China's future mapped out as Xi Jinping starts his third term as president

12:36 pm on 6 March 2023

By Bill Birtles, the ABC's East Asia correspondent

China's President Xi Jinping attends the opening ceremony of the Chinese People's Political Consultative Conference (CPPCC) at the Great Hall of the People in Beijing on March 4, 2023. (Photo by NOEL CELIS / AFP)

President Xi Jinping attending the national congress in Beijing. Photo: AFP / Noel Celis

Analysis: Sitting in the middle of the stage - poker face on - China's paramount leader Xi Jinping didn't have to say anything at the opening day of the national Congress to firmly stamp his mark on it.

Instead - like every year - Xi's nominal deputy, the state Premier Li Keqiang delivered the work report. He put a positive spin on a difficult 12 months and outlined how China would bounce back from a damaging prolonged Covid-zero crusade.

But even as he spoke for one final time as premier of the government, Li had already been replaced in his real deputy position of power in the Communist Party's leadership.

A new Li - Li Qiang - will be the leader Number 2 who will need to fulfill the goals outlined in the year ahead.

And those goals show an increasing focus on shoring up the power of Xi, so he can steer China in an intensifying battle for technology and influence against the US.

Economically, the GDP growth goal of a five percent increase on last year's sluggish performance is more modest than what some expected.

But the 'growth at all costs' days in China are long gone, and now other priorities are coming into focus.

Among the areas receiving big spending increases for this year are technology, diplomacy and domestic security.

A special $US2 billion ($NZ3.2b) fund is being set up to help semiconductor chipmakers, because China's tech companies (and, indirectly, the military) are facing increasing restrictions from the US on buying the most advanced chips.

America doesn't want American-designed chips being used to help Chinese companies and the military compete against the US.

The money comes on top of two state-backed funds that have poured tens of billions of dollars to support chipmakers in recent years, although reports suggest Xi is pondering an overhaul due to mixed results.

"There may be a new institution, we still don't know its name, that would allow the [Communist] Party to more directly control technological development and research", said Dr Fengming Lu of Australian National University.

"It's highly related to Xi's concerns about China's failure to develop cutting-edge semiconductors and other cutting-edge technologies," he said.

The heavy arm of the state is credited with some of China's greatest technology breakthroughs, including the development of nuclear weapons in the 1960s.

But advanced semiconductors - seen as the most vital technology of our times - is far more challenging.

"For example, even North Korea and Iran can pull their resources together to develop nuclear weapons, but I don't think they could develop semiconductors," Dr Lu said.

Another increase in spending on military

(221222) -- ABOARD DESTROYER JINAN, Dec. 22, 2022 (Xinhua) -- Warships of Chinese navy take part in a joint naval exercise, Joint Sea 2022, in the East China Sea on Dec. 21, 2022. Chinese and Russian navies on Wednesday kicked off a joint naval exercise, Joint Sea 2022, in the East China Sea. TO GO WITH "China, Russia hold joint naval exercise" (Photo by Xu Wei/Xinhua) (Photo by Xu Wei / XINHUA / Xinhua via AFP)

Warships from the Chinese navy take part in a joint naval exercise with those from Russia, in the East China Sea, last December. Photo: AFP / Xu Wei

China's military is also in for a funding boost, with spending to increase by 7.2 percent for the year ahead - a similar rise to last year - and one that again outstrips the pace of overall economic growth.

Li Keqiang said China's military - the world's biggest army by troop numbers and Navy by fleet-size - needs to be "combat ready".

It's standard language in some ways, but the build-up of Chinese ships, fighter jets and missile capabilities really is rattling nerves across the Taiwan Strait and in the region.

Money for China's military has doubled in the past decade, and while the $US224b official budget pales in comparison to the $US800b a year the US spends on defence, China's forces are focused on much more specific goals.

Taking Taiwan is chief among them, so even as the overall economy grows more modestly than some might hope, Xi is maintaining the spending to make a US intervention over Taiwan more costly.

And it's not just hardware.

Diplomats play key role

One of the most eye-catching funding pledges is a 12 percent boost for China's diplomats, the so-called "civilian soldiers" fighting a different battle for influence against the US.

Beijing has carefully watched the Western response to Russia's attack on Ukraine, including sanctions.

Xi would want to prevent a similar response from economic partners to any future moves on Taiwan if it comes to that.

And diplomacy is key.

China's representatives are already locked in an ideological struggle for hearts and minds both in embassies around the world and on (American-owned) social media platforms.

Senior diplomats regularly decry the US as imperialistic, hegemonic and poorly governed, and repost government propaganda aimed largely at winning over audiences in third countries, often in the developing world.

Now better resourced than ever, China's diplomats will have the backing to be even more ambitious in pushing their country's interests, including in the South Pacific where Australia also competes for influence.

Even in an era of more constrained Chinese economic growth, Xi is not backing away from the contest for the 21st century.


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