Beijing keeps powder dry for now

Editorial | Mary Ma 28 May 2020

If not because of Beijing's plan to impose national security legislation on Hong Kong, the National People's Congress plenary session - which closes today - would have gone largely unnoticed by people here.

The sudden announcement to enact national security laws in Hong Kong was the only surprise.

While its passage in Beijing today is a foregone conclusion, the incident stole public focus away from Premier Li Keqiang's work report.

For decades, the premier's work report had been the focal point of the two sessions. The Beijing event is so called because the session of the Chinese People's Political Consultative Conference is held parallel to the NPC meeting.

For the first time in memory, the premier did not set an annual growth target.

It's difficult to imagine that the central government does not have a target in mind.

It's either that it did not want to state the truth because the target was too low to restore confidence, or that it did not want to lie about the situation with an optimistic prediction.

That's because it knew no one would believe in an optimistic outlook in view of the global recession brought about by the pandemic and China's escalating geopolitical conflicts with the US.

Li, caught between a rock and a hard place, erased the target from his report, leaving it to everyone's guess.

Another observation making the two sessions a little strange from previous ones was the absence of economic stimulus.

There's an old Chinese saying that the ducks know first when the river becomes warm in spring - a popular expression among mainlanders in reference to a sad joke that insiders near the power center often have advance knowledge of any stimulus packages that may come up.

The ducks had been waiting this year but they failed to frolic in the A-share market ahead of the two sessions as they had regularly done in the past.

This time around, the ducks were either kept in the dark because policymakers had done better in keeping secrets, or they already knew prior to the meetings that there would not be any major stimulus to wow the markets.

Monetary easing is probably on the horizon, in addition to pledges of infrastructure bonds to be raised by local governments. But these are hardly the kind of debt feasts pursued by the US and Europe to excite the markets.

Why was there no stimulus? Was it because Chinese people did not deserve the kind of generous assistance that their counterparts - as far away as the West and as close as Hong Kong and Macau - have been getting?

It's either that those in Beijing just did not want to provide stimulus - or they wanted to keep the nation's dwindling foreign reserves for more important purposes.

The latter makes better sense. As the US spends unlimited amounts to bail out its people and companies from hardship, the spending won't stop firms from going bankrupt without a proper economic recovery from the pandemic crisis.

Beijing is likely stocking up ammo in anticipation of opportunities that may arise during a showdown with the US.

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