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Xi Urges Military Innovation; Li Qiang in Spotlight: NPC Update

(Bloomberg) — President Xi Jinping called on China to boost its military might via technological innovation and accelerate its push to achieve an advantage over international rivals.

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Former Shanghai party secretary Li Qiang, a close ally of Xi, is set to be appointed as China’s premier Saturday. Li, 63, will get a chance to preview any policy plans in his first annual news conference after the country’s parliamentary session ends Monday — his first chance to make extensive public comments since his rise to the Communist Party’s supreme body five months ago.

During the National People’s Congress earlier this week, Xi also called on the private sector to help overcome “comprehensive containment and suppression by Western countries led by the US” — unusually direct criticism of his largest trading partner.

What to Know:

  • Click to view the full text of the government reorganization plan in Chinese

  • Click here to read more about this year’s NPC, which ends on March 13

  • What to watch out for this year (video)

  • A QuickTake explainer on the NPC

  • Insights on incoming officials, NPC delegates

Key Upcoming Events:

Key NPC/CPPCC events that have been announced so far include:

  • March 10: The country’s president and vice president will be decided. Xi is expected to get a norm-busting third term as China’s president

  • March 11-12: Delegates will decide on the country’s next prime minister and ministers, including the central bank governor. Li Qiang is expected to replace Li Keqiang as the new premier when the decision is announced on March 11. Vice premiers and state councilors will be appointed on March 12 along with ministers and the PBOC governor.

  • March 13 — NPC closing session. The new premier’s press conference is likely to follow

Latest developments: (Time-stamps are local time in Beijing):

New Premier in Spotlight (6:00 am)

For decades, China’s premiers were towering figures in Beijing. It was Zhou Enlai who toasted then-President Richard Nixon on his historic trip to the communist-led country while Zhu Rongji was the undisputed spokesman for economic reform in the late-1990s.

When Li Qiang, 63, finally ascends to the premier’s job Saturday, he’ll inherit a position greatly diminished in both political stature and direct authority. Perhaps no other office has lost as much under President Xi Jinping’s efforts to consolidate power than the premier, who officially leads China’s cabinet, the State Council.

Xi spent much of his first decade in power giving himself greater control over areas of policymaking that might otherwise have been dominated by Premier Li Keqiang, 67. Even now, the National People’s Congress in Beijing is wrapping up a massive restructuring expected to shift more traditional State Council policy areas to party organs.

The question is whether Li Qiang’s long history with Xi, including a stint in Zhejiang province as the future president’s top aide, will let him play a greater role and restore the country’s No. 2 office to something resembling its former prominence.

US Urged to End Tariffs on Solar Equipment (8:12 pm Wednesday)

The US should scrap decade-old import tariffs on solar power equipment after years of protectionism has failed to boost its domestic manufacturing base, according to the chairman of a top Chinese clean energy firm.

Easing such measures will allow more technology sharing, and will also help the US speed up its shift away from fossil fuels, Tongwei Group chairman Liu Hanyuan said in an interview on the sidelines of the NPC on Wednesday.

Xi Calls for More Military Innovation (8:00 pm Wednesday)

President Xi Jinping called on China to boost its military might via technological innovation and better coordination of the defense industry with the wider economy, according to state broadcaster CCTV.

China should accelerate its push for high-tech independence to achieve an advantage over international rivals, Xi told military delegates at the National People’s Congress on Wednesday, CCTV reported. Supply chain resilience also needs to be improved, he said.

Underscoring those objectives, the government has said it will boost defense spending by 7.2% this year, the fastest growth in four years, according to a release earlier this week.

Investors Turning to SOEs Amid NPC Nothingburger (1:21 pm Wednesday)

With the NPC so far being largely a non-event for China watchers grappling for investment inspiration, state-owned firms are emerging as a relatively bright spot — a corner of the market that looks to have the greatest policy certainty yet.

The swings for the Shanghai Composite have been less than 0.5% so far this week, while northbound net trades have remained within 1 billion yuan each day, showing the lack of fresh catalysts.

The cohort of SOEs is benefiting from the catch phrase “Valuations with Chinese Characteristics”, coined by the securities chief. Its underlying thesis that these national giants, which often enjoy an oligopoly in their respective fields, are ripe for value discovery.

What China’s Powerful Financial Regulator Means for PBOC (3:40 pm Wednesday)

China’s sweeping changes to the financial regulatory system will see the central bank lose some of its functions to a new and enlarged oversight body, leaving it focused on broader economic and financial stability management.

The banking and insurance watchdog will be absorbed into a new bureau — a national financial regulatory administration — to oversee all financial sectors except the securities industry, according to a plan released at the National People’s Congress on Tuesday. Under the revamp, the People’s Bank of China will no longer have oversight of financial holding companies and financial consumer protection.

China’s Financial Regulators Face Deep Pay Cuts After Revamp (3:20 pm)

China’s financial watchdogs are facing massive pay cuts as Beijing overhauls the regulatory regime to further tighten the reins on the $60 trillion industry and comply with President Xi Jinping’s “common prosperity” drive.

Under the shake-up announced on Tuesday, China will set up a new national regulator to oversee all financial sectors except the securities industry. Staff at regulators including the central bank, the foreign exchange regulator, the new authority and the securities watchdog will be paid on par with the nation’s public servants.

Xi’s Frustration at Biden Grows With Warning of Conflict (6 am)

Back in November, before the latest downward spiral in US-China ties, Xi Jinping cast himself as a statesman in a meeting with Joe Biden. This week, as top Chinese officials gathered for the National People’s Congress, Xi stopped playing nice. On Monday, he called on the private sector to help overcome “comprehensive containment and suppression by Western countries led by the US” — unusually direct criticism of his largest trading partner.

China Unveils New PLA Joint Staff Chief in Military Succession (3:27 am)

China’s military on Tuesday unveiled a general as the new effective counterpart of Mark Milley, the chairman of the Joint Chiefs of Staff.

A March 7 report in the PLA Daily, the official newspaper of the Chinese military, said that General Liu Zhenli attended a group discussion as chief of the People’s Liberation Army’s Joint Staff Department. An official announcement of the personnel decision has yet to emerge. The session came during this week’s annual gathering of the National People’s Congress in Beijing.

China Warns US Risks Catastrophe in Push to Contain Beijing (1:27 am)

China’s new foreign minister warned that soaring US-China tensions risk blowing past any guardrails in the relationship, showing that divisions between the world’s biggest economies are becoming more entrenched. Qin Gang, who was previously ambassador to the US, blamed Washington for a wide range of problems in geopolitics and the global economy.

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