China gets its annual two-week dual conclave off the ground Monday with 3,000 delegates in Beijing for what is being called the most important such meeting in recent memory. The concurrent meeting of the National People’s Congress, the country’s parliament, and the Chinese People’s Political Consultative Conference, a broader advisory body, comes at a time of growing concern over the world’s second-biggest economy as it attempts to switch direction from the triumvirate of exports, investment and consumption that has powered the country for decades to one led primarily by domestic consumption while continuing to maintain at least 7.2 percent average annual growth. While the bodies do not actually debate anything publicly and disagreement is unheard of, they are important gatherings of officials in one place at one time. The bodies will issue pronouncements that have already been decided but the outside world will eagerly await the marching orders that will be handed down to the state apparatus. The world has grown used to a Chinese juggernaut headed by leaders who can seemingly put programs in place by waving a wand – in this case President Xi Jinping. Prime Minister Li Keqiang, the architect of the economic transformation, faces the considerable headwinds of slowing credit growth while seeking to tighten local government expenditures and clean up their debts, estimated at a breathtaking RMB19 trillion (US$3.1 trillion) and attempting to slow overproduction of state-owned manufacturing sectors such as steel and coal by bosses who in the past saw never-ending expansion as the key to promotion. The country also faces disastrous pollution that is so severe it is slowing plant photosynthesis and leading to vast numbers of lung cancer cases. It is a nation also bristling with tensions that coexist with pride at its fast pace of economic development. The Chinese Academy of Governance in 2012 said there were 180,000 reported "mass incidents," responses to issues such as primarily official corruption, government land grabs, Tibetan autonomy and environmental problems. The conference opens against the horrific backdrop of an attack yesterday on a Yunan train station, allegedly by Uyghur separatists, that killed at least 29 and wounded more than 140. C H Kwan, a Senior Fellow at the Nomura Institute of Capital Markets, warned recently that the economy could be facing signs of overheating despite a sharp slowdown in economic growth – stagflation – suggesting that, constrained by a dwindling labor supply, potential growth might have fallen significantly from its past level. With both the US and European Union economies mired in lackluster growth, China won’t be able to rely on exports unless it sharply devalues the renminbi, something Li has vowed not to do. Urbanization – the movement of huge numbers of rural citizens to the cities – has become Li’s signature mantra for modernization and the stimulus for domestic consumption, although at the moment it remains a concept rather than a concrete program. Li is expected to get the show on the road by unveiling tangible prescriptions for action to a country growing more anxious to learn how it’s going to work. Existing social security and medical care systems are being extended to rural residents although they require revision of effective regulations or allocation of new funds and thus need to be approved by the parliament. But pulling off a task involving the movement of as many as 260 million people into new housing, jobs and social programs will take enormous amounts of money, straining already-strapped local and regional budgets. According to the Chinese Academy of Social Sciences, it would cost RMB131, 000 to provide urban citizenship for each migrant over the entire migrant population. The total bill is expected to be RMB34 trillion (US$5.59 trillion), or 65.5 percent of 2012 gross domestic product. Also, issuing orders from Beijing, especially for the breakneck construction pace envisioned by the government, is a lot different from what happens in cities thousands of kilometers from the capital. There is still a culture of bribery to contend with, no matter how many chickens are killed to scare the monkeys.
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