China in standout policy shift
The two-week long ceremonial National People's Congress may ratify the Xi era
8 March, 2018President Xi Jinping is poised to make a historic power grab as China's legislators gather on 5 March to approve changes that will let him rule indefinitely and undo decades of efforts to prevent a return to crushing dictatorship. This year's gathering of the ceremonial National People's Congress has been overshadowed by Xi's surprise move - announced just two weeks ago - to end constitutional two-term limits on the presidency. The changes would allow Xi, already China's most powerful leader in decades, to extend his rule over the world's second largest economy possibly for life. More than 3,000 deputies will vote on 17 March to reappoint Xi for another five-year term as China's president. The second of Xi's five-year terms is set to conclude in 2023, but this rule change will allow him a legal path to stay in office. The proposed constitutional amendment is widely seen as the culmination of the 64-year-old Xi's efforts since being appointed leader of the ruling Communist Party in 2012 to concentrate power in his own hands and defy norms of collective leadership established over the past two decades. Xi has appointed himself to head bodies that oversee national security, finance, economic reform and other major initiatives, effectively sidelining the party's No. 2 figure, Premier Li Keqiang. Reform policies were laid out in official documents, including the Government Work Report and the Report on the 2018 Draft Plan for National Economic and Social Development, which this year stated more of the same policies presented in previous years, but also a few important highlights. Among a renewed commitment to implement supply-side structural reform to cut overcapacity and deleverage, the reports also describe a major tax cut, as well as a revision of rural land use and increased military spending.China is poised to reduce taxes on businesses and individuals by more than 800bn RMB ($126bn) in 2018, which will provide heavy stimulus to its slowing economy. Tax rates on manufacturing and transportation will be a priority in receiving tax cuts, as are small businesses. Tax cuts will have the effect of reducing government revenues by over 5%. This continues an ongoing effort to reduce the corporate tax burden; last year, $157bn in taxes and administrative fees were cut. Despite the tax cuts, the government aims to lower the fiscal deficit this year from that of last year, from 3% to 2.6% of GDP. Premier Li Keqiang stated last Monday that “faced with profound changes in the national security environment” the absolute leadership of the military by the ruling Communist Party must be observed, and the unity between the government and the military, and the people and the military must always be “strong as stone”. Modernising the military will boost China's global might and preserve the nation as the world's second largest military spender. This will help to buffer the nation against external conflicts, potentially between the United States and North Korea, but will also boost China's actions in the contested South China Sea, where it is building up military bases.