China’s post-coronavirus policy includes challenges America also faces

As the U.S. confronts a challenging series of racial, economic, health and political issues at home that have caused or exacerbated a wide range of social and political divisions, China last week moved forward with measures of its own that seek to showcase national unity and demonstrate that China’s leaders have managed to largely overcome one of the most serious crises they’ve faced in recent decades: the novel coronavirus.

The fact that China held its annual National People’s Congress (NPC), its legislative body — bringing together 3,000 of its top leaders for a week, sitting in close quarters in the Great Hall of the People — and then its Chinese People’s Political Consultative Congress (CPPCC), with 2,000 senior officials in the same place, in itself was remarkable. It represented a show of confidence that China’s leaders believe the virus has been contained, despite some new cases, and at the moment poses no major risk. Two months ago, the government postponed these two events because of the pandemic.  

Another noteworthy aspect of these meetings is that the government did not attempt to set growth targets, as it normally does at this time. The uncertainties presented by the longer-term economic impact of the virus, and the global economic environment, caused them wisely not to attempt to forecast goals.

Interestingly, the major document to emerge from the annual NPC meeting — the government’s Work Report presented by Premier Li Keqiang — emphasized several new themes, some of which, though hardly all, will be similar to those preoccupying officials in Washington in coming months and years as the U.S. emerges from the COVID-19 pandemic and confronts a similar series of domestic and international issues. In some areas the domestic narratives are remarkably parallel.

One of China’s top goals — similar to that of the U.S. — is to improve the nation’s public health care system through fundamental structural changes, including improving early-warning systems, strengthening testing capabilities and providing greater support for drugs to treat COVID-19 and future pandemic-type diseases, and vaccines to stop this and others — as well as support for more training and compensation for health care workers. Earlier, the government made a major commitment to increase funding for enhanced biosecurity capabilities.

Second, as in the U.S., is to boost job creation as part of a broader effort to prevent millions of people who, in recent decades, achieved middle-class status from falling back into poverty as the result of business shutdowns during the pandemic. This will include boosting pensions and funding for health care insurance. Vocational training will be a key component as well. A related program is tackling poverty in roughly 50 of China’s poorest counties — to deal with rural-urban inequities.

Technological development received a lot of attention. The government plans to focus on  advancement of 21st century technologies, such as artificial intelligence (AI) and 5G telecommunications, by Chinese businesses and support domestic innovation. The twin goals are to drive economic growth and to become less dependent on other countries, specifically the United States, in high-priority, strategically important sectors. This mirrors the debate in Washington about reducing American dependence on China in a variety of strategic sectors. How this is done will have an enormous impact on U.S.-China trade and on American companies selling to and investing in China. To what extent, for example, will they be able to receive support for advanced research and product development in China — or will they be excluded from, or squeezed out of, the market and production base in some product lines?

Where the Chinese government’s agenda for the future differs from what is likely to emerge in the U.S. is that, while self-sufficiency in key strategic areas will be a priority, so too will be greater collaborative trade and investment programs with other nations. China sees enormous opportunities to expand its global influence in coming years, especially if the U.S. remains preoccupied with internal problems and divisions. It also sees attracting foreign investment as a key element of its future growth; it therefore has responded to requests from the U.S. and other nations to reduce “significantly” the number of sectors that will be included on its “negative list” that blocks certain foreign investment — and to improve treatment of foreign companies operating in China. This is aimed at offsetting demands abroad for decoupling and restrictions on Chinese firms — and retaining or increasing job-creating foreign investment and integrated supply chains in key areas.

China also repeated its commitment to move ahead with “Phase One” of its trade deal with the U.S., despite growing tensions on both sides, but did not elaborate on future trade relations with Washington. On a broader scale, Premier Li Keqiang indicated the government’s desire to sign the massive Regional Comprehensive Economic Partnership — a trade liberalization agreement with all of Association of Southeast Asian Nations (ASEAN), plus other major trading partners such as Japan, South Korean, Australia and New Zealand — this year. 

Remarkably, and perhaps ironically from Washington’s point of view, Premier Li also said that China would consider joining the current version of the Trans-Pacific Partnership (TPP), from which the U.S. withdrew, now known as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership. China has hinted at this before, but there are numerous provisions in the arrangement related to labor unions and intellectual property that China might find difficult to accept. However, to get China in, some current members might make concessions in some of these areas. Would Japan, now the leader of the group, accept this? Would Washington, for example, see this as part of the “battle of the systems” and impose restrictions on trade and investment in certain advanced technologies to deter inclusion of China? All this remains to be seen.

The details of the outcomes of these two meetings have yet to emerge. Many regulations and specific initiatives will be put in place by top policymakers over time. But they present a broad, long-term vision and set of priorities, and project to Chinese citizens and the world a unified approach for moving forward.

More broadly, preventing and controlling a future pandemic, developing the drugs and vaccines to control and eliminate this one, and dealing with the highly disruptive financial aftermath that will hang over the world for many years will require a substantial measure of Sino-American collaboration. Medical researchers know this, drug companies know this, financial experts know this. The question now is what will be the framework for doing this and whether governments can work out a way to avoid major confrontations. They must compete in some key areas while recognizing that some cooperation will be essential — for their own and global interests.

Robert Hormats is managing director of Tiedemann Advisors, a New York-headquartered financial firm. He was undersecretary of State for economic growth, energy and the environment, 2009-13; a senior official of Goldman Sachs from 1982-2009; assistant secretary of State, 1981-82, and a former ambassador and deputy U.S. trade representative, 1979-81. As senior economics adviser to three White House national security advisers from 1969 to 1977, he helped to oversee the U.S. opening to China. Follow him on Twitter @BobHormats.