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China’s Communist Party Congress: What It Means for Business

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At a Communist Party congress starting in Beijing on Oct. 16, Xi Jinping is expected to be named to a third five-year term as the country’s top leader, paving the way for him to consolidate power to an extent not seen in decades.

Under Mr. Xi, China has become the world’s dominant manufacturer of everything from cement to solar panels, as well as the main trading partner and dominant lender for most of the developing world. It has built the world’s largest navy, developed some of the world’s most advanced ballistic missiles and constructed air bases on artificial islands strewn across the South China Sea.

in a tailspin. Its property market, which over the last ten years contributed about a quarter of the country’s economic output, is melting down. Foreign investment has faltered. And widespread lockdowns and mass quarantines, part of China’s zero-tolerance approach to Covid-19, have hurt consumer demand and stalled businesses.

At the same time, Mr. Xi has worked to turn China into a more state-led society that often puts national security and ideology before economic growth. He has cracked down on Chinese companies and limited their executives’ power. Some of China’s best-known entrepreneurs have left the country and others, such as Alibaba co-founder Jack Ma, have largely disappeared from public view.

All of this has hurt China’s economy, which was just 0.4 percent larger from April through June than during the same period last year. The growth was far below the government’s initial target for growth of about 5.5 percent this year. For the first year since the 1990s, China’s economic growth is expected to fall below the rest of Asia’s.

at the start of the last party congress, in 2017, lasted more than three hours. But buried in that jargon are likely to be some important messages. Here’s what finance leaders and corporate executives around the world want to know.

One of Mr. Xi’s favorite economic policy initiatives in recent months has a simple, innocuous-sounding name: “common prosperity.” The big question lies in what it means.

Common prosperity, a longtime goal of the Communist Party, has been defined by Mr. Xi as reining in private capital and narrowing China’s huge disparities in wealth. Regulators and tax investigators cracked down last year on tech giants and wealthy celebrities. Beijing demanded that tycoons give back to society. And Mr. Xi has strongly discouraged speculation in housing, pushing instead for government subsidies for the construction of more rental apartments.

A regulatory crackdown on tech companies and after-school education companies contributed to a wave of layoffs that left one in five young Chinese city dwellers unemployed by August. Lending limits on China’s highly inflated housing sector have triggered a nosedive in the number of fresh construction projects being started and a wave of insolvencies among real estate developers. Many Western hedge funds that bet heavily on the real estate developers’ overseas bond issues incurred considerable losses.

The term “common prosperity” was seldom used by top officials last spring during those setbacks. But Mr. Xi conspicuously revived it during a tour of northeastern China in mid-August. The Politburo subsequently mentioned common prosperity when it announced on Aug. 30 the starting date and agenda for the party congress.

first put forward in May 2020, is a theory of what he calls “dual circulation.” The concept involves relying primarily on domestic demand and innovation to propel the Chinese economy, while maintaining foreign markets and investors as a backup engine for growth.

Mr. Xi has pushed ahead with lavish subsidies to develop Chinese manufacturers, especially of semiconductors. But the slogan has attracted considerable skepticism from foreign investors in China and from foreign governments. They worry that the policy is a recipe for replacing imports with Chinese-made goods.

China’s imports have indeed stagnated this year while its exports have soared, producing the largest trade surpluses the world has ever seen. Those surpluses, not domestic demand, have sustained China’s economic growth this year.

Chinese officials deny that they are trying to discourage imports, and contend that China remains eager to welcome foreign companies and products. When the Politburo scheduled the party congress for Oct. 16, it did not mention dual circulation, so the term might be left aside. If it goes unmentioned, that could be a conciliatory gesture as foreign investment in China is already weakening, mainly because of the country’s draconian pandemic policies.

China’s zero-tolerance approach to Covid-19 has prevented a lot of deaths and long-term infections, but at a high and growing cost to the economy. The question now lies in when Mr. Xi will shift to a less restrictive stance toward controlling the virus.

in Tiananmen Square, on the 100th anniversary of the founding of the Chinese Communist Party, when he reiterated China’s claim to Taiwan, a self-ruled island democracy. President Biden has mentioned four times that the United States is prepared to help Taiwan resist aggression. Each time his aides have walked back his comments somewhat, however, emphasizing that the United States retains a policy of “strategic ambiguity” regarding its support for the island.

Even a vague mention by Mr. Xi at the party congress of a timeline for trying to bring Taiwan under the mainland’s political control could damage financial confidence in both Taiwan and the mainland.

The most important task of the ruling elite at the congress is to confirm the party’s leadership.

Particularly important to business is who in the lineup will become the new premier. The premier leads the cabinet but not the military, which is directly under Mr. Xi. The position oversees the finance ministry, commerce ministry and other government agencies that make many crucial decisions affecting banks, insurers and other businesses. Whoever is chosen will not be announced until a separate session of the National People’s Congress next March, but the day after the congress formally ends, members of the new Politburo Standing Committee — the highest body of political power in China — will walk on a stage in order of rank. The order in which the new leadership team walks may make clear who will become premier next year.

a leading hub of entrepreneurship and foreign investment in China. Neither has given many clues about their economic thinking since taking posts in Beijing. Mr. Wang had more of a reputation for pursuing free-market policies while in Guangdong.

Mr. Hu is seen as having a stronger political base than Mr. Wang because he is still young enough, 59, to be a potential successor to Mr. Xi. That political strength could give him the clout to push back a little against Mr. Xi’s recent tendency to lean in favor of greater government and Communist Party control of the private sector.

Precisely because Mr. Hu is young enough to be a possible successor, however, many businesspeople and experts think Mr. Xi is more likely to choose Mr. Wang or a dark horse candidate who poses no potential political threat to him.

In any case, the power of the premier has diminished as Mr. Xi has created a series of Communist Party commissions to draft policies for ministries, including a commission that dictates many financial policies.

What do you think? Let us know: dealbook@nytimes.com.

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China and the Climate

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When I was last in China, in 2019, I met an entrepreneur named Gao Jifan, who told me a story that I’ve been reflecting on during President Biden’s climate summit this week.

Back in the 1990s, Gao received a letter from an old friend who was living in the United States. The letter included a photo clipped from a newspaper, showing President Bill Clinton as he announced a plan to outfit one million homes with solar power.

“It was like a light bulb,” Gao recalled, as we were sitting in his office in Changzhou, about 100 miles northwest of Shanghai. Clinton’s initiative caused Gao — a chemist by training — to think that he should start a company to meet the coming demand for solar equipment. That company, Trina Solar, has since made Gao a billionaire.

For the inspiration, Gao is grateful to the U.S. But he is also befuddled by the American approach to climate change.

the sharp policy changes from one to the next. Those changes, he added, had hurt the solar industry and other clean-energy efforts: If the U.S. took a more consistent approach, the global struggle to slow climate change would be easier.

Many Americans have come to believe a different story — namely, that U.S. climate policy hardly matters compared with the actions of China, India and other countries that account for a growing share of emissions. As some congressional Republicans have been asking this week, why should the U.S. act to slow climate change unless other countries do so first?

But that view is not consistent with history, either the recent history of climate diplomacy or the broader history of American influence.

“There aren’t many other areas of policy where we say, ‘Why don’t we let everyone else lead, and we’ll follow?’” as Nathaniel Keohane of the Environmental Defense Fund says. The U.S., for all its problems, remains the world’s most powerful country. When it wants to influence the policies of other countries, it can often do so, especially when those countries see it as being in their own interests to change.

more reliant on coal than Biden administration officials wish. But the U.S. can often have an effect. Relative to many other issues, in fact, climate diplomacy is sometimes easier: President Xi Jinping has largely rejected U.S. entreaties on Hong Kong, Xinjiang and the South China Sea, but he has been willing to deal on climate change.

President Barack Obama and Xi came to multiple agreements that involved both countries moving to reduce emissions. They started small, with the relatively narrow topic of refrigerants, and expanded from there. As my colleague Brad Plumer says, “There’s a reasonable argument the Obama administration’s and China’s joint agreement on climate change in 2014 helped set the table for the Paris climate agreement.”

Crucial to these efforts was a U.S. willingness to act at home: It’s much easier to agree to take economic risks when your main global competitor is doing the same. And the U.S. still leads the world in per-person emissions, about 75 percent above China, according to recent numbers.

The Trump administration slowed global efforts on climate change by dismissing it as a threat and allowing more pollution at home. A Chinese official last week mocked the U.S. for “the lost four years.” The Biden administration is now trying to reverse course, with an emissions-reduction goal that’s larger than many advocates expected.

The cynical view — that the U.S. can only follow, not lead, on climate policy — has it backward. As Gao told me, one of the biggest obstacles to progress on climate change has been the lack of consistent American leadership.

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Seeking Cooperation on Climate, U.S. Faces Friction With China

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The United States and China do not agree on much nowadays, but on climate change both countries are publicly pledging to do more to fight global warming. The problem will be working together on it.

On Thursday, President Biden’s climate envoy, John Kerry, met in Shanghai with his counterpart to press China on reducing its carbon emissions, at a time when an emboldened Communist Party leadership has become increasingly dismissive of American demands.

In Beijing’s view, the United States still has much ground to recover after walking away from the Paris climate agreement, the 2015 accord to address the catastrophic effects of warming.

Mr. Biden’s commitments to now make climate change a top priority are, to officials in Beijing, merely catching up to China after its leader, Xi Jinping, last year pledged to accelerate the country’s efforts to reduce carbon emissions.

article on Wednesday before Mr. Kerry’s visit.

A main purpose of Mr. Kerry’s travels to China and elsewhere has been to rally support for Mr. Biden’s virtual climate summit of dozens of world leaders next week. Mr. Xi has not yet accepted the invitation, but he will join a similar conference on Friday with President Emmanuel Macron of France and Chancellor Angela Merkel of Germany.

rivalry over technology could spill into climate policy, where innovations in energy, batteries, vehicles and carbon storage offer solutions for reducing emissions. Already, American lawmakers are demanding that the United States block Chinese products from being used in the infrastructure projects that Mr. Biden has proposed.

“If there is a serious lack of basic trust, strategic and political, between China and the U.S., that will inevitably hold back deepening cooperation in the specialized sphere of climate change,” Zou Ji, the president of Energy Foundation China, who has advised Chinese climate negotiators, wrote recently in a Chinese foreign policy journal.

Cooperation between the United States, the worst emitter of greenhouse gases historically, and China, the worst in the world today, could spur greater efforts from other countries. China accounts for 28 percent of the world’s carbon dioxide emissions; the United States, in second place, emits 14 percent of the global total.

Secretary of State Antony J. Blinken and other American officials have said they are prepared to cooperate with the Chinese government on issues like climate, even as they confront it others, including the crackdowns in Hong Kong and Xinjiang and the menacing military operations against Taiwan and in the South China Sea.

It is not clear that Mr. Xi’s government is prepared to compartmentalize in the same way. Officials have indicated that the souring of relations has spoiled the entire range of issues between the two countries.

“Chinese-U.S. climate cooperation still faces many internal and external constraints and difficulties,” said a study released this week by the Shanghai Institutes for International Studies.

resume the role of China’s climate envoy.

Both he and Mr. Kerry — a former secretary of state and Senate colleague of Mr. Biden’s — have high-level support from the leaders who appointed them, making them powerful voices in the political bureaucracies they must confront at home.

Lauri Myllyvirta, the lead analyst at the Center for Research on Energy and Clean Air in Helsinki, who closely follows Chinese climate policy. “His position has the aura of having been installed from the top.”

The Chinese climate official also oversaw a study from Tsinghua University last year that he has indicated helped shape Mr. Xi’s goals to achieve net carbon neutrality for China before 2060.

video talk late last month with António Guterres, the United Nations secretary-general, Mr. Xie said that wealthy countries should deliver on promises of financial support to help poorer countries cope with global warming and acquire emissions-reducing technology.

official Chinese summary of the meeting. He also appeared to gently suggest that the Biden administration should not assume that it naturally belonged at the head of the table.

“We welcome the United States’ return to the Paris Accord,” Mr. Xie said, “and look forward to the United States striving to catch up and exercise leadership.”

Somini Sengupta contributed reporting. Claire Fu contributed research.

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