Schedule of 1st Session of 11th National People’s Congress (NPC), handily compiled by an investment bank, who sent it along. Check out the excellent China Vitae for bios of key people and who’s on what committee.

March 5:
(1) Government work report delivered by Premier Wen Jiabao
(2) Examining the Report on the Implementation of the 2007 Plan for National Economic and Social Development and the Report on the Draft 2008 Plan for National Economic and Social Development; and voting on the Plan of National Economic and Social Development for 2008
(3) Examining the Report on the Implementation of the Central and Local Budgets for 2007 and on the Draft Central and Local Budgets for 2008; and voting on the 2008 central budget.

March 6:
Group discussions on the government work report

March 7:
Group discussions on the Report on the Implementation of the 2007 Plan for National Economic and Social Development and the Report on the Draft 2008 Plan for National Economic and Social Development, and the Report on Budgets for 2008

March 8:
NPC Standing Committee work report delivered by Wu Bangguo, chairman of the NPC Standing Committee

March 9:
Group discussions on the NPC Standing Committee work report

March 10:
(1) Work report of the Supreme People’s Court delivered by Xiao Yang, president of the Supreme People’s Court
(2) Work report of the Supreme People’s Procuratorate delivered by Jia Chunwang, the procurator-general

March 11:
The plan on the institutional restructuring of the State Council delivered by Hua Jianmin, state councilor and secretary-general of the State Council.

March 12:
Group discussions on the institutional restructuring of the State Council

March 13:
Break

March 14:
Group discussions on the candidates for chairman, vice chairpersons, secretary-general, and members of the Standing Committee of the 11th National People’s Congress; the candidates for state president and vice president; the candidates for chairman of the Central Military Commission of the PRC.

March 15:
Election of the chairman, vice chairpersons, secretary-general, and members of the Standing Committee of the 11th National People’s Congress; State president and vice president; chairman of the Central Military Commission of the PRC. Group discussions on the candidates for the premier of the State Council; the candidates for President of the Supreme People’s Court and procurator-general of the Supreme People’s Procuratorate; the candidates for vice chairmen and members of the Central Military Commission of the PRC.

March 16:
Election of the premier of the State Council; the president of the Supreme People’s Court and procurator-general of the Supreme People’s Procuratorate; vice chairmen and members of the Central Military Commission of the PRC. Group discussions on the candidates for heads of all ministries and commissions, governor of the PBOC, auditor general of the National Audit Office and the candidates for members of various special committees of the 11th NPC; the candidates for secretary-general of the State Council.

March 17:
Election of the heads of all ministries and commissions, governor of the PBOC, auditor general of the National Audit Office and the members of various special committees of the 11th NPC; the secretary-general of the State Council.

March 18:
Closing speech made by the State president and chairman of the NPC Standing Committee. NPC concludes.

Highlights from the last week of China business news.

Democracy, but only within the party
While we wait breathlessly for the new leadership lineup next Monday, at the close of the twice-a-decade Party Congress, we’ll just have to content ourselves with these morsels about the CPC’s burgeoning “intraparty democracy.” Say what? President (and party boss) Hu Jintao said in his key speech to the Congress that the party is working to “expand intraparty democracy to develop the people’s democracy.” Xinhua noted that Hu uttered “democracy” more than 60 times during that speech (which, by some accounts, was a 2.5-hour test of attendees’ stamina). Then, the party’s HR chief, who vets promotions and appointments, said “Democracy within the party is the lifeline of the party,” but also added, “Likewise, unity is also the lifeline of the party.” Huh? The markets, meanwhile, paid no attention to this game of ideological tongue-twisters. The Shanghai Composite broke through the 6,000-point ceiling on October 16, setting a new record. Making money trumps politics, for now, it seems.

High-tech picks up speed
Just as talk of a second internet bubble in the US starts to gain traction (don’t believe it? This great New York Times article will convince you), Alibaba, right on cue, pops up with its IPO. Jack Ma, Alibaba’s pugnacious boss, has made plans to raise US$1.33 billion on the Hong Kong Stock Exchange, which would make it China’s biggest tech IPO to date. If all goes to plan, Alibaba will receive a net profit of more than US$80 million. Ma has already bested foreign pretenders like eBay, who dared encroach on his turf (Alibaba’s auction site Taobao dominated eBay in the local e-auction market). Now, pockets lined with cash, it looks like he’s ready to start the next phase of Alibaba’s rise and rise. Another smart Chinese player, telecom firm Huawei, is also making its mark felt abroad. Last week it announced a plan to buy 21.5% of 3Com, the US network equipment manufacturer. The folks at the Shenzhen Stock Exchange must have been paying attention - Huawei, after all, is still a privately held company, although it’s already a global telecoms equipment player. The exchange will launch a new growth enterprise board targeting high-tech companies, part of a national plan to accelerate the country’s tech sector, which also includes a US$10.7 billion investment from China Development Bank.

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Highlights from the last week of China business news: A minister calls a mining accident a “natural disaster”; the Shanghai Composite Index crosses the 5,000 mark while new securities regulations are introduced

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Highlights from the last week of China business news: Mattel toy recalls escalate the product safety issue; China’s forex reserves are safe - for now.

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It appears the Chinese management merry-go-round is turning once again. Sinopec Chairman Chen Tonghai has resigned, citing “personal reasons,” which may or may not transpire to be “serious breaches of discipline.”

Meanwhile, China Banking Regulatory Commission employees Tang Shuangning and Xu Feng are to become chairman of China Everbright Group and president of Shanghai Pudong Development Bank respectively. Xiang Junbo, a deputy governor at the People’s Bank of China, is taking over as president of the Agricultural Bank of China.

No underhanded behavior tied to these last three personnel changes – they’re being made, well, because the government feels like it.

I wrote an article recently (for the upcoming July issue of CER) about the role of non-executive independent directors on the boards of listed Chinese companies. The appointment of senior executives cropped up because it is one area where – at state-owned enterprises, at least – independent directors can’t expect to have much of a say. On issues like this, the Communist Party delegates on the board rule the roost.

It makes for interesting situations in terms of governance.

First of all, it doesn’t do wonders for corporate transparency and serves as a reminder that, particularly in sensitive industries, policy is set by Beijing. One would like to think that an increasingly business-minded Beijing’s thinking is increasingly in tune with Western corporate philosophy, but there are no guarantees.

Secondly, who comes in as the replacement? The guy taking over from Chen at Sinopec is Su Shulin, a former vice-president at key rival PetroChina, which naturally leads to questions about strategy and relations within the top echelon of management.

People I spoke to for the article gave a range of responses. One foreign independent director on the boards of a number of Chinese firms argued that the state, as major shareholder, was entitled to have the main say on appointments. And this merry-go-round isn’t necessarily a bad thing at Chinese firms …

“Companies can become bureaucratic and stale over time. A change-around in leadership is not without its merits. You might come to one answer because it is the standard approach but look deeper and there might be some rationale there. You have to look at it on a case-by-case basis.”

A foreign banker, responsible for overseeing his employer’s investments in China, was more concerned about the unpredictability factor. He also had a horror story to tell:

“They [another foreign bank] heard rumblings that the chairman of the Chinese bank they had invested in was not getting full support and so flew to Beijing to speak to the bank and the regulators, saying ‘This is our guy’. They were given reassurances but then the chairman was sacked while they were on the plane going home.

“Senior management positions are not a real board issue in China.”

A short but interesting debate unfolds in the letters page of the current Foreign Policy magazine. One of its overarching messages is the critical role family plays in the stability of China.

Families, even extended families, provide a safety net that enables people to weather problems - periods of unemployment are easier to handle, forced relocations can become less of a burden. Family members can also band together to fight legal or regulatory injustice, pitch in for unexpected health care bills or buy land as a group or provide loans to start a business.

In short, families can provide the social safety network that the government does not provide.

In many ways, families balance out the damage that local government causes through corruption and a disproportionate emphasis on economic growth over welfare.

One way to help this is to allow for the faster development of civil society. Non-governmental organizations (NGOs), both domestic and foreign, are not yet allowed in China but there are signs of change.

On May 25, China Daily reported that the government is to create registration policies for NGOs (foreign NGOs have to operate as businesses in China) and streamline registrations for their domestic equivalents.

All this is part of an effort to deal with a very basic problem that Beijing: how to maintain its authority and legitimacy if economic growth begins to waver. As long as more people make more money than they did last year, all is good. If that changes, there are fears of social unrest. Nobody wants that.

Families can provide some stability in bad times but their ability to act as the country’s surrogate social safety provider only goes so far. A strong civil society can give people more recourse in times of trouble but Beijing needs to let go of some of the reins.

The noted China scholar Minxin Pei was in Shanghai last week to speak at a conference of the Australian Institute of Company Directors. In his session, he gave the skeptic’s view (for which he is quite well known) of China’s economic growth while Geoff Raby, the Australian ambassador to China, presented the optimistic picture. Pei said China’s leadership had created a “monster”, an ever-growing economy which needed to be constantly fed.

“By creating political stability linked to economic growth, the Chinese government has created a monster. The government will have to feed this monster until another monster appears on the horizon,” he said.

I spoke to Pei after his session; here are some highlights:

On China’s economic monster:

“This leadership is not out of touch. The problem is, do they have the political courage, can they organize a new political coalition?

…

The people who benefit from having the first monster around — the growth model is obviously helping a lot of people get rich in relatively small numbers — the current government officials benefit from less accountability.

…

The issue the central government is worried about are systemic risk issues. [But] gains by provinces, cities, are being achieved at a huge cost of future sustainability. But for a local mayor, party secretary, it’s none of his concern. So that’s the biggest problem.

…

The government had one strategy, that is economic growth will solve all the other problems. But nowadays we find out that’s not true. Growth solves some problems, but growth is creating problems. … It’s a constitutional issue: How to devise the system so that local governments maintain autonomy and behave responsibly. Today, both local and central governments are behaving opportunistically.”

On corruption:

“There is no such thing as lubricating corruption. There are two types of corruption, one which I call ‘the toll collector’ — when you go through his department you have to pay a toll. That’s India, you have so many toll collectors, like a highway.

The worst kind of corruption, I’m not going to say China has this, is car-jacking. You kill the driver and take his car, not collect a toll! That’s really the worst kind. It is worse because you take away productive assets, destroy public security. China has both, because the country is so complex. The good areas have toll collector corruption, the really bad areas have car-jacking and Mafia states.”

On the new property and Chongqing ‘nail house’:

“In China, the devil is not in the details; the devil is in execution, implementation, enforcement. The Chongqing case was the one and only [case of individual property rights victory]. You don’t see [more cases] after the Chongqing case; there was a news blackout. That raises skepticism about the replicability of the dingzi hu (nailhouse). [The government] doesn’t want to encourage people. Everybody’s a dingzi hu; how can you build a city… the cost of building a city will spiral.”

So it’s farewell to Chinese Foreign Minister Li Zhaoxing, who is to be pensioned off at the age of 66 (a year beyond the official ministerial-level retirement age of 65).

Obviously, Li has been at the focal point of a number of controversial incidents relating to Chinese foreign policy over the years and his successor will likely face similar challenges. Given the current state of US-China relations, it’s no surprise that the new man will be Yang Jiechi, a former ambassador to the US and a long-time friend of the Bush family (he was George H.W.’s translator for a China visit in 1977).

As Li shuffles off towards a tree-lined compound probably somewhere on Beijing’s west side, how should we remember him (apart from the fact he is the current administration’s best known amateur poet)?

How about this discussion he had on an internet chatroom in 2003. It was the first time a senior government official had taken part in an interactive chat and, while most of the questions focused on foreign policy, a SCMP report highlighted some more personal exchanges…

Participant 1: “People are not too keen about your looks. What do you say?”

Li: “My mother would not agree with this view. She is an ordinary woman in a village in Shandong province who once made shoes for the communist army. She is quite proud of the way I look.”

Other participants rushed to his defense…

Participant 2: “Although some people have not said anything flattering about your looks, to us women you are a very special and charming man. In the arena of foreign policy you have made us see the beauty of the Chinese man.”

Bless…

The annual meeting of China’s parliament, the National People’s Congress (NPC), is nothing if not predictable. After all, this is the political body that has never actually voted down a policy.

Opening the 10-day jamboree (which, curiously, always seems to see the ethnic minority NPC delegates pushed to the front for photo calls - never let it be said China is not a diverse, equal and caring society), Premier Wen Jiabao hit all the expected buttons.

“The pattern of economic growth is inefficient,” Wen told the 3,000 delegates. “This can be seen most clearly in excessive energy consumption and serious environmental pollution.”

There goes that chemical plant they wanted to build in northern Anhui. And Shandong, Guangdong, Henan, et al.

And it’s not as if the provinces can simply nod in agreement and then do whatever the hell they want any longer. At least, not in theory. Wen noted that many of the problems are down to local governments that have failed to comply with environmental regulations and requirements.

The message is clear: the party’s over boys. China is no longer interested in growth at any cost.

(Incidentally, there is no reason why the message shouldn’t be clear. This mantra has been publicly polished for months now just so it would be nice and shiny for Wen’s big speech.)

The tighter leash to be placed on provinces previously committed to lightning growth is reflected in Wen’s GDP growth projection for 2007 - “around 8%”, down from 10.7% in 2006. Note the “around”. Based on Beijing’s track record, a projection of 8% means they will struggle to keep it below 9-9.5%.

As if things couldn’t get any worse for your provincial official who has grown fat on the government’s tab, Wen added: “Quite a few local governments, government offices and organizations compete with one another for lavishness and spend money hand over foot, which arouses strong public resentment.”

Cue the hearts and minds section of the address, complete with the prerequisite reference to “building a harmonious countryside”. Down with corruption, down with the rich-poor divide and up with farmers’ incomes, buoyed by better education and medical care.

Expect more on the “new Socialist countryside” Tuesday, courtesy of a news conference starring officials from the Chinese People’s Political Consultive Conference.

Come Wednesday and it’s back to controlling the growth express train, with your friendly ticket collector Ma Kai, director of the National Development and Reform Commission.

Premier Wen Jiabao wrote in an article in the People’s Daily this week that democracy in China will only emerge once the socialist system matures, which could take up to 100 years.

Wen’s comments concentrated on two areas: what China needs to do now, and the reality of what China is ready for. Since China is not yet a mature socialist society, the reasoning goes, it is not ready for democracy. Running through the article is a common theme the Communist government is quick to remind us of: China is still a developing country. Of course this is true, but one cannot help but view it as an excuse not to provide real answers.

But it is a familiar line. China’s leaders have always been swift to smother criticism of their authoritarian style, saying that the current socialist system is not incompatible with democracy, it just needs time to mature, in this case 100 years or so. Currently, the central government refers to its National People’s Congress as a part of the democratic process. Wen subjectively labels China’s current socialist market economic system and legal system as not “perfect enough,” stating that “social injustice and corruption,” still exist. It’s good that he’s aware of the problems, but his comments on social injustice do not address how the opaqueness of the current political system contributes to these problems, nor does he provide any details as to how the so-called maturing process will take place.

Leaders in Beijing may theorize that the road to democracy for China goes through a “mature socialist system”, and that “a highly developed democracy and a complete legal system are inherent requirements of the socialist system and important symbols of a mature socialist system,” but reality shows a flaccid foundation for any hope of real answers from Beijing. Wen says China will democratize in its own way as it opens up. Hopefully, such openness will extend beyond just the economy.