Hello and welcome to DEEPER LOOK.

I'm Del Irani, it's great to have your company.

China's President Xi Jinping is cementing his grip on the government.

The National People's Congress held their annual meeting this month and of the major outcomes announced -

an economic growth target of 5 percent was set for the year.

The delegates also passed a revised law which calls on the Chinese government

to uphold President Xi's guiding principles and ensure the continued leadership by the Communist Party.

So, what message was President Xi trying to send through this annual political event?

What exactly is President Xi's strategy and how should the US and its allies respond?

Joining me now is a scholar who spent her professional life studying China.

She's an expert on China's domestic and foreign policy,

and is a senior fellow at Stanford University's Hoover Institution.

Until recently, she was the Senior Advisor for China at the US Department of Commerce and she joins me now.

Welcome to the program. Elizabeth Economy.

Great to have you with us.

Great to be here, Del. Thank you so much.

So, Elizabeth if you could use only three words,

how would you describe this year's National People's Congress?

I suppose first, maybe just significant, because the NPC is always significant.

It gives us a good sense for the way that the Chinese leadership is thinking about the economy,

more broadly, sort of socio-economic trends.

So it's always important to pay attention to what comes out of the NPC.

I might also say it was a bit of a snooze fest, though.

Because in many respects, there wasn't really much new out of this NPC.

You know, we saw a similar economic growth target to the one that they had for last year.

Many of the initiatives are just things that have been sort of a retread from before.

You know, more investment into advanced manufacturing.

And then maybe, I'd say it was strange.

So maybe three 'S's. Right?

Strange because Premier Li Qiang did not give a closing press conference, he didn't hold a closing press conference.

That's the first time in two decades that that hasn't happened.

And I have to say, you know, I've met Premier Li Qiang.

He is perfectly capable of conducting a press conference.

He's articulate, he's intelligent.

So I guess the question is what does that signal that he didn't hold that press conference?

What message do you think Chinese President Xi Jinping was trying to send to the world this year?

I think what came through most clearly was just, you know,

China's on track, you know, 5.2% growth...and we're investing. We're all in.

We're all in on R&D, we're all in on Chinese military, and we're all in on advanced manufacturing.

And so you know, notions of any kind of further economic reform and opening up,

notions of a big push into social welfare, notions of we want to do something for the Chinese consumer.

I think all of those things really were largely left off the table.

And so I think this was a very significant, you know, we are all "in;"

in the direction that Xi Jinping has been leading this country.

This is the direction we're going to continue to go.

What impact does the Chinese slowing economy have

in terms of how the Chinese people view their leader and view Xi Jinping?

Do you think that it's going to affect public perception and, you know,

change the way that they feel about the government and their leader?

I think once you end up in a situation where over a period of many years, right,

you see that the government is not addressing your problems.

You see that the two places where you can put your money, namely,

the property sector or the stock market are both failing you, right.

You see that your children - don't - are not likely to have a life that is better than yours.

I think all of those things then begin over time to change a consciousness.

And so I think, you know, one thing I've been thinking a lot about, frankly,

is this idea of polarization in China.

And that we don't necessarily appreciate the extent to which China is actually a highly polarized society.

Polarized along gender lines, right.

So opportunities for women have become more constrained under Xi Jinping.

Polarized, obviously, along income, right, where China is as unequal a society as the United States.

If not more so.

And a polarized I guess I would also say,

between what you might call a creative class, right.

The entrepreneurs and intellectuals whose jobs depend on coloring outside the lines, and the bureaucratic class.

And so I think you have a situation now where that, that kind of feeling that these groups are,

in some ways, being left out, right, of the process of moving forward, moving the country forward.

And that that diminishes first of all their own enthusiasm for what's going on.

But also it deprives the government, the country of all of the energy and creativity

that can come from these marginalized parts of society.

So, I think there are a lot of longer term, slow gestating, changes in the society,

in the political economy that we should be paying more attention to, than we have.

That actually have some pretty big implications for China's future.

Elizabeth, you were senior adviser, until recently, to the US Secretary of Commerce, Gina Raimondo,

and you accompanied her on a four day high level visit to China back in 2023.

This came just before that, you know, high level meeting between President Xi Jinping and President Biden,

how open were they to meeting with their American counterparts and having serious conversations about trade?

Yeah. Honestly, that trip could not have been better.

And the Chinese were extremely gracious and welcoming hosts.

There was no kind of polemical...

There were no polemical attacks, there was no discussion of Taiwan or red lines.

Or... it was all about, let's try to get this bilateral commercial relationship back on track.

I think the challenge is, at least one challenge, I would say, is that, you know,

we saw this one incredibly important slice of the Chinese bureaucracy,

but we didn't really... it's not like we had meetings with the Ministry of State Security, right,

or the people in charge of the cyber sort of commission.

So, you know, even as I think the economic ministries and you know,

and part of the bureaucracy is incredibly interested in improving the bilateral economic relationship.

I think there are other parts of the Chinese government that are not that interested.

And, I think, they have been empowered.

And that's why you see all these laws and regulations that are basically designed to crowd out multinationals.

And this isn't even just about the United States and China.

This is about China, and all multinationals.

Do you get the impression that the Chinese believe it's possible to have close relations with the US

while these tariffs and export, you know, measures are still in place?

I think, certainly with the tariffs.

You know, they've been in place since the Trump administration.

And I think they're baked into the relationship right now.

And, you know, whether you think it's a good idea or not,

I think the Chinese, you know, have the sense that they're baked in.

What they don't want to see is, you know, the Trump administration come in and slap on more tariffs!

That would that would be a game changer.

I think the tariffs, though, are kind of here, there - they're set.

The export controls, right, and the new inbound or outbound investment restrictions,

I think they are struggling with those.

China has made it well known, like the relationship between national security and the economy in China,

and the sort of expansive nature of that relationship where national security covers so much of the economy, right,

anything related to social stability, right.

So it's everything basically, is well known.

And that the expectation is the United States is not like that.

So from their perspective, right, we've changed the rules of the game.

It doesn't matter that what we're doing in some way is no different

and still much less than what they do to US companies.

What matters is that we're not the US that they had come to expect.

If there's blame for the friction around these issues does rest with the United States.

I think that we need to do, and should do a better job of explaining - here are the tools.

Here is how we are using them. Because the tools are different. Right.

So you mentioned export controls, you mentioned tariffs.

Export controls, are tied to national security, they're tied to democratic values.

So related to surveillance technologies, you know.

We have the de-risking around economic security, supply chain issues, that... a lot came out of COVID, right.

It's focused on semiconductors.

Then you have the tariffs.

Those are issues of economic competitiveness, and trying to ensure that we have a level playing field, right?

Because the sense is that our companies do not have a level playing field in China.

And we need to redress that imbalance.

So, I think to begin with, you know, we need to do a better job of explaining what we're doing, why we're doing it.

But I also think China, which is not very good at this typically, needs to take a look inside itself. Right.

And acknowledge that in many respects, this is just the United States playing catch up.

What is President Xi's vision for the Indo-Pacific?

And just how committed is he to this vision?

I mean, what's he willing to do to realize this vision?

I think, you know, for the Indo-Pacific, in particular, I think, having the United States out,

as the dominant power, as the dominant security player is a high priority.

So if you look at the big initiatives that Xi Jinping has put out there over the past just two or three years,

you know, the Global Security Initiative, the Global Development Initiative, the Global Civilization Initiative, right,

building off of also the Belt and Road Initiative from 2013.

All of them have sort of embodied within them elements of deconstructing the current international system.

And by that I mean, you know, changing the priority or the belief in universal human rights.

So development is the number one priority.

Without that you shouldn't even be talking about, you know, universal human rights.

The Global Security Initiative, basically, at the heart of the Global Security Initiative,

is the end of the US-led alliance system.

That's what that's about, right?

It's this notion that we have dialogues, and we negotiate, and we come to peace, but we don't have hard alliances.

So, I think he is relentless in his drive, to transform the international system, you know.

And this is built on many, many other efforts within the United Nations,

to sort of transform norms to insert Chinese, you know, programs like the Belt and Road Initiative into the UN

to make it as though the UN and China are completely aligned in what they're doing.

But in the end, what he's trying to do is to subvert the current international system, and replace it with,

you know, a Chinese-centered system, or certainly one that's not dominated by the United States.

How should the US and its allies in the region respond to China's goals?

And do you think that the US and its allies are currently responding effectively and, you know, accurately?

So I think there's been an important progression from the Trump administration, which I think did,

in fact, recognize the seriousness of the challenge that China was presenting in a way that previous administrations did not.

So a kind of a wake up call.

In terms of the response of the US - not ideal, right.

I think the Biden administration has, and not simply because I was in it,

has done a much better job of reasserting US leadership in important ways,

working with the European Union for the US-EU Trade and Technology Council,

building up the Indo-Pacific Economic Framework, which is, you know,

was in large part of Commerce, Department of Commerce initiative, right,

with our partners, you know, 13 other countries in the Indo-Pacific.

Bolstering the Quad, right, with India, Japan and Australia.

Engaging other countries in Quad-related activities, AUKUS.

But I think there's another whole level of competition in response to what I just mentioned,

with the Global Security Initiative and the Development Initiative and the Belt & Road,

there's a whole another level of competition that the United States also needs to respond to.

And fundamentally, that's a competition for what does the world look like in 2050?

Because China has that vision. Right.

And the United States, I don't think, has fully articulated that vision.

So to be able to articulate - here's what we want the world to look like,

here's our inclusive world vision to the rest of the world, why you want to come along with us,

and we're listening to what you want and we want to work together.

That's what the United States has left to do, I think.

Elizabeth Economy, thank you so much for your time and insights.

It was great to have you on the program.

My pleasure. Thanks so much.

Most analysts agree that, at least for now, the US-China relationship appears stable but tense.

Washington and Beijing are acutely aware of the sensitive year ahead,

with the US presidential election in November.

How exactly this will impact trade and relations

will only be revealed in the coming months.

I'm Del Irani, thanks for your company.

I'll see you next time on DEEPER LOOK.