Vaguely akin to the Oscars, with the rich and famous showing off their loyalty to the Communist Party of China on the red carpet, China’s Two Sessions, or lianghui, can be bewildering for the uninitiated: lots of bold pronouncements, wacky ideas from celebrities, and a virtual (pun intended) isolation from the rest of the world as the government gets serious about unlicensed VPNs.
Previously the realm of economists, policy wonks, and seriously hardcore China watchers, the noises made at the Two Sessions are increasingly relevant for us China tech watchers, as more and more attention is paid to the sector both by entrepreneurs, billionaires, and governments.
The annual meeting of the Chinese People’s Political Consultative Conference (CPPCC) and the National People’s Congress (NPC) kicked off last earlier this month in Beijing.
Unlike the National Congress of the Communist Party, the most important political event in China, which is held every five years (usually in October), the Two Sessions is the perfect place for the famous and elite of all stripes to show off their pet projects. With a density of celebrities unavailable at any other time of the year, journalists from China’s state-run media are known for swarming delegates for an interview, soundbite, and even sometimes a selfie.
This year, missing from the lineup of prominent tech heads was Richard Liu, CEO of JD, who was accused of sexual assault last year in the United States.
For the eagle-eyed and stalwart China tech watcher, most of the platitudes and policies should come as no surprise.
Political status
The NPC is the de jure legislative body of the People’s Republic of China. In the West, it’s known for being a “rubber stamp” body; for many of the delegates, membership is more about status than actually passing legislation.
If the NPC is more about ceremony than substance, then the CPPCC is even more so. With even less actual power than their NPC counterparts, CPPCC delegates like to introduce policy proposals—some relevant to China’s needs, but many not—that are unlikely to go any further than this session.
For our purposes, what’s most interesting is examining which CEOs belong to which body:
- Pony Ma, founder and CEO of Tencent
- Dong Mingzhu, chairwoman of the consumer electronics giant Gree
- Li Shufu, chairman of Geely, one of the biggest Chinese carmakers
- Lei Jun, founder and CEO of Xiaomi
- Robin Li, founder and CEO of Baidu
- Wang Xiaochuan, founder and CEO of Sogou, China’s second search engine
- Zhou Hongyi, co-founder and CEO of the Chinese internet security company Qihoo 360
Curiously, Jack Ma has never been appointed as a delegate to either NPC nor CPPCC. Indeed, no one from Alibaba has ever appeared at the Two Sessions. Bytedance is also nowhere to be found, even though they are perhaps best positioned to bring China’s soft power abroad.
This doesn’t mean, however, that they are necessarily out of favor. Alibaba, as with all major tech companies in China, has many areas of preferential cooperation with the government, most notably blockchain solutions to prevent corruption and medical fraud.
Given the opacity of the decision-making process adopted by the government, it may be argued that other not-so-visible channels are opened for top companies to ensure some sort of communication, though not necessarily translating into cooperation.
Words are wind
As George RR Martin so wonderfully quipped in his Game of Thrones series, “words are wind.” Unless they’re followed up by action, they don’t count for much. And there’s a lot of words during the Two Sessions, much of which has a little actual impact on policy.
As cogently argued by Peter Mattis, words are how China’s governing party produces, promulgates, and promotes policy from the center down to the village.
Here’s a quick look at the words that tech representatives are using this year:
- Pony Ma: Greater Bay Area development, including a bank for fintech and a university; data privacy; manufacturing; “smart retail”; 5G; protecting minors;
- Robin Li: AI, specifically applied to transportation, medical records, as well as AI ethics; data privacy; US-China trade war;
- Li Shufu: methanol fuel and vehicles;
- Dong Mingzhu: robotics and chips;
- Wang Xiaochuan: healthcare reform and data transparency;
- Zhou Hongyi: cybersecurity, especially in AI and IoT. Zhou went so far as to call for a “national defense system”
- Lei Jun: 5G, IoT
Blockchain, very prominent last year, was nowhere to be found in 2019. On top of that, AI was featured in Li Keqiang’s work report, stating that the government wants to use AI to “accelerate China into a manufacturing powerhouse.” Industry 4.0, here we come!
Deriving a meaningful narrative from China’s deliberately opaque power politics requires a detail-oriented and meticulous effort to gather all the pieces of the puzzle. The fun of watching China’s system lies in how much it hearkens back to imperial politics, with the rapid ascents and falls from grace.
While much less volatile these days, mandates are still top-down and the Two Sessions gives us a glimpse into certain policy priorities for the year as well as where tech companies will be focusing.