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As thousands of delegates from across China arrive in Beijing this week to participate in the annual parliamentary session, there is a barely perceptible shift in the mood in the capital. Though few ordinary Chinese pay much attention to goings-on inside the Great Hall of the People, the imposing 1950s modernist building that flanks the western edge of Tiananmen Square, the ripple effects of this week’s conclave can be felt across the city.
Security is heightened. Extra uniformed personnel have been deployed to stand guard on Beijing’s bridges – lest anyone attempt a stunt inspired by Peng Lifa’s protest at Sitong Bridge ahead of the 20th party congress in 2022. Guards at busy subway stations subject commuters to random scans of their identification cards.
Virtual private networks – apps used to tunnel through the firewall of internet censorship – slow down, as the authorities try to tighten their grip on the exchange of information with the outside world. It is imperative to the Communist party that the parallel sessions of the “Chinese People’s Political Consultative Conference”, an advisory body, and the National People’s Congress (NPC), China’s rubber-stamp parliament, run smoothly. Put together, the meetings are known as the Two Sessions, and represent the most important annual event in China’s political calendar.
From Beijing, the outside world appears to be in flux. China’s claim to be the beacon of stability in a chaotic world is being bolstered by events. The presidents of the US and Ukraine are trading verbal blows live on television; the US-backed ceasefire deal in Gaza is on the brink of collapse.
China, save for a few headlines about tariffs, is staying out of the news. The tariffs themselves are generally far from the public consciousness, despite the fact that China is expected to impose another round of countermeasures on the US on Tuesday, after Donald Trump threatened Beijing with an extra 10% duty.
The trade war “won’t influence me”, said Wang Zichen, an 18-year-old salesperson working in Beijing’s upmarket Chaoyang district. The US and China “are just having some problems and need a solution … [the US] is a friendly country”. Wang is more interested in hustling for his next customer. Business is slow. Total sales of consumer goods in Chaoyang dropped by 4% in 2024, while sales of commercial and residential property fell by 10% and 13% respectively, when measured in square metres.
China was supposed to roar back from the pandemic as consumer spending was unleashed, but most people on the street agree that hasn’t happened. Real estate prices are falling. Millennials and Gen-Z workers are struggling to find work and even the middle-aged, including people with their own young children, are sitting at home without jobs. They, like the younger generations, are tangping, or “lying flat”: choosing passivity in a society that doesn’t feel like it is rewarding hard work. Young parents even talk of kenlao, or “eating the old” – living off their elders who have healthy state pensions.
This kind of economic nihilism is exactly what Beijing wants to combat. High on the agenda for this week’s NPC will be fiscal stimulus. In December, the Central Economic Work Conference, an economic planning session convened by the CCP politburo, stressed the need to stimulate consumption and stabilise economic growth.
When the Chinese premier, Li Qiang, delivers the government work report at the NPC’s opening session on Wednesday, analysts will be watching closely for the GDP target for 2025, expected to be 5%, and for details on the directions set by the CCP at the end of last year.
With the first shots of the US-China trade war fired since that December meeting, Beijing is under pressure to find ways to shield its economy from the impact of tariffs. In 2024, China’s economy reached its GDP target with the help of an end-of-year export boom. Exports to the US in December increased by 15.6%. With tariffs back on the menu, economic growth built on exports will be harder to pull off in 2025.
China’s economic boom was built on infrastructure and policies that prioritised GDP growth above all else. Then it turned to manufacturing, becoming the “factory of the world”. Now China’s leaders want to pivot the economy towards “new quality productive forces”, a phrase coined by China’s leader, Xi Jinping, in 2023. That means focusing on investment in innovation and hi-tech sectors.
And in 2025, that means DeepSeek. The upstart Chinese AI company took the world by storm in January when it released an AI model that emulated the sophistication of leading American competitors, seemingly at a fraction of the cost. DeepSeek’s debut wiped a record $1tn off US tech stocks as investors reeled from the revelation that the US may not keep its leading position in AI for much longer.
DeepSeek, a private research firm bankrolled by a hedge-fund entrepreneur named Liang Wenfeng, achieved its success without state backing. But the state has since embraced Liang and his company. Last month, Xi held a rare in-person meeting with tech leaders in Beijing, with Liang reportedly present.
While Liang is burnishing his connections in the capital, his company is everywhere. The technology giant Baidu is integrating DeepSeek with its own large language model, Ernie, with DeepSeek already being embedded into Baidu’s apps. Beijing commuters consult DeepSeek’s chatbot while huddling on crowded subway carriages.
Western diplomats report that Chinese officials are mentioning DeepSeek’s potential at every possible opportunity. The local public transport authority in Shenzhen, China’s southern tech hub, has started using DeepSeek in its AI-powered customer service agent, and claims to have increased efficiency by 50% as a result.
There is no doubting a spring in the step of Chinese policymakers tasked with promoting Xi’s beloved “new quality productive forces”. The delegates to this week’s Two Sessions will have to hope that such optimism in the corridors of power can spread on to the streets of Beijing, and beyond.
Additional research by Jason Tzu Kuan Lu
