China: What To Expect From The ‘Two Sessions’

China's main annual political meetings known as the Two Sessions take place next month, with the Chinese People's Political Consultative Conference (CPPCC) on 4 March and the 13th National People's Congress (NPC) the following day. The government work report is the main focus of the NPC as it will prioritize the policy agenda for 2021, which is the first year of the 14th Five Year Plan. This article previews what we expect and don't expect from the Two Sessions this year.

Background to this year’s Two Sessions

In our note back in November, we discussed the main points of the 14th Five Year Plan of China, and we said that implementation was important. In another note, we analyzed China’s goal of becoming an advanced economy by 2035 – which means approximately doubling its GDP level from 2020 levels. On top of this, China has pledged to become a net-zero CO2 emission economy by 2060.

This year’s Two Session meeting is the first in the 14th Five-Year Plan. The meetings will set out actionable steps to achieve the policies of the five-year plan, doubling of the economy, and decarbonization of the economy.

What we expect from this Two Sessions meeting

From the central economic work conference, we understand that the policy priorities in 2021 will differ from those in 2020. These differences stem from the low number of Covid-19 cases in China and the challenging international politics that affect technology businesses. The government would also like to use the recovery as an opportunity to resume its deleveraging reform, but it needs to ensure that domestic demand continues to grow sufficiently to offset the economic losses from these reforms. Policy actions will also include a roadmap on how to achieve carbon neutrality by 2060.

Table: comparison of top 5 policy priorities in 2021 vs 2020

Source: ING 

No GDP growth target

With Covid-19 outside China still widespread, the proliferation of new virus variants, uncertainty over the effectiveness of the current cohort of Covid vaccines, and ongoing international tensions affecting Chinese companies, it is difficult to see how the Two Meetings will be able to set a GDP growth target. Instead, the government will place a greater emphasis on “high quality” growth.

1 2
View single page >> |

Disclaimer: This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does ...

How did you like this article? Let us know so we can better customize your reading experience.


Leave a comment to automatically be entered into our contest to win a free Echo Show.