China’s two sessions to flesh out economic roadmap

By Li Xuanmin (Global Times) 12:18, March 04, 2024

Lujiazui area in Shanghai Photo:Xinhua

Lujiazui area in Shanghai Photo: Xinhua

China will officially kick off the annual two sessions on Monday, one of the most important political gatherings for the year that will set the tone for the country's policy priorities in a wide range of sectors from the economy, diplomacy, military to social development.

The pivotal event is being convened against the backdrop of a complex international situation, rising geopolitical tensions and a year fraught with presidential elections, which cast tremendous uncertainties on global economic outlook. This year marks the 75th anniversary of the founding of the People's Republic of China. Internally, China is also embarking on a significant year in the implementation for the 14th Five-Year Plan (2021-25) and a march toward Chinese modernization, an overarching goal under which economic engines are expected to not only rev up but also be driven by "new productive forces."

So the stakes of how the two sessions flesh out a roadmap for China's economic development are high, observers said, as it will also have a far-reaching impact in shaping the global economic and political landscape. China's economic recovery trajectory would also instill stability and predictability into the world, they noted.

A cluster of economic topics are high on the agenda, including GDP growth target, deficit-to-GDP ratio, fiscal and monetary policies as well as employment. Meanwhile, deputies and political advisors told the Global Times that they're keenly gauging on policy elaborations involving boosting private economy, creating "new productive forces," as well as deepening financial market reform, among other things of public concerns.

The second session of the 14th National Committee of the Chinese People's Political Consultative Conference (CPPCC), China's top political advisory body, will begin at 3pm on Monday and close on March 10 morning, lasting for six days, Liu Jieyi, spokesperson for the second session of the 14th CPPCC National Committee, said at a press conference on Sunday, one day ahead of its annual session.

The second session of the 14th National People's Congress (NPC) will open in Beijing on March 5.

Setting key economic goals

Economic issues have been a focal point for political advisors, and it is the opinion of all political advisors that in 2023 the Chinese economy withstood external pressure and overcame internal difficulties, Liu said, noting the economy has been on a general recovery track.

"Looking to the future, the Chinese economy is resilient, has huge potential and vitality and its growth momentum will continue to strengthen and lead to a bright future," Liu noted.

One of the most widely watched economic goals for the upcoming two sessions is the GDP target, as China, while sustaining a good economic recovery momentum, still faces a bunch of downward pressures ranging from insufficient demand, weakening social expectation and property downturn that could weigh on economic development prospect this year.

Deputies and economists said the GDP narrative will set a beacon for this year's economic work and accompanying measures. It also sheds light on how the Chinese government makes a comprehensive calculus on balancing off a number of goals including stabilizing employment, preventing risk, improving people's livelihoods, lifting social expectation, while coordinating with targets outlined in the 14th Five-year Plan (2021-25).

Observers said the GDP target could be set around 5 percent, which will show the policymakers' "pragmatism and bottom-line thinking." It will also take into account the growth targets put forward at the local two sessions since the beginning of the year.

Also, "it is important that the GDP growth goal should be set almost the same as last year's level, or even higher, for the world's second-largest economy to continue a high-quality development path," Cao Heping, an economist at Peking University, told the Global Times on Sunday.

The 14th Five-year Plan (2021-25) stated that the country will "keep the average annual growth of GDP within an appropriate range, and set annual targets for GDP growth on the basis of actual condition."

"We're closely watching the government's attitude toward the progress of the 14th Five-year Plan (2021-25) … We also expect the government to take the climate target seriously, and more green policies are expected in the next two years," Xing Zhaopeng, a senior China Strategist at ANZ Research, said in a note sent to the Global Times over the weekend. Xing stressed that China's economic goals will add certainty to the world economy, and China will continue to be the largest contributor to global GDP this year.

How China will phrase its fiscal and monetary policy direction is another focus on the market's radar. Xing expects the deficit-to-GDP ratio to be set at 3 percent.

Some economists also predicted that this year's budget deficit could hover around 3.5 percent to 4 percent, with doubled-down fiscal stimulus amid the country's low interest rate environment and a near-end to global interest rate hikes cycle that could see drops in borrowing costs.

"This year will be a transitional year for the massive implementation of supportive policies, both in macro fronts and subtle areas that are conducive to fine tune the country's economic structure, after a new cabinet lineup was unveiled during last year's two sessions," Cao said. He added that China also undertook a reform on Party and state institutions last year, which signals that policies from the central government will be carried out more effectively and swiftly.

Tian Yun, a veteran economist based in Beijing, told the Global Times on Sunday that with the presidential elections in the US and some other 60 countries this year, as well as lingering geopolitical tensions that wreak havoc on the global supply chain, the global situation may become even more complicated this year.

"The volatile external environment calls for Chinese policymakers to maintain a strategic focus, to properly arrange economic work throughout the year and stay committed to executing them, so as to instill confidence and lift up market expectation," Tian noted.

China's economy grew by 5.2 percent year-on-year in 2023, staying above last year's official GDP target of around 5 percent. The deficit-to-GDP ratio is estimated to reach 3.8 percent last year.

Under the spotlight

Deputies and political advisors also expect this year's Government Work Report to expound the country's plan to create "new productive forces" - a new concept proposed by Chinese top leader in September and has emerged as a buzzword of heated discussion, with broad ramification for the Chinese modernization in the years to come.

"Creating 'new productive forces' is a decisive step in the economy's high-quality development course, against the backdrop of China's economic transition and sweeping tech revolution. It maps out a blueprint on the growth of strategic newly emerging and futuristic industries, and offers guidance into the intelligence, digitalization drive of traditional industries," Guo Guoping, a deputy to the NPC, and chief scientist of Origin Quantum, told the Global Times.

In the face of white-hot global tech race and the US-led relentless decoupling push against China's tech industry, creating "new productive forces" is also essential for China to make breakthroughs in cutting-edge tech sectors, such as artificial intelligence (AI), semiconductor and quantum computing, and achieve more self-sufficiency in certain foreign-dominated areas, the deputies said.

"The creation of 'new productive forces' will inject new impetus underpinning steady progresses in Chinese modernization," Qi Xiangdong, chairman of Qi An Xin Technology Group and a member of the National Committee of CPPCC, told the Global Times on Friday. According to his proposal shared with the Global Times, Qi urged private firms to play a pioneering role in facilitating the coordinating development of the tech industrial chain.

Also, a number of motions and proposals this year feature predominately on shoring up the confidence of the private economy. According to Liu, facilitating the expansion of the private economy is a tradition of CPPCC duty performance, and the political advisory body will also hold briefings on key issues involving "clearing up default payments to private companies."

According to a proposal the China National Democratic Construction Association (CNDCA) shared with the Global Times, the political party suggested the Chinese policymakers to speed up the formulation of private economy promotion law to improve legislation system concerning the private economy. CNDCA is one of China's eight noncommunist political parties.

"The private economy constitutes an important driver of employment and a non-negligible force in China's economic upgrade. In recent years, the vigor of the private economy has slipped to some extent due to both internal and external environment. It would be a much-needed boost to the confidence of private entrepreneurs if there's a law that guarantees equal market position of private firms as State-owned and foreign companies," Liu Yonghao, a member of the National Committee of CPPCC and chairman of New Hope Group, told the Global Times.

In addition, deepening reforms in key sectors are in the laser focus. Among them, how Chinese regulators respond to investors' concerns and push for deeper reforms in the equities market has garnered much limelight, amid recent turbulent ride of the stock market.

Authorities should conduct a series of reforms targeting the underlying systems of the capital market in line with the "market-oriented, law-based and internationalized" standard, in a bid to build the foundation for a healthy investment environment in China in the long run, Tian Xuan, vice president of the Tsinghua University PBC School of Finance, told the Global Times.

"We are interested to see how much emphasis will be placed on improving the business environment for foreign firms," EUCCC president Jens Eskelund told the Global Times, expressing hope for stepped-up efforts in the country's opening-up.

(Web editor: Tian Yi, Liang Jun)


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