Every March, the National People’s Congress (NPC), China’s top legislature, gathers in Beijing, alongside the concurrent session of the nation’s top political advisory body, the Chinese People’s Political Consultative Conference (CPPCC). Known colloquially as the ‘lianghui,’ or ‘Two Sessions,’ the elite conclave is one of the most significant annual political events in China, gathering around 5,000 delegates from across the country, including Party leaders, provincial officials, business executives, military commanders, and more. This year, the second session of the 13th CPPCC and the 13th NPC will respectively kick off on Sunday and next Tuesday – March 3rd and 5th – and then last for roughly 10 to 14 days.
We will provide you with regular updates throughout the Two Sessions and help you better understand what the outcomes may mean for your business. On the eve of the meetings, companies should be aware of the following:
- Managing China’s economic slowdown will likely be front and center. The ongoing deceleration will be factored into policymakers’ biggest goals – in particular, the annual GDP growth target is expected to be lowered to a range of 6-6.5%. Major new tax cuts may also be announced. However, businesses should not anticipate a broad-based stimulus program to be announced. Beijing remains cautious about the risks of returning to a credit-intensive model to fuel growth.
- The draft foreign investment law – which will replace the current laws that regulate JVs and WFOEs – is set to be reviewed and approved. The new legislation looks to strengthen protection for foreign investors’ intellectual property and prohibit forced technology transfers, addressing some of the biggest concerns of international businesses.
- Chinese foreign policy has faced greater pushback abroad as concerns over Beijing’s rising global influence have mounted. To a large extent, this has revolved around the Belt and Road Initiative, especially apprehensions about its future impact on some involved nations, as well as China’s ambitions to establish itself as a global technological powerhouse. The Two Sessions may hint at whether or not Beijing plans to stick to its current diplomatic course – or make policy adjustments to deal with the growing pressure overseas.
- The meetings will take place against the backdrop of the ongoing China-U.S. trade talks. These negotiations may well have an impact on what is announced – or not – at the Two Sessions as Beijing continues to sit at the bargaining table with Washington, particularly in terms of where China’s market liberalization efforts head to next. At the moment, signs look positive that an initial deal will be struck in the coming weeks. However, the degree to which such an accord would re-stabilize bilateral relations between the world’s largest economies in 2019 remains to be seen.
As the main event of the Two Sessions, the NPC, in particular, provides an important bellwether for taking stock of the Chinese leadership’s policy plans and strategic priorities for the year ahead as well as its assessment of China’s development over the preceding year. These are encapsulated in the government’s annual work report, the centerpiece document published during the NPC which is typically delivered by the premier on the opening day. In addition, the premier and foreign minister usually hold press conferences while various ministers participate in Q&A sessions and a number of other panels with representatives are also convened, all of which shed further light on China’s official agenda.
Although the Two Sessions is a carefully choreographed and stage-managed affair, the showcase political event provides international businesses with a rare glimpse into the inward workings of the Chinese government and its political and economic decision-making processes. Corporate leaders would be well-advised to closely follow the key outcomes from the meetings and work to discern Chinese officialdom’s policy leanings and priorities for 2019 and beyond. Doing so will help them to extrapolate the likeliest paths that China will take in the year ahead and plan their business strategies accordingly.