What to expect from China’s 2016 NPC & CPPCC Sessions

China’s top lawmakers and political advisors will convene in Beijing this week for the annual meetings of China's top legislative and consultative bodies - the People’s Political Consultative Conference (CPPCC) and National People’s Congress (NPC) - which will commence on Thursday 3rd March with the NPC meeting beginning two days after the opening of the CPPCC. Lianghui, as the two meetings are commonly known, is one of the most important annual events in the Chinese political calendar and will bring together some 5,000 delegates who will discuss and determine a host of policy matters over the next 12 days.

This year’s sessions will have special significance with the country’s legislature, the NPC, expected to endorse China’s 13th Five-Year Plan, the first under the leadership of President Xi Jinping. This far-reaching plan aims to set the nation's course for the next five years. The plan’s social, economic and political measures will have a deep impact on the business landscape, both within China and in countries that do business with China.

As the landmark event approaches, we list some of the key political, economic and social points of interest which are likely to develop throughout the sessions:

 

  • China’s Growth Target for 2016

Last year, China struggled to reach its economic growth target of around 7%, its weakest rate in 25 years. With this in mind, China’s leadership is expected to target economic growth ranging between 6.5% and 7% this year, setting a range for the first time, a sign of the uncertainty surrounding the country’s economic prospects. The 6.5% cap reflects the minimum average rate of growth needed over the next five years to meet the party’s centenary goal of “comprehensively building a moderately prosperous society by 2021”.

  • 13th Five-Year Plan: ‘Innovative, Coordinated, Green, Open and Shared by All’

Articulated around five key development themes - “Innovative, Coordinated, Green, Open and Shared by All” - the soon to be released 13th Five-Year Plan is expected to reaffirm the core concepts introduced last October during China’s Fifth Plenum, designed to help China achieve its 2020 economic goals. With innovation at the core of China’s overall national development, the Chinese government will look to further stimulate the private sector as well as look to its Made in China 2025 plan to help upgrade the manufacturing industry and help drive it up the global value chain.

  • Supply Side Economics with Chinese Characteristics

For the past few months, President Xi has been urging supply side economic reforms in order to rebalance China’s slowing economy. While the slogans have been catchy, not many details have emerged on how they will look to achieve these reforms beyond sweeping generalizations about raising productivity and spurring growth. China watchers will be following lianghui closely for concrete signs of a real turnaround in policy which would help China rebalance the economy and liberate itself from its excess capacity in areas which include heavy industry sectors.

  •  Financial Reform

In 2016 so far, with Chinese stocks taking a further battering, capital outflow levels at record highs and the yuan showing no sign of strengthening in the long term against the US dollar only increases the pressure on China’s leadership to alleviate market concerns through sound policy making and implementation. One issue to keep an eye on is that China’s 13th Five-Year Plan may look to target 2020 as the date for yuan convertibility on the capital account, marking a major shift from the current system of quota-controlled cross-border flows, with far-reaching implications for China and the world.

  • Going Green

On the back of commitments made at December’s COP21 in Paris, expect greater attention to be paid to the promotion of green production and green consumption, with energy diversification widely anticipated to be incorporated into the 13th Five-Year Plan through a large scale restructuring of the energy industry, increased investment in renewables, improvements in grid connectivity and production side efficiencies. By doing so the CCP will attempt to herald an era of "ecological civilization", calling for a new type of growth that is more holistic and balanced than focusing on high growth industrial development as seen in the past decade.

  •  Social Reform & Poverty Alleviation

One of the most decisive announcements to come out of last October’s Fifth Plenum was the decision to end the one child policy, demonstrating that China is finally facing up to its demographic time-bomb of a declining birth rate, an aging population and a shrinking workforce. China’s leadership is also expected to address growing public demands around healthcare, better education, bigger pensions and other services, as well as income inequality and poverty alleviation, in line with the goal of  becoming a fully developed nation by 2049 – the 100th anniversary of the founding of the People’s Republic of China.

  •  Military Spending

As regional tensions with the US over the South China Sea continue to increase amidst a widespread reorganization of the People’s Liberation Army (PLA), military spending has continued to rise in recent years. With last year’s budget confirmed at over 10 % - outpacing slowing and single-digit GDP growth - expect to see another double-digit rise announced at this year’s lianghui.

  • “Community of Common Destiny”

As China’s military growth strengthens, Beijing also intends to show its neighbors a softer image by emphasizing community and a shared fate in its diplomacy. A phrase repeatedly used by President Xi and seen as a bedrock of China’s continued rise as a major international force, “community of common destiny” aims to ensure a peaceful and stable neighboring environment, achieved in part through exerted Chinese – primarily economic – influence, notably through the “One Belt, One Road” initiative. Coming hot on the heels of President Xi’s visit to the Middle East in January, expect to hear plenty of rhetoric around this key pillar of China’s foreign policy throughout the sessions.

  • A Rejuvenated Party

References to CCP governance are set to feature prominently as President Xi continues his quest to rejuvenate the party as he aims to reconnect it with Chinese society whilst revitalizing its role as the main driving force behind China’s modernization process.

  • Xi’s Anti-corruption to Roll-on

As President Xi tightens his grip on party affairs, the meetingswill most likely reaffirm his now 3 year-long anti-corruption campaign, a campaign that has seen disciplinary action directed towards thousands of officials to date. Expect China’s leadership to call for continued efforts in combatting corruption and for the party to be strictly governed so that officials“don’t want to be corrupt, don’t dare to be corrupt, and couldn’t even if they wanted to be”, as was the case during China’s Fifth Plenum last October.

 

Philippe Healey and Peter Folland, and the GPA Team, Beijing, China

Peter Folland

Hill & Knowlton Strategies Search