The annual meetings of the Chinese People’s Political Consultative Conference (CPPCC) and the National People’s Congress (NPC)—collectively known as the “Two Sessions”—took place between March 4 and March 11.
China is confronted with a series of complex challenges in 2022, from sporadic local COVID-19 outbreaks to weak consumption growth and external tensions. The upcoming 20th Party Congress makes addressing these problems a matter of even greater urgency. As a result, stability emerged as the paramount priority for the government at this year’s Two Sessions, with the Government Work Report and the speeches of senior legislators repeatedly underlining its importance.
The focus on stability did not forestall the return of an ambitious annual GDP growth target—set at about 5.5%—nor neglect other priorities, with increased stimulus measures expected to support the objectives of the 14th Five-Year Plan (2021-2025), including support for Micro, Small and Medium Enterprises (MSMEs). Praise for the “effective and quick” suppression of local COVID-19 outbreaks also reinforced expectations that China’s stringent pandemic controls are unlikely to change in the near term.
The government emphasized its commitment to long-term reform initiatives, such as indigenous innovation and digitalization. China will also continue to implement policies aimed at achieving “common prosperity,” despite the fact that this year’s government reports carried few direct references to the term. However, unlike last year, energy intensity will not be subject to a specific target but will instead be assessed with “appropriate flexibility,” though China’s long-term climate goals remain unchanged.
Opportunities exist for companies that are able to demonstrate their ability to support the country’s development goals and objectives. The 20th Party Congress later this year will provide further clarity on the country’s development trajectory and the key priorities with which foreign businesses will need to align.
What Multinationals Need To Know
- Economic Stability Is the Main Priority for 2022. Domestic economic and social challenges, as well as a turbulent external environment, mean China will focus on economic stabilization measures in the coming year. These will include relief policies for MSMEs, measures to stimulate consumer spending, and innovative financial controls to prevent systematic risks.
- The Government Set an Ambitious Growth Target in Spite of Headwinds. Having achieved 8.1 % economic growth in 2021, the government aims to expand GDP by “around 5.5 %” this year. It acknowledged that meeting this target “will require arduous effort,” as it sits at the high end of market expectations.
- Indigenous Innovation, Digitalization and Decarbonization Remain Long-Term Commitments. In line with the priorities of the 14th Five-Year Plan (2021-2025), China will strive to achieve breakthroughs in core technologies, support its digital economy, and transition to a sustainable high-quality development model. In a break with previous years, however, the government avoided setting an energy intensity target, signaling a shift to more flexible and pragmatic decarbonization policies.
- Despite Core Tensions, the Door Remains Open for U.S-China Cooperation. Alongside the standard divergence on issues including human rights and Taiwan, in his annual foreign policy speech, Foreign Minister Wang Yi invited the U.S. to “set out on a new journey” and focus on areas of cooperation.
- Stringent COVID-19 Controls Will Stay for Now. Ongoing sporadic COVID-19 outbreaks mean there will be no significant departure from the present “dynamic zero” strategy. The possibility of small adjustments later in 2022 remains.
Read APCO’s full analysis of the 2022 Two Sessions, including sector-specific analysis and foreword by James McGregor, below and click here to download a copy.