Two Sessions, China’s most important annual political event, ended last week with a promise of stability, clean, green and quality growth, more transparency and more power to the grassroots leaders. More than 5,000 delegates of the National People’s Congress (NPC), the national legislature, and the Chinese People’s Political Consultative Conference (CPPCC), the top political advisory body, assembled for a week in Beijing.
The grand gathering of deputies took a number of decisions in line with China’s 14th Five-Year Plan (FYP) for 2021-2025, the strategic blueprint for the next half decade, as well as with longer-term goals for 2035 adopted last year.
The theme of ‘quality of growth rather than quantity of growth’ echoed in the Two Sessions this year. However, Chinese leaders remained focused on stability as President Xi Jinping contrasted the ‘orderly governance of China’ with ‘the chaos of the West’.
Stability and progress have been emphasised as the key words for the year. The Government Work Report (GWR) mentioned the words stable and stability around 50 times, and “quality” about 30 times.
“We must make economic stability our top priority and pursue progress while ensuring stability. In the face of new downward pressure, the task of ensuring stable growth needs to occupy an even more prominent position,” says the GWR report.
The key focuses of the 14th FYP are quality of growth, self-reliant technological and manufacturing development, drive towards a low-carbon economy, achieving “common prosperity”, moving ahead with gradual liberalisation of the business environment, elevating China’s role in regional and global economic governance. The two sessions 2022 reaffirmed all of these goals and targets towards high quality development and stability.
The GWR set the GDP target at around 5.5 per cent, below the last year’s 8.1 per cent — owing to the ongoing pandemic concerns and international situation. However, it is still higher than the rates predicted by different agencies. Economists at Goldman Sachs believe the percentage of growth would be around 4.5 for China this year.
Still, the GDP target will require substantial government spending, and strong efforts to boost the private sector as Chinese Premier Li Keqiang said, while presenting report, “achieving this goal will require arduous efforts.”
The Chinese government has set economic and social development goals for 2022, such as creating more than 11 million new urban jobs, keeping Consumer Price Index growth at around 3.0 per cent, and decreasing the deficit-to-GDP ratio from 3.2 to 2.8 per cent.
This year, the Chinese central government expenditures will rise by 3.9 per cent, but the budgetary spending of the central government departments will continue to register negative growth. The central government transfer payments to local governments will come to close to 9.8 trillion yuan (approximately US$1.54 trillion). This figure represents a growth of 18 per cent, or around 1.5 trillion yuan ($240 billion), and is the largest increase in recent years.
China aims to improve income in remote and rural areas among low income groups, to expand middle income, as well as to improve taxation by adjusting excessive earnings and prohibiting illicit incomes. The promotion of philanthropy was proposed as a top priority in the two sessions. The central government will provide greater fiscal support for local governments and allocate fiscal subsidies directly to the prefecture and county levels. Local governments and relevant departments should develop sound systems to allocate funds more effectively.
As China advances in its efforts to cut carbon emissions, public awareness on issues such as climate change and the linear economy will visibly increase — something that will affect global luxury brand’s day-to-day operations and supply chain requirements. Li Keqiang said they will promote development while also reducing emissions, and ensure greater harmony between humanity and nature.
Response to climate change in the form of China’s “dual carbon goals” (namely, reaching its carbon emission peak before 2030 and become carbon neutral by 2060) was re-affirmed during the meetings. More importantly, Li Keqiang highlighted China’s ambition to transition from relative emission targets; such as emissions per unit of GDP to absolute emission targets. The government proposed measures to improve energy efficiency, including those of coal-fired power plants, while at the same time promoting renewable energy. The re-affirmation of the goal to move from relative to absolute emission targets is significant.
As China enters a high-quality development stage, the GWR listed four pillars for the digital economy: promoting technological innovation; optimising and upgrading industrialisation; breaking through supply constraints; and qualitative growth.
The Chinese government proposed to increase the proportion of R&D (research and development) expenses for science and technology-based small and medium enterprises and to focus fiscal efforts on investment in energy, transport and urban infrastructure upgrades. The proposed infrastructure spending includes key water conservancy projects, transportation networks, energy facilities, pipeline networks renovation, and flood control and drainage facilities.
Though the pandemic has slowed down BRI projects, China remains committed to the principle of achieving shared growth through consultation and collaboration. “We will aim for higher-level cooperation, better cost-effectiveness, higher-quality supply and stronger development resilience, to make the BRI a “belt of development” to the benefit of the world and a “road to happiness” for people of all countries,” State Councilor and Foreign Minister Wang Yi said in a press conference during the sessions.