China’s Lianghui (Two Sessions, namely National Congress of the People’s Representatives, or NPC, and Chinese People’s Political Consultative Conference, or CPPCC) convenes in Beijing every Spring. This year’s proceeding of this important political event is especially significant, both home and abroad: it is the highest profile political gathering after the easing of COVID policy in China, as the country’s priority pivots towards development.
Furthermore, Lianghui has enshrined the Party Congress last autumn, when China’s ideological and economic direction for the next five years and beyond were laid out. It also reinforced China’s focus on stability as the country faces geopolitical headwinds – the Ukraine crisis, inflation in developed economics, and fears of a global recession.
As the world’s largest consumer market and the second-largest economy, China is important in itself and to the rest of the world. In the meantime, “China’s history tells a compelling tale of how political motivations can shape economic upturns and downturns …”, as Professor Xu Bin of CEIBS had it.
This China Implications Series newsletter presented by Gusto Collective paints a picture that goes beyond the expected (i.e., the historical third Presidential term). As Joe Ngai, managing partner at McKinsey Greater China put it – “the next China is China.”
Stability being paramount: It appeared a historic 94 times (most even in 45 years) in the Government Work Report (GWR), which was delivered by the outgoing Premier Li Keqiang during the opening of the CPPCC.
Unity of the nation emphasized: With domestic challenges and international headwinds, boosting unity and confidence amongst the Chinese people is also top on the government’s agenda. “Unity of the Nation” was called for repeatedly. President Xi Jinping highlighted unity as the source of the nation’s strength, saying that China has been able to overcome various risks and challenges thanks to all its people uniting with a “fighting spirit”.
Development a top priority: the Government Work Report set this year’s GDP growth at 5%, with the newly elected Premier Li Qiang describing it as “not an easy task” and vowed to “intensify policy support”. Since the Chinese New Year holiday break, the government at all levels has signaled injecting impetus into the economy. It is worthy to note that the government now advocates “high quality development” – a phrase coined to capture the determination on adjusting the country’s industrial structure to more innovation and sustainability-led.
Consumption as a key driver: China’s Ministry of Commerce has already designated 2023 as “the Year of Consumption Boosting”. The ministry said it will implement measures to recover consumptions that need close contacts (such as shopping and offline retail), build “international consumption centers”, which could set trends for the whole nation. Other measures include increasing income, stabilizing prices of necessities, improving mechanisms to solve disputes and nurture hot spots, especially “green and new” types of consumption.
Demonstrating a stronger stance on the international stage: When talking about international relations and reunification of the nation, the Chinese government is taking a firmer stance. This year’s Two Sessions saw no tuning-down of it. During a press conference, Foreign Minister Qin Gang used strong language – especially when describing US-China relations.
Offering China’s solution to the world’s problems: “Chinese modernization”, a phrase first raised during the 20th Party Congress last year, was highlighted during the Lianghui. Chinese Foreign Minister Qin Gang described it as a “new form of human advancement” and breaks down the myth of being modern means being like the West. This also coincides with the recent deal between geopolitical rivals of Saudi Arabia and Iran to re-establish diplomatic relations, under the mediation of China.
China is poised for the long-term: Despite many headwinds, China continues to prioritize quality of growth. Companies are advised to leverage China’s focus on high-technology, sustainability, and population well-being.
China remains top choice for MNCs: Chinese government continues to send signals on opening-up and creating a positive business environment for foreign enterprises. It is a positive signal for international businesses operating in China.
A rosy year for consumption support measures: Chinese government has prioritized consumption recovery. Expect a string of support measures and shopping festivals. Sustainable consumption, such as electric vehicles, and those supporting public welfare, such as care for the elderly and children, will continue to receive support. Coinciding brands’ events with the government’s future event calendar may earn additional exposure.
Stability is key: The theme of 2023 is stability. It is important for businesses to be aware of this and avoid any agitating activities or communications. Companies (and spokespersons) are advised to present a humbler attitude in commenting China related issues.
Geopolitical issues will continue to pose challenges: Companies need to continue paying special attention on geopolitics, handling maps (when addressing territories such as Hong Kong SAR, Macao SAR and Taiwan Region) and cultural sensitivities. Again, international companies should also be mindful that the HQ’s stance on geo-political issues might back-fire in China.
“Common prosperity”: People often quote Deng Xiaoping’s famous development strategy “let a few people get rich first”. The second half of the quote “before the attainment of common prosperity” is in fact, what the Chinese government has been working on. The phrase “common prosperity” did not appear in this year’s GWR, but the concept is hinted throughout. The government’s message is clear: it is not about “robbing the rich to help the poor”, but to support people’s wellbeing and welfare.
The population challenge: China entered negative population growth in 2022, and the discussion on “population challenge” has been ongoing for a while. However, Li Qiang urged calm over China’s population decline, saying China still has a 900m pool of labor force, and over 240m people with a higher-education degree, and that China aims for advantageous “talent dividend”, rather than “population dividend”, in line with the “high quality development” scheme. GWR also vowed to “improve elderly care services and refine supporting policies on children”.
Sustainability continues to be important: While sustainability is less talked about during this year’s Two Sessions, China has revealed achievements in sustainability in the past five years and announced new targets, including controls on fossil fuel consumption, more natural preservation efforts and green transformation efforts. The Chinese government sees sustainability as a long-term commitment and strategy, as highlighted during the 20th Party Congress. Through fostering innovation led “high quality development”, through setting new milestone targets, the Chinese government is delivering through doing, and sustainability will continue to be of great importance in China.