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July 09, 2020

China’s two key sessions and future prospects

By Nay Soe Oo

China already convened its two key annual sessions recently which are normally held in March, but this year they were delayed because of COVID-19. Now with a notion that China can bring the virus under control, these two sessions could be successfully held following more than two months of delays as a result of the coronavirus issue.
These two sessions refer to the annual meetings of the Chinese People’s Political Consultative Conference (CPPCC) – an advisory body of over 2,000 members – and the National People’s Congress, China’s top legislative body. They are China’s most important annual political meetings. During the recently-held meeting in Beijing, Chinese Premier Li Keqiang laid out the government’s agenda and policy priorities for the coming year.
Despite the fact that noble coronavirus COVID-19 could be brought under control, the representatives attending the sessions were found all donning surgical masks placing on full health alert. These two sessions are focus of attention to foreign investors during which the government usually announces the country’s key economic policies just like the annual GDP growth target.
China had to face an economic crisis due to the impact of COVID-19 and this year these two sessions added to importance in political and economic aspects globally. Therefore, it would be true that the interest of foreign investors is what the government would announce to revitalize China’s economy out of a coronavirus-induced crisis.
Nevertheless, the report Mr. Li submitted to the meeting indicated that China failed to set a GDP growth target for 2020, marking the first time the government did not set a target since records began in 1990. Mr. Li added in the report that the government opted not to set a growth target because of the high level of uncertainty caused by COVID-19 and its effects on the global economy.
Before COVID-19 struck, most analysts believed that the government would set its growth target at “around six per cent”. Last year, China set a growth target of 6-6.5 per cent, which it ultimately achieved by growing 6.1 per cent. In the first quarter of this year, however, China’s economy contracted by 6.8 per cent, per official statistics, and some analysts expected another contraction in the second quarter.
Despite the attention paid to the announcement, many economists have long argued that China’s leaders should abandon the tradition of setting a target. The GDP growth target in China is not just a predictor of growth output but also an input signal of forthcoming government credit and spending.
Accordingly, while Mr Li stated that the government would take strong measures to support employment, there remains uncertainty over how far they will go to stimulate the economy. It may also be a signal that the government is prepared to accept a low level of growth in 2020.
Mr Li announced a fiscal stimulus package of almost RMB 3.6 trillion (US$506 billion) to lead China’s economy recovery following the COVID-19 disruption. Beyond stimulating growth, government planners are hoping the stimulus will help employment and, as a result, social stability. Mr Li said that the government is seeking to create nine million new urban jobs in 2020.
Besides the announcements of the growth target and stimulus, government officials have announced a number of other policies during the two sessions. One major development was the government’s surprise announcement of a national security law for Hong Kong, to be passed in Beijing. Party leaders hope that the law will lead to more stability in Hong Kong, which was beset by protests for much of 2019.
Further, despite the economic disruption of COVID-19, Mr Li said in the work report reiterating the goal of eliminating rural poverty in 2020. A decade ago, the Party announced that it would double 2010 income per capita levels by 2020, while President Xi Jinping has made it a priority to end rural poverty by this year.
Accordingly, foreign investors can expect reforms of China’s health system and greater investments in the sector this year. The next notable point the annual session showed that China’s top political advisor Mr Wang Yang urged the use of modern technology, including big data and the internet, to better fulfill officials’ duties, while reiterating the importance of the “Chinese-style democracy” in the advising systems.
Anyhow, the third session of the 13th CPPCC had to be held in Beijing in a later time than as scheduled regularly on account of the impacts of the COVID-19 crisis. China, the crucial neighbouring country, will be seeking a solution to the platform for new political landscape besides the ways how to recover its economy going to a downtrend by using the key points coming from the key annual sessions.  (Translated by Htut Htut (Twantay))

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