Interview
What to Expect At China’s ‘Two Sessions’
- The two sessions in March are critical for revealing China's 2021 economic parameters and the 14th five-year plan (2021–2025), marking a period of high political significance.
- The 2021 government work report is expected to define key targets for growth, inflation, and employment, with a potential focus on livelihood metrics over numeric growth goals.
- A numeric growth target for 2021 may not be set, or if defined, it could aim for above 6% growth, which is considered a low bar given the 2020 low base.
- Local governments are anticipated to set easily surpassable targets, potentially above 6%, following central-local communication patterns.
- The 14th five-year plan will prioritize a more balanced and resilient economy reliant on domestic demand rather than external demand.
- Key implementation parameters for the plan are expected to cover urbanization, R&D investment, and consumption encouragement.
- Technology advancement, including domestic semiconductor production, is identified as essential for achieving economic resilience and self-reliance.
- The economy is projected to transition from an investment-driven model to a consumption-driven model to support sustainable growth.
- China has set a long-term objective to achieve carbon neutrality by 2060, highlighted as a key sustainability factor.
- Global investors are monitoring how policymakers manage the normalization and exit from 2020's significant fiscal and monetary support.
- The two sessions are expected to clarify the speed and combination of policies for economic normalization in 2021, including specific numbers on fiscal revenue, expenditure, and deficit size.
- Monetary policy language is expected to be subtle, requiring interpretation of the management stance, while property market policy statements will be vital for the 2021 growth outlook.