China's “Two Sessions” 2024 has wrapped up – here’s a quick recap of the highlights
At this year's meetings, China shared its plans for the year ahead.
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The backstory: As we've reported before, China's economic landscape has been rocky post-COVID, facing hurdles like a property crisis, debt risks, slow global growth and rising geopolitical tensions. The country's struggling property sector is particularly an issue, as it contributes a big chunk to its GDP (estimated at 17-29%). Big players like Evergrande are drowning in debt and defaulting. On top of that, issues like high youth unemployment, decreasing exports (which means other countries aren't buying as much from China) and mounting local government debt are compounding the economic woes. To counter this downturn, China has taken steps like reducing key mortgage rates to support the property market. China's GDP grew by 5.2% last year, beating its target of "around 5%." However, it fell slightly short of analyst estimates at 5.3%.
The development: From March 5 to March 11, China held its annual "Two Sessions" in Beijing, involving the National People's Congress (NPC) and the Chinese People's Political Consultative Conference (CPPCC). This gathering, attended by over 2,900 lawmakers from China and Hong Kong, aimed to chart the country's path forward.
China shared its plans for the year ahead at this year's meetings. Premier Li Qiang set the goal of maintaining GDP growth at around 5% for 2024, just like last year. To boost the economy, China plans to issue 1 trillion yuan (US$139 billion) in special government bonds. This move is one of the biggest pushes for growth since 2020. The aim is to ensure enough money is circulating for banks to support government projects.
One thing that was different about this year's policy meeting was that Premier Li Qiang didn't hold his usual press conference at the end of the National People's Congress. It was also announced that these press conferences would be skipped for at least the rest of the term.
Economically, the attention shifted from real estate to boosting manufacturing. There were discussions about upgrading equipment, which could create a market worth over 5 trillion yuan (US$694.5 billion). The Chinese Communist Party also reshuffled the State Council, adding key figures like vice premiers and the head of the People's Bank of China.
Key comments:
"It sends a positive signal to the outside world, helps control the government's debt ratio, and can enhance fiscal sustainability. It reserves the policy room for dealing with potential risks and challenges in the future," said Huang Shouhong, director of the research office at the State Council, referring to the special government bonds.
"Deflation remains a significant concern among investors regarding China's economic landscape," said Stephen Innes of SPI Asset Management.
"In promoting economic development, we did not resort to massive stimulus. We did not seek short-term growth while accumulating long-term risks," said Premier Li Qiang, according to a translation, at the conference in Davos. "Rather, we focused on strengthening the internal drivers."
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