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Two Sessions in 2022 raised confidence in China’s development amid global turbulence

china-two-sessions-observation-2022

The fifth session of the 13th National Committee of the Chinese People’s Political Consultative Conference (CPPCC) and National People’s Congress (NPC) took place between 4 and 11 March 2022. This was the last time the 13th NPC and CPPCC would come together for the Two Sessions. With the 20th National Congress of the Chinese Communist Party (NCCCP) taking place this fall, 2022 marks a key period in the development of the party and the state. Thus, this year’s Two Sessions serves as a transition between the incumbent 13th NPC and CPPCC and the incoming 14th NPC and CPPCC. It should be noted that the election of deputies to the 14th NPC shall be completed in January 2023 before the incumbent 13th NPC deputies finish their term in office in March 2023.

As concluded during the Two Sessions, 2021 was a landmark year in the history of both the party and the country marked by the centenary of the founding of the Communist Party of China (CPC). In line with its plans, China achieved great progress in lifting poverty and built a moderately prosperous society in all respects.

In 2022, China will strive to stabilise economic operation, deliver reasonable economic growth, and maintain overall social stability.

Government’s work priorities for 2022
  1. GDP growth target has been set at around 5.5%, a reasonable level, compared to the 8.1% benchmark of 2021, and close to the projected growth rate by IMF and other international organisations. This implies the average GDP growth rate in 2020, 2021 and 2022, the three-years during COVID-19, would be above 5%, while the average GDP growth rate for 2020 and 2021 was 5.1%.
  2. 11 million new jobs shall be created in 2022, which is 3 million more than in 2020 (9 million), on par with 2021 and 2019. The unemployment rate in the surveyed urban area will be controlled to less than 5.5% in 2022.
  3. Consumer Price Index (CPI) growth shall be maintained at around 3% (as China faces increasing pressure of imported inflation), the same as in 2021 and 2019, and 0.5 percentage points lower than 2020. In fact, CPI increased by 2.5% in 2020 and 0.9% in 2021.
  4. China aims to cut its Deficit-to-GDP ratio to around 2.8% in 2022, which is less than the 3.2% in 2021 and 3.6% in 2020. This can be achieved with proactive fiscal policies to improve efficiency and focus on accuracy and sustainability. Prudent monetary policy should be flexible and appropriate, and maintaining reasonable liquidity.
  5. Grain outputs shall remain above 1.3 trillion Jin (650 billion kilograms). Since the international supply of grain has been disrupted by COVID-19 and geopolitical tensions, China lists domestic grain production as one of the top priorities.
  6. The quality of the ecological environment shall continue to improve in tandem with the declining emission of major pollutants. This statement is much milder than the 2021 report; energy consumption per unit of GDP was set to reduce by around 3% in 2021, the same as 2019. The target of energy consumption intensity shall be comprehensively assessed within the 14th Five-Year Plan period, with an appropriate degree of flexibility.
Implications - what are the takeaways?
  1. The top priority will be to stabilise the macroeconomic development and maintain reasonable GDP growth.
  2. China will boost investment to safeguard economic growth as investment lowered GDP growth by 0.5% last year according to National Bureau of Statistics.
  3. China will deepen reforms, implement the innovation-driven development strategy, and expand domestic consumption.

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