2023 Two Sessions highlights China’s emphasis on institutional reforms and holistic development

China’s Two Sessions 2023, made up of simultaneous meetings by the National People's Congress (NPC) and the Chinese People's Political Consultative Conference (CPPCC), was held in Beijing following the election of members to the 14th NPC and CPPCC National Committee. Both meetings reviewed relevant reports and elected national leaders. The Chinese President, the Premier of the State Council, China’s Central Government, and Chairmen of the country’s top legislative and political advisory bodies, the NPC and CPPCC, all welcomed new leaders while several ministries also saw a change in leadership.

As the pandemic ended and the economy gradually recovered, China entered a new stage of development in the spring of 2023. This year's official GDP growth target is set at around 5% while the country pursues further reform and opening up. Institutional reforms to the Central Government and the State Council will greatly increase private and foreign-funded enterprises’ confidence in the sustained development of the Chinese economy. The State Council institutional reform plan highlights the country's emphasis on technological innovation, financial regulation, and the digital economy. This will help promote the development of China's innovative economy, and create a more friendly external environment and efficient financing environment for enterprises engaged in innovation activities. At the same time, China will pay more attention to the development of the private economy and private enterprises, involved which are expected to reap the ‘policy dividends’ of the country’s institutional reform and opening up in 2023.

Government’s work priorities for 2023

GDP growth of around 5%. This target is considered relatively conservative given the low base last year. If there are no major unforeseen disruptions at home or abroad, China's economic growth in 2023 is expected to exceed 5%, and can potentially approach 6%.
The creation of approximately 12mn new jobs in urban areas, with an urban surveyed unemployment rate of around 5.5%. It is estimated that there will be 11.58 million college graduates in 2023. A target like this, if attained, can basically ensure their employment.
A consumer price index (CPI) increase of around 3%. In the context of high inflation in many countries, China will continue to face import inflation pressure in 2023. However, keeping the CPI at around 3% is a relatively feasible target as domestic consumption is set to further recover.
Bringing the growth of residents' income on par with national economic growth. The three high-impact years of the pandemic was detrimental for economic growth and affected the actual income of some residents. Ensuring the growth of residents' income is key to promoting consumption and maintaining economic growth.
Promoting stable, and high-quality imports and exports, while achieving a basic balance of international payments. During the pandemic, manufacturing activities in many countries were disrupted or affected, but China's manufacturing essentially remained stable. Therefore, imports and exports played a unique role in stabilising economic growth. However, as global economic growth is expected to be lower in 2023 than in 2022, weakening external demand will be the biggest challenge for China's imports and exports.
Maintaining grain production at over 1.3tn jin (or 0.65 tn kg). The Russia-Ukraine conflict and climate change may continue to impact grain supply, as a populous country China's food security is extremely important.
Continuing to reduce GDP per unit of energy use and major pollutant emissions. No specific targets have been set in regard to excessive control of energy consumption and pollutant emissions that might hinder the pace of economy recovery.

Implications - what are the takeaways?

The deepening reform of the State Council institutions has confirmed China’s long-term commitment to its reform and opening up in the future. This will increase the confidence private and foreign companies have in the sustainable and positive development of the Chinese economy.
The State Council's institutional reform plan emphasises the importance of innovation in science and technology, financial regulation and the digital economy. This will promote the development of China's innovative economy, creating a more favorable external environment for enterprises engaged in innovation activities and an efficient financing environment.
The speeches of the core leaders and other representatives during the Two Sessions indicate China’s increasing emphasis on the development of the private economy and private enterprises.