Two Sessions: China’s Most Important Policy Meeting of 2021
More than 5,000 of China’s political, business, and social elite gathered in Beijing in early March for China’s annual Two Sessions meeting. The 2021 Two Sessions discussed the country’s 14th Five Year Plan and highlighted the future directions of China’s thriving industries from green innovation and electric vehicles to 5G, internet, and domestic consumption. Join cultural analyst Xiabing Su, as she debriefs the main takeaways from this meeting.
Hi, I’m Xiabing from KraneShares. Recently, the hottest thing in China is the “two sessions.” More than 5000 people took flights from different parts of China to the capital of Beijing to attend the meetings. Their identities vary from sports stars to business entrepreneurs to primary school teachers. Under strict covid precautions, they got together to discuss the most important things for the whole country.
“Two Sessions” is followed closely both internally and internationally since it is a window for the world to understand the Chinese government’s priorities as well as the future direction the country will take. It is especially valuable for investors who want to understand the future trend of China’s development. I’m very excited to give a brief agenda of what’s going on in our country.
In the Report of the Work of Government, China has set a GDP growth target of “above 6 percent” for the year 2021. This goal is relatively lower than what some economists expected; however, according to the speech, the central government is considering the recovery pace of economic activity from the Covid and the maintenance of a sustained and healthy economy.
In terms of sustainable growth, China is transitioning to follow a greener model. “Peak Carbon” and “Carbon Neutral” have become the most popular terms that everyone talks about. China plans to reach its peak carbon by the year 2030. In order to achieve this goal, the government has launched the National Carbon Emissions Trading Market and will provide financial support for carbon emission projects. China will be the largest emissions trading market in the world once it is fully launched and could be the game-changer for the global carbon reduction process.
In addition, the US and China will co-chair the G-20 climate summit in October. We are excited to see how the two great nations taking responsibility for climate change and partnering up to tackle it. China is also encouraging the development and application of eco-friendly technologies, innovations, and products. Electric vehicle is a particular area of focus and will continue to be one of the hottest themes. The announcement explicitly states that more electric vehicle battery charging and swapping facilities will be built.
In pursuing a “Digital China”, digital technology will further transform traditional industries. The internet will be a cornerstone for people’s daily lives, supporting almost all activities from shopping to entertainment to payment and even healthcare. For better connection and communication, 5G, semi-conductors and other cutting-edge technologies will be widely adopted.
Apart from the high-tech field, China is going to fully tap another territory with huge potential. In the announcement, China plans to expand its domestic market. The consumption power of its 1.4 billion people is huge and could be a key driver of GDP growth into the future. With the world’s largest middle-class population, the income level is expected to increase further, along with the spending on products like home appliances, automobiles, and other commodities. Logistics systems will be further improved to keep pace with the growth of E-commerce.
The Government Work Report gives us a clear blueprint for China’s future and provides a useful guideline for investors. The investment opportunities presented from the announcement include green innovation, carbon emissions markets, and emission-reducing products like electric vehicles. Further opportunities are from the internet, 5G, and semi-conductors. The expansion of massive consumption and products favored by Chinese consumers are also highlighted.
I’m really looking forward to a future without COVID, and I believe more positive changes will take place not only in China but in the whole world.
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