Stability vs. Progress amidst Uncertainty – Report on China’s 2017 “Two Sessions”

The 2017 Two Sessions wrapped up on March 15^th, 2017 and were set against two macro backgrounds. First, China’s top priority is to ensure a successful convening of the 19^th Party Congress and a smooth transition of the new politburo leadership, marking the beginning of President Xi Jinping’s second five years in office. There are mounting political and economic uncertainty domestically and internationally. The objective of this year’s Two Sessions is to develop the Party’s strategy into a national action plan and detailed work projects in each key area. The overall goal is to advance a progressive reform agenda while preserving a high baseline of stability to safeguard the development gains China has made in recent years.

• The “advancing progress and preserving stability” is the guiding principle for all government policy across regions, ministries, and sectors of the economy.
• Stability embodies the government’s approach to fiscal policy and macro-economic and monetary management. A stable RMB exchange rate, real estate market, and employment growth are key sources of stability
• Progressive reform measures can be seen in the revitalization of the real economy; strengthening environmental regulation; increasing aggregate demand while advancing supply-side structural reform; and strengthening foreign investment guidance and incentives. China’s determination to improve the FDI environment and establish an economic growth model driven by innovative green development is an important long term opportunity.
• Opportunities co-exist with challenges. New opportunities will come along with the expansion and upgrading of the consumer market, China’s climb up the global supply chain, and innovation-driven industrial upgrading. Meanwhile, challenges originate from high costs, new market barriers and compliance problems, prejudicial policies, and intensified international competition. These will continue to test the daily operations and strategic capacities of foreign enterprises.

For more information, please contact: Cynthia Xing