China's 2022 Two Sessions: Ensuring Stability Amid Global Uncertainty | Brunswick

China's 2022 Two Sessions: Ensuring Stability Amid Global Uncertainty

Last week, China wrapped up one of its most important annual political gatherings, the Two Sessions. An air of realism permeated this year’s meetings—compared to the guarded optimism exhibited in 2021, the Chinese leadership painted a more somber picture of the myriad headwinds facing the country.

For decades, Chinese leaders have sought to balance the perpetual and sometimes conflicting objectives of economic growth, reform, and stability. This year’s meetings made clear that stability is paramount for 2022.

Premier Li Keqiang noted that China is under multiple pressures exerted by shrinking demand, disrupted and vulnerable supply chains, and weakening expectations. Although praise was given to the accomplishments of the past year, the government identified numerous challenges ahead, from maintaining economic momentum to building technological self-sufficiency and improving social equity.

Our latest report on China’s political environment looks at this year’s Two Sessions and what it means for businesses engaging with China.

Highlights include:

  • Stability, stability, stability: Ensuring stability permeated the Two Sessions. Growth and reform will be seen through the prism of stability in the year ahead.

  • Self-reliance at the fore: Trade tensions and fractured supply chains have drawn the importance of self-sufficiency into stark relief for central policymakers. Special attention will be paid to core technologies like chips and as well as food security.

  • Challenging growth target: The target of "around 5.5%" GDP growth in 2022 exceeded expectations, and will be challenging to achieve given internal and external challenges.

  • Financial stimulus to increase: To support economic growth, the government has increased business tax incentives and business support measures, together with commitments to move forward on significant infrastructure projects.

  • Common prosperity: Despite minimal mention, the emphasis on improving equity and quality of life came through clearly with a focus on expanding social services and working to enhance social mobility.

  • Carbon commitments: The ambitious environmental commitments made in the 14th Five-Year Plan remain—including to hit peak emissions before 2030 and carbon neutrality by 2060—but expect the transition to renewables to be pushed back in the near term, in the interest of stability and energy security concerns.

  • Border controls: While many parts of the world look to resume travel, do not expect any change to China’s strict border controls in the near term. Instead, Premier Li committed to "strengthen epidemic controls in port-of-entry cities." All signs point towards the borders remaining largely closed until at least after the 20th Party Congress later this year. This will put further pressure on companies in China hiring and retaining international staff, as well as vital cross-border team engagement.

China remains an important part of many firms’ operations, both as home to supply chains and customers, and as an influential global power. Read the full report to understand the implications for business engaging in and with the country.

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