China's Annual Two Sessions - 2019

The Two Sessions just concluded in Beijing, with it came information that will tell us what China will be doing in 2019.

Kyle Freeman, Business Advisor Manager in Beijing, answers some of our questions about what all this means.

What is the Two Sessions?

The ‘Two Sessions’ is the largest annual political event in China. Tightly scripted, it provides direction on China's policies for the year. Its primary role is to approve budgets, government reports, and new policies.

What was said?

2019’s session was relatively unexciting; no bombshells were dropped (2018’s removed term limits for the President). Premier Li Keqiang, the top economic official, announced foreign businesses would be treated equally with domestic competitors, a decrease to 6% - 6.5% GDP growth target for 2019, and had a lot to say on the state of the domestic economy (it’s slowing).

Two key policy changes introduced were the reduction of China’s VAT rates and approval of the new Foreign Investment Law (FDI Law).

What can we expect?

China is committed to not injecting a large stimulus into the economy, and statements mirrored measures that have already been undertaken or are in the works, including tax cuts and other measures (VAT decreases) targeted to increase consumption and boost business amid the slowing economy.

The new FDI Law preventing forced technology transfer will be passed to address US/EU complaints, but this and other promises of equalizing the playing field are unlikely to convince the foreign business community, which feels policies might not translate to on-the-ground practices, without measurable results.

China is set to tackle two fights this year, a slowing economy and a trade war with the US that is exacerbating the economic situation. Regardless of the outcome, we expect China to remain a top destination for FDI for a variety of reasons. If you are thinking about investing in China or have questions regarding your investment here, contact us, we would be happy to speak with you about them.