Economy Focused

Liu Zihong, CEO of Chinese tech company Royole, shows off a wearable device that can automatically identify human thought on November 14, 2017 at the company's headquarters in Shenzhen, south China’s Guangdong Province (XINHUA)

At a time when the United States seems to be retreating from the principles of free trade and globalization, Brexit inches toward reality, the rumblings of trade wars begin to rock the stability of the international order and leadership in technology is seen as a path to prosperity, China is faced with unprecedented opportunities to consolidate its position as a global leader in trade, diplomacy and global commerce and generate wealth for its citizens.

This is the context in which thousands of party leaders, business people and innovators from across China gather at Beijing's Great Hall of the People for the annual sessions of the National People's Congress (NPC) and the National Committee of the Chinese People's Political Consultative Conference, collectively known as the Two Sessions.

This year's meetings are of particular significance as they follow the five-yearly National Congress of the Communist Party of China, the 19th installment of which was held in October 2017.

The gathering marks the start of President Xi Jinping's second term in office, the official inclusion of Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era into China's Constitution, the election of the government for the next five years and the launch of institutional reform of the State Council. Despite these momentous changes, the primary focus is still on China's economy and government plans for growth and expansion.

A wide range of topics are being discussed, everything from new growth targets to the role of technology such as blockchain and artificial intelligence in the future of the Chinese economy.

Growth targets

In delivering the annual Report on the Work of the Government at the opening of the First Session of the 13th NPC, Premier Li Keqiang announced the government's economic growth target of 6.5 percent for 2018, the same as the projection made for 2017, despite China's economy growing at a reported 6.9 percent last year.

This target serves several purposes, ensuring continued and well-managed growth, high employment rates, and high-quality growth among them.

The work report included a consumer price index (inflation rate) of 3-3.5 percent, 3 percent less energy consumption, 11 million new urban jobs and an urban unemployment rate of 4.5 percent. Also unveiled were an expected government expenditure of 21 trillion yuan ($3.32 trillion) and a prudent and neutral monetary policy, with easing or tightening only as appropriate.

China's drive for high-quality development means steady progress in the direction the country has been moving for several years: toward an economy that is driven by technology and services, consumer-focused, green, and healthcare-oriented.

The previous break-neck speed growth is being replaced by high-value-added, intelligent and services-focused growth. This requires a fundamental shift in psychology in terms of a greater tolerance and understanding at the central, provincial and municipal levels of government that the "new normal" is a slower, more sustainable and more value-added form of growth, which is not as easy as it sounds. There may be some difficulties and obstacles along the way toward high-quality development, but the temptation to fall back on short term, fast growth attitudes, fixes and initiatives must be avoided.

The discussion and official implementation of a plan for achieving high-quality development is one of the most important outcomes of the Two Sessions.

Globalization leader

China is committed to providing leadership in globalization. This will take the form of free trade agreements with individual countries as well as multilateral trade pacts, further investment in and support for new global economic governance and institutions, and through continued expansion of and investment in the Belt and Road Initiative.

The Belt and Road Initiative will connect the Chinese heartland with Central Asia, Western Asia and Europe by land, and India, Indonesia, Africa, Pakistan and the South Pacific by sea.

There have been and will be investments in ports, railways, the extraction of natural resources and technology. Another seldom discussed aspect of the Belt and Road Initiative is the role it will play in cross-border e-commerce for China.

There has been a great deal of hype around the Belt and Road Initiative as a "trillion-dollar investment" and there being trillions of dollars of potential advantages. In the long term, investment may not reach those numbers, but the initiative is nonetheless real and the symbolism is as important as the infrastructure. The Two Sessions endorse the idea that the Belt and Road Initiative is representative of China's ambitions in global trade and diplomacy.

Technological innovation

The Two Sessions are also serving as a platform for China to showcase its ambition in innovation and technology. Many of the CEOs of China's leading tech companies are present at the Great Hall of the People, working on strategies and plans to help China solidify its place as one of the two most important technology and innovation hubs in the world.

Premier Li identified extending preferential tax policies for venture capital and angel investments, encouraging overseas Chinese students to return to China after their studies to pursue "innovative" business ventures, expediting the recruitment of highly-skilled overseas talent in China, cutting rates for mobile Internet services by at least 30 percent and pushing for ubiquitous high-speed broadband Internet services in urban and rural areas as priorities for the development of China's technology.

Tencent CEO Pony Ma, Xiaomi CEO Lei Jun, founder Richard Liu and Baidu founder Robin Li are all in attendance and talked in detail about everything from AI, to blockchain, to cryptocurrencies. This is a clear sign that technology and innovation are a joint private/public endeavor in a way reminiscent of the Apollo missions and the development of the Internet in the U.S. crescendo has been reached in the debate as to whether Chinese companies listed on foreign stock exchanges should return to China and be listed on domestic bourses. The detail and plan for changes in Chinese laws and regulations that will fast track this process are taking place at the Two Sessions.

According to the Financial Times, "China's tech companies have faced regulatory barriers to listings on the country's more stringent stock markets. Those barriers are being lifted to increase fundraising for tech companies as part of the government's push to become a global tech power, as well as to improve the quality of investments available to local traders."

Alibaba, Baidu, Netease and other big tech firms have voiced support for the change.

Chinese businesspeople are adept at identifying opportunities and making the most of them. In much the same way the country itself has identified key opportunities for stable and secure domestic growth, for going global and for making adjustments that promote quality, value-added growth.

Foreign companies, governments, governing bodies, brands and tech firms would do well to ensure they fully comprehend the policies, initiatives and growth and development targets codified at the Two Sessions in order to make informed decisions about their engagements with China and Chinese companies, and their own "five-year" plans for a globalized world.

The author is vice president of China/Asia Pacific and Global eCommerce Practices at Tompkins International

This article is reprinted from Beijing Review.

Related articles