5 takeaways from the meeting of the two China sessions
China’s historic annual political event, the two sessions, or Lianghui 两会, — with reference to the two meetings of the National People’s Congress (NPC) and the Chinese People’s Political Consultative Conference (CPPCC) — took place from March 4 to 11. More than 5,000 members of the mainland’s political, business and social elite gathered at the event in Beijing.
One of the main objectives was to confirm and publish the Government Work Report (GWR), which includes the expected GDP growth target. This year, the target (around 5.5%) was confirmed by Chinese Premier Li Keqiang at the opening forum of the fifth session of the 13th NPC on March 5. Although below last year’s 8.1% — due to Russia’s war on Ukraine, ongoing pandemic concerns and growing domestic pressure — the number was even higher than expected. For example, economists from Goldman Sachs believe the percentage growth will be around 4.5 percent.
The GWR has also set economic and social development targets for 2022, such as creating more than 11 million new urban jobs, maintaining consumer price index growth at around 3%, and reducing the deficit/GDP ratio from 3.2 to 2.8%. (“Steady growth” was highlighted as a keyword for the year.)
In addition, political priorities were discussed during the event. Right here, Daily Jing identifies five takeaways from both sessions and their potential impact on luxury.
In August 2021, the news of the “common prosperity” the agenda caused luxury stocks to fall. During the Two Sessions, the subject was raised again and reassured luxury players.
According to Zhou Dewen, an economist and deputy director of the Central Economic Committee for Democratic Progress, promoting “common prosperity” is by no means engaging in “egalitarianism” or the equitable distribution of wealth. Rather, the idea is that universal prosperity implies some degree of wealth gap.
In light of this, luxury opportunities may be found in lower tier cities. The country aims to improve incomes in remote and rural areas among low-income groups: increase middle income, as well as improve taxation — the adjustment of excessive income and the prohibition of illicit income. Finally, the promotion of philanthropy was proposed as an absolute priority.
Regulation of live broadcast and internet
The rapid growth of China’s livestreaming industry has attracted government oversight: in 2021, the former livestreamer, Viawas fined $210.2 million (RMB 1.34 billion) for concealment of personal income and misrepresentation.
At both sessions, several Chinese national representatives recommended new regulations for the live e-commerce sector. These include new professional licenses, tax codes and more detailed live streaming categories — to reduce violations by hosts. While labels should be careful in choosing the right partner, a better regulated environment seems more inviting for companies that are reluctant to test the waters of this nascent field.
Meanwhile, cyber-violence was also a hotly debated topic during the proceedings. And on Weibo — #Strictlyprosecutecyberdefamationandothercrimes is trending on the local microblogging platform, amassing over 170 million views. Wei Shizhong, a member of the National Committee of the Chinese People’s Political Consultative Conference and vice president of Henan University of Science and Technology, suggested making serious cyber violence a subject of criminal prosecution.
As China enters a stage of high-quality development, the government work report lists four pillars for the digital economy: promoting technological innovation; optimize and modernize industrialization; breaking supply constraints; and qualitative growth.
These objectives will be achieved through three action plans. First, by strengthening scientific research and technological innovation. Second, increase incentives for business innovation. Finally, improving the basic competitiveness of the manufacturing industry: as 5G, big data center, artificial intelligence, industrial internet and industrial digitization.
Xiao Yaqing, Minister of Industry and Information Technology, said that this year they will work to ensure the number of 5G base stations exceeds 2 million (against 1.43 million currently). As technological advancements accelerate, heritage brands must be ready to keep pace. This means improving online and offline experiences: to stay relevant to local consumers.
Population aging and childbirth
Last year, the country’s birth rate hit an all-time low. As such, the issues of an aging population and low birth rate have been high on the agenda. Several elected officials have implemented pronatalist measures and lifted all restrictions on family planning. these include tax deductions for families raising multiple children, maternity leave payments, extended paternity leave, and free kindergarten for third children.
On Weibo, the subject of family planning sparked a debate. Many young people shared how overwhelming economic, professional and social pressures were reasons for not having babies. And – given the low birth rate – in addition to young consumers, luxury companies should start to redouble their efforts to target the vast aging population. Indeed, the fact that the over-60s group now accounts for 18.7% of all citizens has sounded alarm bells for the government, which has called for building a more senior-friendly society with infrastructure to improve their way of life.
China has set two major carbon emissions targets: to achieve peak carbon emissions by 2030 and carbon neutrality by 2060. At the event, leaders and delegates from the private sector, including Li Shufu from Geely, Lei Jun from Xiaomi, Robin Li from Baidu and Pony Ma from Tencent, discussed ways to achieve net zero emissions.
New energy vehicles, recycling, low-carbon technological innovations were proposed. NPC delegate and founder of automaker Geely Automobile, Li Shufu, suggested adopting methanol-powered vehicles. NPC Deputy Lei Jun, founder and CEO of electronics company Xiaomi, proposed setting up a nationwide e-waste recycling system. Robin Li, CPPCC delegate and founder of Chinese search engine Baidu, recommended “Green AI”: using green electricity and AI-powered technology to improve energy efficiency and carbon emissions everywhere, from routes to data centers. And, NPC member and founder/CEO of Tencent Holdings Pony Ma mentioned the potential of “blue carbon” — carbon stored in the sea.
As China progresses in its efforts to reduce carbon emissions, public awareness of issues such as climate change and the linear economy will visibly increase, affecting the luxury brand’s day-to-day operations. global and supply chain requirements.