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1、2023 Two Sessions highlights Chinas emphasis on institutional reforms and holistic developmentWhat are the highlights of the Two Sessions?4Highlights of the NPC Standing Committee Work Report 5Highlights of the CPPCC National Committee and the Work Report 6Highlights of the Government Work Report7Wh

2、at are the implications for the economy and businesses?10Contacts15Chinas Two Sessions 2023,made up of simultaneous meetings by the National Peoples Congress(NPC)and the Chinese Peoples Political Consultative Conference(CPPCC),was held in Beijing following the election of members to the 14th NPC and

3、 CPPCC National Committee.Both meetings reviewed relevant reports and elected national leaders.The Chinese President,the Premier of the State Council,Chinas Central Government,and Chairmen of the countrys top legislative and political advisory bodies,the NPC and CPPCC,all welcomed new leaders while

4、several ministries also saw a change in leadership.As the pandemic ended and the economy gradually recovered,China entered a new stage of development in the spring of 2023.This years official GDP growth target is set at around 5%while the country pursues further reform and opening up.Institutional r

5、eforms to the Central Government and the State Council will greatly increase private and foreign-funded enterprises confidence in the sustained development of the Chinese economy.The State Council institutional reform plan highlights the countrys emphasis on technological innovation,financial regula

6、tion,and the digital economy.This will help promote the development of Chinas innovative economy,and create a more friendly external environment and efficient financing environment for enterprises engaged in innovation activities.At the same time,China will pay more attention to the development of t

7、he private economy and private enterprises,involved which are expected to reap the policy dividends of the countrys institutional reform and opening up in 2023.What are the highlights of the Two Sessions?Sessions of 14th NPC lasted eight and a half days,opening on the morning of 5 March and closing

8、on the morning of 13 March.This marked the first time delegates of the 14th NPC met in Beijing following their election.There are 2,977 representatives in the 14th NPC.There are 442 ethnic minority representatives,accounting for 14.85%of the total,with all 55 ethnic minorities in the country being r

9、epresented.There are also 42 overseas Chinese representatives,and 790 female representatives,accounting for 26.54%of the total.16.69%of the NPC is made up of 497 representatives for frontline workers and farmers.The main agenda for the NPC included reviewing the Government Work Report,the draft amen

10、dment to the Legislation Law of the Peoples Republic of China,as well as several other reports,drafts,and resolutions.They also reviewed the State Councils institutional reform plan,and elected and appointed members of the state organs.On 7 March,the Chairman of the 13th NPC Standing Committee,Li Zh

11、anshu,presented the Work Report of the NPC Standing Committee to the 14th NPC,summarising the main achievements of 2022,and the past five years.In 2022,the NPC Standing Committee drafted five laws,amended nine laws,made four decisions on legal issues and major issues,and made one legal interpretatio

12、n.The Committee also inspected the implementation of five laws,and appointed and dismissed 393 staff across state organs.Over the past five years,the NPC Standing Committee passed constitutional amendments,drafted 47 laws,amended 111 laws,made resolved 53 legal and major issues,and reviewed 19 legal

13、 and decision-making cases.They also legally appointed and dismissed 1,515 staff across state organs.The work report proposes the following for 2023:Highlights of the NPC Standing Committee Work Report 52023 Two Sessions highlights Chinas emphasis on institutional reforms and holistic developmentImp

14、rove adherence to the Constitution and legislation.Promote the institutionalisation and standardisation of constitutional review,improve and strengthen the record review system,and maintain constitutional order of the special administrative regions as determined by the Constitution and the Basic Law

15、.Enhance NPC oversight effectiveness.Improve supervisory work operations to achieve proper,effective,and legal oversight.Enhance the extent of representative work.Improve the mechanism for contacting Standing Committee representatives and strengthen contact between the representatives and the people

16、.Carry out external exchanges of the NPC.Fully co-operate with the party and the states diplomatic approach and engage in foreign affairs as assigned by the Central Government.Strengthen the self-construction of the Standing Committee.Learn,grasp,and implement the spirit of the 20th National Congres

17、s of the Communist Party of China.The first session of the 14th National Committee of the CPPCC lasted seven and a half days,opening at the Great Hall of the People at 3 pm on 4 March and closing on the afternoon of 11 March.The conference consisted of an opening ceremony,a closing ceremony,two plen

18、ary sessions and eight group meetings.The main agenda of the conference included:listening to and deliberating on the work report of the Standing Committee of the CPPCC National Committee,government work report,work proposals and other relevant reports;attending the first session of the 14th Nationa

19、l Peoples Congress;reviewing and approving amendments to the Constitution of the CPPCC,political resolutions and work reports;and electing the chairman,vice-chairmen,secretary-general,and standing committee members of the 14th National Committee of the CPPCC.On 4 March,during the opening ceremony,th

20、e Chairman of the 13th National Committee of the CPPCC,Wang Yang,reported on past work.Over the last five years,the 13th National Committee of the CPPCC held over 100 special-purpose meetings,including thematic Standing Committee meetings,thematic consultations and bi-weekly consultation symposiums,

21、to promote high-quality development,provide suggestions for the formulation and implementation of the 14th Five-Year Plan,and supervise accordingly.The Committee received a total of 29,323 proposals and upon review and acceptance,filed 23,818.By the end of February 2023,99.8%of the proposals were pr

22、ocessed.Many suggestions and recommendations put forward by Committee members were developed into policy options for the Party and the Government.The CPPCCs consultation topics cover major issues concerning economic and social development,such as:constructing a new development pattern;advancing the

23、real economy;promoting innovation;promoting sustainable development of the new energy vehicle industry;ensuring national food security;advancing the tough battle of pollution prevention and control;building a safer China;ensuring education satisfies the needs of the people;constructing the Grand Can

24、al,Chinas cultural belt;and promoting the construction of overseas economic and trade co-operation zones.The topics also addressed practical issues related to the vital interests of the people such as dealing with an ageing population,basic public cultural services in rural areas,food safety regulat

25、ions for takeaway food and the formulation,and revision of laws and regulations.On the afternoon of 10 March,the 14th National Committee of the CPPCC held its third plenary session to elect the leaders of the 14th CPPCC National Committee.Wang Huning,a member of the Standing Committee of the Politic

26、al Bureau of the Communist Party of China Central Committee,was elected as the Chairman of the National Committee of CPPCC,along with 23 CPPCC National Committee vice-chairpersons.Highlights of the CPPCC National Committee and the Work Report 62023 Two Sessions highlights Chinas emphasis on institut

27、ional reforms and holistic developmentOn 5 March,Premier Li Keqiang of the State Council presented his final government work report after serving as premier for 10 years,reviewing work accomplished in 2022 and the last five years and putting forward suggestions for the new Government in 2023.Highlig

28、hts of the Government Work ReportThe average age of the newly elected Chairman and Vice Chairpersons of the CPPCC National Committee is 65.3.Among the Vice Chairpersons,11 are members of the Communist Party of China,12 are non-members,4 are from ethnic minority groups and 4 are women.The average age

29、 of the newly elected Standing Committee is 60.8.In terms of demographics,195 non-Communist Party members account for 65.2%of the Committee,while 32 are from ethnic minority groups and 48 are women.Increasing uncertainty in the external environment stemming from high global inflation,the weakened gl

30、obal economic and trade growth momentum,and increasing external pressure and containment;An unconsolidated foundation of domestic economic growth,along with insufficient demand,unstable private investment and expectations,arduous employment stability tasks and financial difficulties in some grassroo

31、ts governments;Hidden risks in the real estate market as well as in some small and medium-sized financial institutions;Institutional and mechanism barriers to development,including:weak technological innovation capabilities;lagging progress in ecological environment protection;weak links in urban an

32、d rural infrastructure,such as disaster prevention and reduction;and areas of shortcoming in the improvement work for peoples livelihood.The report stated that Chinas GDP reached 121 tn yuan,with an average annual growth rate of 5.2%over the past five years,adding nearly 7tn yuan per year.China achi

33、eved an average annual growth rate of 6.2%over the past ten years,achieving medium-to high-speed growth off a high base and moving towards high-quality development.The report highlighted that unbalanced and insufficient development in China still remains a prominent issue to resolve.The current scal

34、e of development will face many difficult challenges,such as:72023 Two Sessions highlights Chinas emphasis on institutional reforms and holistic developmentThe report sets out the main development targets for 2023,including:GDP growth of around 5%.This target is considered relatively conservative gi

35、ven the low base last year.If there are no major unforeseen disruptions at home or abroad,Chinas economic growth in 2023 is expected to exceed 5%,and can potentially approach 6%.The creation of approximately 12mn new jobs in urban areas,with an urban surveyed unemployment rate of around 5.5%.It is e

36、stimated that there will be 11.58 million college graduates in 2023.A target like this,if attained,can basically ensure their employment.A consumer price index(CPI)increase of around 3%.In the context of high inflation in many countries,China will continue to face import inflation pressure in 2023.H

37、owever,keeping the CPI at around 3%is a relatively feasible target as domestic consumption is set to further recover.Bringing the growth of residents income on par with national economic growth.The three high-impact years of the pandemic was detrimental for economic growth and affected the actual in

38、come of some residents.Ensuring the growth of residents income is key to promoting consumption and maintaining economic growth.Promoting stable,and high-quality imports and exports,while achieving a basic balance of international payments.During the pandemic,manufacturing activities in many countrie

39、s were disrupted or affected,but Chinas manufacturing essentially remained stable.Therefore,imports and exports played a unique role in stabilisingeconomic growth.However,as global economic growth is expected to be lower in 2023 than in 2022,weakening external demand will be the biggest challenge fo

40、r Chinas imports and exports.Maintaining grain production at over 1.3tn jin(or 0.65 tn kg).The Russia-Ukraine conflict and climate change may continue to impact grain supply,as a populous country Chinas food security is extremely important.Continuing to reduce GDP per unit of energy use and major po

41、llutant emissions.No specific targets have been set in regard to excessive control of energy consumption and pollutant emissions that might hinder the pace of economy recovery.82023 Two Sessions highlights Chinas emphasis on institutional reforms and holistic development1.Give priority to restoring

42、and expanding consumption.This is crucial for improving Chinas economic landscape for consumers,investors,private entrepreneurs,and small and medium-sized merchants.If the Government issues consumption vouchers to low-and middle-income earners,it can not only stimulate consumption but also improve p

43、eoples livelihoods.2.Increase urban and rural income through multiple channels.Economic growth and stable increase of resident income can only be achieved when consumption is restored,creating a virtuous cycle for the economy.3.Encourage the signing and construction of landmark foreign-invested proj

44、ects.While many foreign-invested enterprises still have confidence in Chinas future economic development,geopolitical tensions,especially between China and the US,may lead to heightened risk cautiousness by some foreign invested funded enterprises when considering making additional investments in Ch

45、ina.4.Effectively prevent and resolve the risks of leading real estate enterprises.China should improve the asset-liability structure,prevent disorderly expansion and promote the stable development of the real estate industry.At the same time,the country needs to support the demand for both essentia

46、l(basic)and improvement housing,and solve the housing problems of new urban residents and young people.Last year,Chinas economic growth rate declined due to COVID-19 prevention and control measures as well as macro-control of the real estate market.As long as the real estate market avoids excessive

47、speculation and returns to a healthy path of growth,by mainly focusing on meeting the housing needs of residents,it is expected to remain stable in the future.To achieve the aforementioned goals,the report proposes the following major policy measures:92023 Two Sessions highlights Chinas emphasis on

48、institutional reforms and holistic developmentWhat are the implications for the economy and businesses?The deepening reform of the State Council institutions has confirmed Chinas long-term commitment to its reform and opening up in the future.This will increase the confidence private and foreign com

49、panies have in the sustainable and positive development of the Chinese economy.Some of rapid policy changes in recent years,have impacted a few sectors of the business community,affecting the investment confidence for business expansion,these include COVID-19 prevention and control measures,anti-mon

50、opoly measures for internet platforms,measures preventing excessive capital expansion,the regulatory crackdown on extracurricular education and training institutions and real estate regulation.In addition,last year Nancy Pelosis,the then Speaker of the U.S.House of Representatives,visit to Taiwan,es

51、calated and exacerbated tensions between the two nations(China and the U.S.).The Russia-Ukraine conflict caused many European countries to reassess their national security and become more concerned about the stability of the Taiwan Strait,affecting the development of China-EU relations.The complex g

52、eopolitical environment has affected Chinas foreign policy,as well as its domestic economic policies,which have affected the confidence of the business community in China,especially private and foreign companies.The Central Government reform is expected to improve the efficiency of policy regulation

53、,thereby boosting the confidence of the business community.The State Councils institutional reform plan emphasises the importance of innovation in science and technology,financial regulation and the digital economy.This will promote the development of Chinas innovative economy,creating a more favour

54、able external environment for enterprises engaged in innovation activities and an efficient financing environment.Specifically,the State Councils institutional reform plan primarily focuses on key areas such as financial regulation,data management,science and technology,intellectual property rights,

55、rural revitalisation and elderly care.The reform measures include:Rebuilding the Ministry of Science and Technology in order to reform the distribution and use of national funds.This streamlines the leadership and management system of science and technology,co-ordinates scientific and technological

56、forces to tackle key core technologies,and accelerates the realisation of high-level science and technology self-reliance.China is taking steps to accelerate its self-reliance because of the U.S.restrictions in some of the high-tech field.For the business community,especially high-tech enterprises,t

57、his is both a challenge and an opportunity.On the one hand,domestic tech companies have to deal with the potential risks caused by decoupling(between China and the U.S.)on some high-tech sectors.On the other hand,national policies will strongly support local enterprises to become independent in core

58、 technologies.112023 Two Sessions highlights Chinas emphasis on institutional reforms and holistic developmentA guide to Chinas 2023 State Council institutional reformMinistry of Industry and Information and TechnologyMinistry of Industry and Information and TechnologyNow a directly affiliated agenc

59、y under the State CouncilMinistry of Civil AffairsNational Health CommissionMinistry of Foreign AffairsMinistry of EducationMinistry of FinanceMinistry of CommerceMinistry of Public SecurityMinistry of DefenseBefore the reformMinistry of Science and TechnologyMinistry of JusticeMinistry of Human Res

60、ources and Social SecurityMinistry of Natural ResourcesMinistry of Ecology and EnvironmentNational Audit OfficeMinistry of Water ResourcesMinistry of Agriculture and Rural AffairsMinistry of Veterans AffairsMinistry of Culture and TourismMinistry of TransportMinistry of Emergency ManagementMinistry

61、of State SecurityPeoples Bank of ChinaNational Ethnic Affairs CommissionMinistry of Housing and Urban-Rural DevelopmentNational Development and Reform CommissionMinistry of Civil Affairs1National Health CommissionMinistry of Foreign AffairsMinistry of EducationMinistry of FinanceMinistry of Commerce

62、Ministry of Public SecurityMinistry of DefenseMinistry of Science and Technology2Ministry of JusticeMinistry of Human Resources and Social Security4Ministry of Natural ResourcesMinistry of Ecology and EnvironmentNational Audit OfficeMinistry of Water ResourcesMinistry of Agriculture and Rural Affair

63、s3Ministry of Veterans AffairsMinistry of TransportMinistry of Emergency Management Ministry of State SecurityMinistry of Culture and TourismNational Ethnic Affairs CommissionNational Development and Reform CommissionPeoples Bank of China5State Council institutionsChina Banking and Insurance Regulat

64、ory Commission China Securities Regulatory CommissionChina National Intellectual Property Administration National Public Complaints and Proposals Administration National Data Bureau6National Financial Regulatory Administration(a directly affiliated agency under the State Council)China Securities Reg

65、ulatory CommissionNational Public Complaints and Proposals AdministrationChina National Intellectual Property AdministrationAfter the reformAbolishedNewly set-upRestructuredAbsorbed functions or organisations1 The work of the National Working Committee on Aging has been transferred to the Ministry o

66、f Civil Affairs.2 The Administrative Centre for Chinas Agenda 21 and the Ministry of Science and Technologys High-Tech Research and Development Centre have been transferred to the National Natural Science Foundation of China,which is still under the Ministry.The State Administration of Foreign Exper

67、ts Affairs is no longer affiliated under the Ministry.3 Certain responsibilities of the National Rural Revitalisation Administration will be taken over by the Ministry of Agriculture and Rural Affairs.The Administration will be formally inaugurated by the Ministry.No separate agency will be retained

68、.4 The State Administration of Foreign Experts Affairs will be formally inaugurated by the Ministry of Human Resources and Social Security.5 Advance reform of the branches of the Peoples Bank of China.6 Certain responsibilities of the Office of the Central Cyberspace Affairs Commission have been tra

69、nsferred to the National Data Administration.Source:Xinhua News AgencyCertain responsibilities,including formulating,coordinating,and implementing policies and measures in response to an ageing population,have been transferred.Responsibilities for formulating plans,and policies to promote social dev

70、elopment through science and technology have been transferred along with the China National Centre for Biotechnology Development.Responsibilities for formulating plans and policies on high-tech development and industrialisation have been transferred.Restructured;retained responsibilities for nationa

71、l key basic research programmes and applied basic research.Responsibilities for formulating plans and policies to promote social development through science and technology have been transferred.Responsibilities for formulating plans,and policies to promote rural,and agricultural development through

72、science and technology have been transferred along with the China Rural Technology Development Centre.Responsibilities for bringing in foreign talent and experts have been transferred.Responsibilities for formulating plans,and policies to promote social development through science and technology hav

73、e been transferred.Now a directly affiliated agency under the State CouncilNow a directly affiliated agency under the State CouncilNow a directly affiliated agency under the State CouncilEstablished on the base of the institution.Responsibility for protecting investors has been transferred.Responsib

74、ilities for routinely supervising financial groups,including financial holding companies,have been transferred.Responsibilities for coordinating and promoting the development of the digital economy have been transferred.Ministry of Housing and Urban-Rural Development122023 Two Sessions highlights Ch

75、inas emphasis on institutional reforms and holistic developmentAbsorbing the China Banking and Insurance Regulatory Commission,the National Financial Regulatory Administration will be established to bring the supervision of all types of financial activities under its umbrella and deepen the reform o

76、f the local financial regulatory system.To strengthen capital market regulations,the China Securities Regulatory Commission will shift from its current status as a directly affiliated institution(直属事业单位 Zhishu Shiye Danwei)of the State Council to a directly affiliated agency(直属机构Zhishu Jigou),escala

77、ting its influence and authority.The divisions of the Peoples Bank of China will also be reformed.At the same time,the management system of state-owned financial capital will be improved,and the unified and standardised management of financial management department staff strengthened.For a long time

78、,the pace of Chinas financial reform and opening-up has been relatively slow and cautious due to the risk of losing control.The recent collapse of banks in the US and Europe reminded us that financial risks are everywhere.The impact of the 2008 financial crisis on the global economy remains in the f

79、orefront of our minds.In this context,in recent years,China has been emphasising the need to prevent systemic financial risks.After reworking its financial regulatory system,China is expected to usher in financial reform which will enable a more reasonable allocation of financial resources among sta

80、te-owned enterprises,private enterprises,foreign-invested enterprises,local governments and residents.Establishing a National Data Bureau to be managed by the National Development and Reform Commission to strengthen the management,development,and utilisation of data.The Bureaus main responsibilities

81、 include:concentrating on the integration,sharing,and development and utilisation of data resources in each department;co-ordinating the construction of the data basic system;and the overall planning and promotion of constructing a digital China with a digital economy and digital society.While China

82、s digital economy strengthens,the current regulatory mechanism is lags;so the establishment of a National Data Bureau will improve the regulatory environment.Improving the intellectual property rights management system.This includes comprehensively improving the level of intellectual property creati

83、on,utilisation,protection,management and services.At the same time,the status of the National Intellectual Property Administration,managed by the State Administration for Market Regulation,will shift to become a directly affiliated agency of the State Council,thereby escalating its influence and aut

84、hority.Strict implementation of intellectual property protection will promote the development of the innovation economy.Improving the elderly care system.This includes,but is not limited to,developing the pension industry;promoting the realisation of basic pension services for all elderly people;and

85、 transferring the responsibility of formulating and co-ordinating the implementation of policies and measures to cope with the ageing population from the National Health Commission to the National Committee on Ageing.In addition to the governments efforts to ensure its public welfare initiatives,mor

86、e enterprises need to respond to population ageing,providing more development opportunities for the elderly care industry.Overall,institutional reform will create a more efficient and comprehensive regulatory system,improve the investment environment,and promote the development of Chinas economy in

87、key areas.132023 Two Sessions highlights Chinas emphasis on institutional reforms and holistic developmentThe speeches of the core leaders and other representatives during the Two Sessions indicate Chinas increasing emphasis on the development of the private economy and private enterprises.With heig

88、htened priority,in 2023,the private economy and private enterprises are expected to enjoy more policy dividends from reform and opening up.During the Two Sessions,President Xi Jinping emphasised the need to:optimise the environment for private enterprises to develop;remove institutional barriers tha

89、t hinder fair participation of private enterprises in market competition;protect the property rights as well as the rights and interests of private enterprises and entrepreneurs in accordance with the law;incorporate the equal treatment requirements for state-owned and private enterprises into the s

90、ystem and law.The support for the development,and growth of the private economy and private enterprises will boost both market expectations and confidence.Additional measures will also be taken to support the development of micro-and small-enterprises and individual businesses,and to empower interne

91、t platform enterprises in creating employment,expanding consumption and international competition.In addition,the new Premier,Li Qiang,in a press conference after the Two Sessions,stated that he has been working in regions where the private economy is relatively developed and often has opportunities

92、 to communicate with private entrepreneurs.With this experience,he has a good understanding of their expectations and concerns regarding development.Li Qiang urged leaders at all levels to genuinely care for and serve private enterprises,build a close and clear relationship between the Government an

93、d businesses,and promote a society that respects entrepreneurs and business owners.The importance of the private economy within Chinas overall economy can be demonstrated its contributions:the private economy makes up over 50%of the national fiscal revenue;contributions to GDP,fixed asset investment

94、,and foreign direct investment all make up over 60%;Considering this,China will gradually establish a more matured market-oriented economic system as the country further develops its private economy.With more reform and opening-up policies,state-owned enterprises,foreign-invested enterprises and pri

95、vate enterprises are expected to work together to forge a benign yet fair competition environment in the future.contribution to enterprise technological innovation and new products makes up over 70%;contribution to urban employment exceeds 80%;contribution to new employment exceeds 90%.142023 Two Se

96、ssions highlights Chinas emphasis on institutional reforms and holistic developmentElton YeungVice Chairman,PwC China86(10)6533 ContactsThomas LeungManaging Partner Markets,PwC China86(10)6533 Elton HuangManaging Partner Central Markets,PwC China86(21)2323 Xing ZhouManaging Partner North Markets,PwC

97、 China86(10)6533 James ChangManaging Partner South Markets,PwC China 86(755)8261 G.Bin ZhaoSenior Economist,PwC China 86(21)2323 152023 Two Sessions highlights Chinas emphasis on institutional reforms and holistic This content is for general information purposes only,and should not be used as a substitute for consultation with professional advisors.2023 PwC.All rights reserved.PwC refers to the PwC network and/or one or more of its member firms,each of which is a separate legal entity.Please see for further details.