What happened? 
On 11 March, China concluded its third 14th National Committee meeting of the Chinese People Political Consultative Conference (CPPCC) and the National People’s Congress (NPC). This year’s discourse focused on economic goals, reviving domestic consumption, defence spending, investing in high-tech innovation, and private enterprises. Chairman of CPPCC, Wang Huning, called to work towards Chinese modernization and said: “CPPCC should keep enhancing its capacity for political consultation, democratic oversight, and participation in and deliberation of State affairs.” China’s President Xi Jinping called for quality education and said: “To develop a high-quality educational system that meets the people's expectations, the key lies in deepening comprehensive reform of education.” 

What is the background? 
First, a background to the “Two Sessions.” Also known as “Lianghui,” it is the annual consultative meeting of the CPPCC and the NPC. The Chinese People’s Political Consultative Conference with 2,169 members, is the multiparty organ that works as an advisory to the Communist Party of China. It advises the party on non-party concerns and agenda; they are an advisory body with no legislative or executive powers. The National People’s Congress of 2,977 members is China’s national legislature and “the highest organ of state power.” The NPC discusses the Government Working Report from the previous year and sets the agenda for the year ahead. 

Second, the internal economic, sociological, and political climate. Since Covid-19, the Chinese economy saw a decline, but also a growth of 4.8 per cent in 2024. The economy is further burdened by the housing bubble crisis, lower domestic consumption, and an aging demography with fewer youth willing to marry. The politburo saw restructuring by removing high-ranking officials who either engaged in corruption or did not follow suit with the party/Xi’s ideology. 

Third, the external political and economic climate. Currently, China is dealing with high tariffs imposed by the US administration under Donald Trump, the European Union, and Canada. Trump imposed 20 per cent tariffs on all Chinese products. In retaliation, China imposed tariffs on American agricultural produce and 25 per cent on rare metal exports. Recently, the UK also sanctioned 10 Chinese firms for aiding the Russian defence industry. 

Fourth, economic agenda and funding 2025. China set the GDP target of 5 per cent for 2025 as it aims to double its economy by 2035. The meeting called to stimulate domestic consumption and funded RMB 300 billion for trade-in funding. The Government working report instated the “new quality productive forces” to be the focus of 2025. They include sectors like quantum technology, AI, and biomanufacturing. 

Fifth, high-tech and private enterprises. China has been pioneering in the innovation of high technology. More recently, China’s AI firm Deep Seek made waves around the world for formulating a learning model at a fraction of the cost compared to the US firm OpenAI. Huawei was able to make 7 nanometer chips despite sanctions and restricted access to high technology by the US. On the sidelines of the two sessions, China’s President Xi Jinping made a rare attendance to the symposium of private firms, attended by representatives of all major firms, BYD, Alibaba, DeepSeek, and Xiaomi. Xi said: “Party committees and governments at all levels must base their actions on local conditions and coordinate efforts to ensure the effective implementation of policies and measures for promoting the private sector's development.”

Sixth, lower domestic consumption. China’s internal consumption accounts for 39.2 per cent of the GDP. After Covid-19, there was an economic slump, housing crisis, and unemployment issue. China’s consumers’ purchasing power and confidence have dipped. At the peak of the housing crisis, many people lost their savings over ghost houses. The precarious economic situation has hit the consumer’s confidence to purchase.  

What does it mean? 
First, insulating the economy. In the 2024 GWR, they noted: “Global economic growth lacks steam, unilateralism and protectionism are on the rise, the multilateral trading system is experiencing disruptions, and tariff barriers continue to increase.” The agenda for 2025 pivots to developing their economy to rely on domestic consumption and sale rather than on export. Aiming to make them shock proof from the changes in the geopolitical climate. 

Second, “Neijuan” - recalibrating investments. Neijuan is the self-harming loop where, due to excessive competition, there is an unregulated investment by firms on resources, hoping to receive gains. This has led to a generation of overcapacity with little to no returns. Chinese Premier Li Qiang called for a comprehensive crackdown on neijuan. The government will recalibrate and regulate investments made. As the Premier called to: “eliminate local protectionism and market fragmentation, and remove bottlenecks in market entry and exit as well as resource allocation.” It can be reckoned that more strategic investments will be made in sectors with high chances of returns, which are the high tech and innovation sectors.