The high stakes of China's ‘Two Sessions' summits this week

Yahoo

03-03-2025

Analysts and investors are closely watching China's 'Two Sessions' summit — an annual gathering of Beijing's rubber-stamp parliament and a key political advisory group — to glean clues as to how the country plans to navigate increasingly turbulent geopolitical and economic waters.
Beijing is expected to reveal its economic growth targets, its monetary and fiscal priorities, and, perhaps most crucially, its broader policy course.
This year's Two Sessions, beginning Tuesday, comes amid persistent economic malaise in China — although investor sentiment has risen in recent weeks — and as the country faces an escalating trade war with the US.
The official statements that arise from Two Sessions gatherings are generally marked full of hyperbolic language to describe the country's future plans — think 'momentous' and 'extraordinary' — but this year presents 'a moment for China to match its words with actions,' longtime China-watcher Wang Xiangwei told the South China Morning Post. The week will test how serious Beijing is about boosting domestic consumption, a critical piece of its larger economic plan. China's leadership has acknowledged the challenge, but has yet to fully prioritize it, Wang said: The country needs 'more concrete actions,' such as loosening constraints on private firms and expanding social security benefits to low-income groups 'to make consumers and entrepreneurs feel confident enough to spend again.'
China's 31 provinces have already held their own 'mini-Two Sessions meetings' that together provide hints of what to expect from Beijing, The Wire China wrote. The local gatherings 'paint a picture of tacit acknowledgment of challenges and uncertainties,' and 'an economy undergoing a decisive push for industrial transformation.' Central to the latter is artificial intelligence: More than two thirds of provinces outlined plans to integrate AI into other industries, 'an indication that Beijing views AI as a pillar of long-term national competitiveness.' The moves reflect the global success of Chinese AI startup DeepSeek's new low-cost model, which lifted investor sentiment around China.
In the face of existent US tariffs and President Donald Trump's pledge to hike them further, Beijing has held off from making the kind of swift overtures to Trump that Mexico and Canada have: Chinese officials are 'moving much more cautiously and deliberately as they try to assess Mr. Trump and determine what it is he actually wants,' The New York Times reported. One expert said China is especially suspicious of 'hidden traps' in early talks. That caution could ultimately threaten the initial economic momentum that marked the first months of 2025: Chinese manufacturing activity in February grew at its fastest pace in months, a potential sign that stimulus measures launched late last year are working.