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What to expect from China’s two sessions meetings

The Two Sessions, or “Lianghui” in Chinese, are the annual meetings of China’s National People’s Congress (NPC) legislative body and the Chinese People’s Political Consultative Conference (CPPCC) advisory group. It is one of the most important annual events in Chinese politics where key national policies and economic plans are discussed and decided upon.

The government work report presented at the meetings contains the annual economic targets and the policy direction for the year ahead. China aims for economic growth target at around 5% for this year which is in line with market expectations and plans to increase defense spending by 7.2%. Any adjustments to the “proactive fiscal policy” and “prudent monetary policy” terms used in the last few years will also be important.

China’s trade and inflation numbers will also be released this week. A rebound in imports and slower export growth are likely for January-February. Inflation is expected to show a rise for February, mainly driven by a rise in food prices during the Lunar New Year holiday.

  • China exports are likely to grow from 2.3 to 3.0 and imports are set to also rise from 0.2 to 1.5.
  • The trade balance is expected to increase from 75.3B to 110.3B.
  • The consensus for CPI y/y is a rise to 0.2% from prior -0.8% and a PPI y/y change from -2.5% to -2.6%.

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