The new Premier, Li Qiang, has vowed to strive for “stability” and “quality of growth” in the global economic downturn and amid the country’s recovery from the coronavirus. The South China Morning Post listed eight areas for the new government to focus on.
1. Real estate: The government has taken measures since last year to improve the balance sheets of property developers and to stimulate property purchases, while regulators also pledged to prevent the “disorderly” expansion of capital in the property sector to promote its stable development. Real estate investments in January and February continued to fall, but the pace has slowed for the first time since 2021. However, a rapid rebound appears unlikely. “Even if homebuyers return en masse, the days of runaway housing booms are unlikely to return,” Fidelity International wrote in a report.
2. Research and development: The revamp of the Ministry of Science and Technology (MOST) was a major highlight in the government-restructuring plan introduced during the two sessions. The Ministry will “strengthen strategic planning” and “accelerate the implementation of scientific achievements”. The consolidation is expected to channel more resources in research and achieving breakthroughs, with the goal of moving faster towards “self-reliance”.
3. Infrastructure: Beijing will continue to push investment in traditional infrastructure, such as transport, electric power supplies and water projects, as well as in big data, artificial intelligence (AI), aviation and satellite industries.
4. New energy: Beijing also aims to reduce carbon emissions as part of its green transition. Green energy, such as solar and wind power, will continue to receive government support, but China will also continue to rely heavily on coal for its power needs. Support for EV production and the related battery supply chain will remain strong, to counter the impact from the latest policies of the U.S.’ Inflation Reduction Act. The act restricts EV companies from applying for subsidies if their supply chain includes batteries from a “foreign entity of concern”, such as China.
5. Data: China is setting up the National Data Bureau to promote the digital economy and data-related sectors. The government is expected to continue to boost investment in big data, 5G and the Internet of Things (IoT), while also strengthening the availability of computing resources.
6. Healthcare: The Chinese government is expected to strengthen China’s pharmaceutical industry and enhance support for sectors providing medical devices and care for the elderly. Financial regulators also may consider boosting the commercial pension fund to reduce the financial pressure facing the aging population.
7. Seeds and self-sufficiency: Weak links in agriculture will be addressed, especially seeds, as the sense of urgency surrounding food self-reliance has been heightened amid the Ukraine crisis and U.S.-China tensions. Major progress in domestic seed innovation has been listed as the top agricultural task this year. Subsidies will also be provided for corn and soybean production.
8. Consumption: Reviving consumption is a priority this year, as well as support to private enterprises. E-commerce is also expected to enjoy a boost.
