All eyes on the economy as China's National People's Congress begins

China's legislative body the National People's Congress begins its annual session this weekend. This year they’ll be outlining the country’s 13th Five Year Plan. In light of recent economic jitters, all eyes will be on plans for the economy, and what it means for local businesses and foreign investment.

Government officials and delegates stand for the national anthem during the opening of the fourth Session of the 12th National People's Congress (NPC) (EPA) Source: EPA

Nigel Blair’s green technology company E-Agri has developed vertical farming technology which produces organic, clean vegetables and uses 90% less water than traditional farming. His greenhouse facility one hours drive northeast of central Beijing will be able to supply urban consumers, he hopes, by June. Blair says green innovation, especially in relation to agriculture, will being particularly supported by the Chinese government in the upcoming Five Year Plan. 

“The air pollution is a significant issue, along with ground pollution and water pollution. Everything is significantly contaminated. So the government are screaming out for these types of solutions,” says Blair.

Another priority of the Chinese government is set to be the closing of so-called “zombie” state-owned enterprises which are debt-laden and running at overcapacity.

Deloitte Chief Economist Xu Sitao says the drain on the economy has been evident especially in recent years.

“Given the government’s mandate of reducing leverage, reducing inventory. I think state-owned-enterprise reform will be really the centrepiece of reform,” says Xu.

Xu is hoping that in addition to stream-lining the state sector, that “draconian” interventions and regulations will be decreased. “These are precisely why we’ve had so much market volatility,” he says.

Also hoping for less red-tape is Jiuxian Vice-President Yang Guofen. Jiuxian is China’s biggest online liquor retailer and holds 50% of the country’s market share. It currently does business with ten countries, including Australia. He says high taxes are an impediment for international deals.

“We can see the government will provide more good policies for its development, and that more companies can have more space and freedom to develop on their own,” says Yang.

But as well as eyeing reforms, Australian businesses have been encouraged to keep an eye on opportunities which may be underlined by the NPC. Vincent Dwyer from Norton Rose Fulbright helps to facilitate partnerships and transactions between Chinese companies and Australian corporates. He says the current Belt and Road initiative is a golden opportunity for Australian business to expand into emerging markets – but they need to act quickly.

“Belt and Road give Australian corporates opportunities to reengage in an emerging market strategy with a strong and determined partner, both politically and through the corporates.

But we don’t have the luxury of time. For those who want to be engaged in emerging market strategies they better get on and do it as fast as they can,” says Dwyer.