Two Sessions, Labour on EVs, and jobs are coming for your robots

Welcome to China in 5, from the British Chamber of Commerce in China.

Each week, we bring you up to speed with what’s caught our eye in the China-sphere in five(ish) minutes.?Grab a coffee, take a break, and dive in!

Two Sessions begins, with financial policy at the fore

What’s the background? The “Two Sessions” (两会), which opened at the Great Hall of the People earlier this week, represents the most significant event on the Chinese political calendar. As the official meeting of the National People’s Congress and Chinese People’s Political Consultative Conference, it offers an insight into government policymaking for the year ahead and the overall trajectory of China’s economy and society.

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Fact 1: During the meetings, those present will be hearing and discussing five main reports - the Premier’s Government Work Report, as well as reports from the National Development and Reform Commission, the Ministry of Finance, the Supreme People’s Court, and the Supreme People’s Procuratorate.

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Fact 2: As expected, one of the chief focuses of the Government Work Report has been economic recovery and growth. It highlighted that China’s GDP growth in 2023 surpassed 123 trillion yuan, an increase of 5.2 percent, and that targets for GDP growth in 2024 will remain above 5 percent. It also highlighted as a target the creation of 12 million new urban jobs, as well as a surveyed unemployment rate of 5.5 per cent.

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Fact 3: Another focus has been on the development of “new quality productive forces,” a term first used by Xi Jinping in September last year. This refers specifically to China’s plan to leverage science and technological innovation, not only for the formation of new industries, but also for the country’s overall economic development.?

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This year’s “Lianghui” will focus mainly on the restoration of China’s economic stability, with the Government Work Report identifying several priority areas. This includes modernisation of the industrial system, the development of new quality productive forces, expansion of domestic demand and promotion of sound economic flows, as well as the opening up of foreign investment. These will all be essential if China is to tackle current economic headwinds and ensure long-term sustainable growth. For members of the British Chamber, who want to better understand the future direction of the Chinese economy and make informed business decisions, this is crucial. It is also imperative that the government follows through with its proposals, to reassure companies that their legitimate business interests are looked after, and market access is not unfairly restricted. – Louis Poyser , BritCham Junior Associate

Recharging Britain: Labour’s pledge to boost manufacturing and investigate Chinese EV imports

What’s the background? At a keynote speech for Make UK’s annual conference, Labour MP and Shadow Business Secretary Jonathan Reynolds last Tuesday gave an indication of Labour’s vision for the UK. His stated priorities included building up the UK’s manufacturing capabilities and driving forward new deals outside of the EU. Notably, Reynolds also confirmed that Labour would plan to undertake investigations into Chinese EV import practices.

Fact 1: With a general election underway later this year, Reynolds discussed the importance for Labour of revitalising the UK’s manufacturing sector, this included a pledge to upscale the UK’s capability in battery manufacturing, a move which would create an estimated 80,000 jobs.

Fact 2: The speech included a commitment to reopening Britain’s free trade agreement talks with Canada, which were paused in January this year after a disagreement over food regulations standards.

Fact 3: Renault, among other European carmakers, have previously expressed their frustrations that Chinese-made EVs benefit unfairly from state subsidies. The UK has not yet formally launched investigations into such allegations, with the EU having already launched a probe last October.

This emphasis by Labour on managing UK-China trade is going to continue to be crucial for British Industry, particularly given the importance of China generally as a trade partner in this area. Moreover, the Shadow Business Secretary’s discussion of the battery industry and Labour’s planned commitment to increase UK battery manufacturing capabilities is an important one. This focus will require a holistic view of relations with the Chinese, particularly given their expertise and market share in the industry. – Carlos Jackson , BritCham Policy Associate

Coffee Break Read: What to Watch at China's Two Sessions in 2024

Why we like it: We're all focused on Two Sessions this week at BritCham, as delegates meet to set China's legislative direction for the upcoming year. But what exactly should businesses and governments be looking at through the reams of work reports, press coverage, and news conferences? This great explainer piece by the Asia Society Policy Institute covers lots of the important points for this year's event, including looking beyond just growth figures to examine factors such as Xi's remarks, personnel changes, and the all-important US-China bilateral relationship as important focus points this week – so you can be the smartest person in the room on this year's meeting. And, if you want more reaction on this year's Two Sessions, don't forget to sign up for our debrief with our friends at Trivium China , happening on Wednesday 13th March at Jing-A Taproom CBD, Beijing. Click here for all the details!

Podcast of the Week: Overcapacity

Why we like it: This informative podcast walks us through the story behind the recent wave of Chinese electric vehicle (EV) exports on the global market and its roots in China’s overcapacity management. Alongside host Jude Blanchette, Yanmei Xie delves into the Chinese political economy mechanisms, in particular supply-stimulus industrial policies, which have historically led to overcapacity. Much excessive capacity has traditionally been absorbed through exports – this was the case when overcapacity emerged as a domestic issue in the steel and cements sectors. Yet the recent wave of overcapacity in the much higher value-added, strategic sector of EVs has triggered acute global concerns over the possibility of deindustrialisation in the West - particularly Europe, where the automobile industry forms the backbone of the regional economy. Resulting international resistance has led to new challenges for China’s industrial policy. Assessing policy options for Western countries as well as China in light of probable trade friction, Xie and Blanchette also draw attention to strategic industries such as semi-conductor chips and airliners where Chinese overcapacity and upscaling patterns are next likely to be observed.

And finally...

There has been considerable discourse and excitement surrounding AI in recent years, particularly with the emergence of technologies like Sora. However, the extent to which businesses are integrating AI into their daily operations and the sectors experiencing the most significant growth remain pivotal questions. Surprisingly, numerous companies, including Allen & Overy, have embraced AI innovation. The global law firm in collaboration with Harvey, an AI startup, has developed a system aiding lawyers in tasks ranging from due diligence to contract analysis. Similarly, Nestlé and KPMG are actively recruiting 'prompt engineers' proficient in eliciting valuable responses from AI-powered chatbots. Is your industry embracing AI advancements? We're eager to hear your insights!

Thanks for reading China in 5! Have thoughts about what you'd like to see, suggestions for our coffee break reads, or a favourite podcast you want to share? Let us know below, or reach out via our website at britishchamber.cn.