Policy Outlook for 2025 "Two Sessions"

What to watch for in this year's Two Sessions?

The 2025 “Two Sessions” will start next next week. It’s an annual gathering of China's two key political bodies: the National People's Congress (NPC, the highest organ of state power) and the Chinese People's Political Consultative Conference (CPPCC, political advisory body). The National Committee of CPPCC opens on Mar.4 followed by the NPC on March 5.

These two meetings bring together thousands of delegates to discuss and shape the country's political, economic, and social agenda for the year ahead. The NPC, as the top legislative body, reviews and approves major policies, laws, and the national budget, while the CPPCC serves as an advisory forum, offering recommendations and fostering dialogue among various sectors of society. Two Sessions offers a critical window to understand China's priorities, from economic targets to environmental goals.

(Tips: Many CPPCC delegates speak fluent English and are more casual and willing to discuss in-depth issues with reporters worldwide. It’s just more fruitful to talk with them.)

So, before the two sessions, what’s this year’s outlook?

Macroconomy and Boosting Consumption

Facing both short-term underconsumption problems and long-term structural issues, China’s economic agenda is under intense scrutiny as the 2025 Two Sessions approach. Signals from local “Two Sessions“ shows that local authorities are quite prudent of this years economic growth, as well as fixed investment and consumption data. According to the report from CICC, 15 provinces have lowered their economic growth targets, these 15 provinces account for 31.8% of the national GDP. Based on CICC calculations, the weighted average GDP target of 31 provinces is 5.3%, which is 0.1 percentage point lower than the 2024 target (5.4%).

Observers should focus on the annual government work report to be presented by Premier Li Qiang on March 5, which will reveal this year's GDP goal and deficit ratio target, among other economic indicators. (there will not be a Premier's Press Conference this year.)

The market has been paying extra attention to stimulus measures coming from the Two Sessions, especially after recent signals of a shift toward boosting consumption. From fiscal sides, Chinese treasury has been showing signals for proactive fiscal policy. Jan.10 vise minister Liao Min said

The direction of fiscal policy for 2025 is clear and well-defined, fully taking into account the need to strengthen counter-cyclical adjustments, and is very proactive.

2025年财政政策方向是清晰明确的，充分考虑了加大逆周期调节的需要，是非常积极的。

Chief Economist from CITIC Securities estimate the deficit ratio for 2025 may increase to around 4%; the scale of new special bonds may increase to about 4.2-4.5 trillion yuan, of which special bond funds used for land reserves may be around 400-600 billion yuan; the scale of ultra-long-term special treasury bonds may be between 1.2-1.5 trillion yuan, of which the amount allocated to "Large-scale equipment upgrades and trade-in programs for consumer goods" policies（两新政策) may increase to around 500-600 billion yuan.

During the last Central Economic Working Conference-China's highest-level annual economic meeting, boosting consumption has been put on the top of to do list in 2025. So I’d anticipate that pace to be continued in the Two Sessions. Currently, we're seeing nationwide subsidies on consumer goods such as cellphones and household electrical appliances. For products with a unit selling price not exceeding 6,000 yuan, there's a subsidy of 15% of the product's selling price. Notably, consumers don't actually need to "trade in" their old devices, which makes this policy function more like a direct subsidy program. There could be more consumption-boosting policies incoming, recommand paying attention to Economic-themed press conference during the Two Sessions with key figures such as PBoC’s Chif Pan Gongsheng(潘功胜) and Minister of Finance Lan Fo'an (蓝佛安).

Boosting Private Sector Confidence

With private sector confidence remaining relatively weak, protecting and promoting private enterprise has emerged as a central theme for the 2025 Two Sessions. In 2024, the central government announced plans to draft the Private Economy Promotion Law. Now, after a year of preparation, the law has been submitted for second review. It addresses several key concerns, including "offshore-fishing style law enforcement"（远洋捕捞式执法） and delayed payments.

“offshore-fishing style law enforcement” refers to certain local law enforcement agencies that engage in arresting entrepreneurs from other jurisdictions, shutting down businesses, or freezing and even embezzling corporate funds—behavior likened to fishermen venturing far offshore to catch fish.

Regarding the issue of delayed payments to private enterprises, we've seen increasing high-level attention. In 2022-2023, the special campaign to clear delayed payments to enterprises was primarily led by the Ministry of Industry and Information Technology. In October 2024, the General Office of the Central Committee of the Communist Party of China and the General Office of the State Council issued the "Opinions on Resolving the Problem of Delayed Payments to Enterprises." On February 17, 2025, during the symposium with private enterprises, Xi delivered a speech, clearly stating that "we must focus on resolving the problem of delayed payments to private enterprises." signaling this will likely be a key policy focus during the upcoming Two Sessions. The budget to be approved during Two Sessions is expected to provide much-needed financial resources to local governments, which are often the primary source of delayed payments.

Tech Innovation

I anticipate the Two Sessions will likely introduce some concrete policies designed to mobilize capital markets in support of technological innovation. DeepSeek has led international investors to reevaluate China's technological innovation capabilities. Within China, we have also seen increasing emphasis on "new quality productive forces" (新质生产力) since late 2023. Xinhua News explains this concept as "advanced productivity that plays a leading role in innovation and breaks away from the traditional economic growth mode and productivity development path." During a symposium with private entrepreneurs hosted by President Xi, the front row was dominated by CEOs from hard tech-driven companies such as CATL, Xiaomi, and Unitree Robotics.

It's also worth noting that beyond industry, there are increasing voices from the top calling financial sector to support technological innovation. During the Politburo meeting last April, President Xi first mentioned the concept of "Patient Capital" (耐心资本), emphasizing the need to cultivate technological innovation capabilities through long-term investment approaches.

A more prominent signal came from Wu Qing, Chairman of the China Securities Regulatory Commission, in his latest article published in The Journal of New Industrialization on February 25, 2025. At the beginning of the piece, he wrote:

Focus on improving the fundamental systems of the capital market, fully leverage the functional role of the capital market, and better serve the construction of a manufacturing powerhouse and new industrialization.

着力完善资本市场基础性制度，充分发挥资本市场功能作用，更好服务制造强国建设和新型工业化。

Birth Rate and Social Security Net Building

I personally expect that this year's Two Sessions will draft policies that provide national childbirth subsidy. In 2024, China's total population decreased by 1.29 million people, while the number of births increased by 520,000 compared to the previous year. However, considering the Chinese preference for having children in the Year of the Dragon, this data merely represents a temporary rebound. Currently, some local governments provide subsidies for childbirth, but there is no subsidy policy at the central level. In October 2024, General Office of the State Council’s document mentioned establishing childbirth subsidy systems. However, we should not expect large-scale short-term stimulus.

I have previously analyzed President Xi's understanding of population issues; he believes population is a long-term problem, and an overreaction with massive short-term subsidies to promote childbirth would only waste resources and be counterproductive.

establish and improve a scientific public policy system for population and related fields. This will allow people to gain more from participating in and supporting high-quality population development. At the same time, we must avoid "quick fixes" and hastily implementing measures that may cause controversy.

建立健全科学的人口及相关领域公共政策体系，让人民群众在参与和支持人口高质量发展中获得更多利益。同时也要避免“急功近利”，仓促出台可能引发争议的举措。

The social security is also expected to increase. More than 10 provinces have explicitly proposed measures to increase social security in their government work reports. The main initiatives include "appropriately increasing the basic pensions for retirees," "raising the basic pension for urban and rural residents," and "increasing government financial subsidies for urban and rural residents' medical insurance."

At this stage, it remains unclear how substantially the central government will enhance social security benefits. However, since improving the social safety net is a necessary condition for addressing low consumer spending among residents, this year's budget is expected to exceed 2024's 4 trillion yuan allocation.

Aside from the Two Sessions, China's Ministry of Defence has announced plans to increase the frequency of its press releases and expand media access. During a recent briefing, Ministry Spokesperson Wu Qian said this initiative aims to enhance transparency and improve communication with both domestic and international audiences. (They said welcome tricky questions)

To offer greater access to information about China’s national defense and the Chinese military, we will increase the frequency of MND’s regular press briefing from twice a month to three times a month, and open the door of our press conference to more Chinese and international media agencies. Questions are the voice of the times. As an open military, the PLA welcomes all kinds of questions, even tricky ones. Friends from the media, we hope we will meet more, talk more and create more with you. Let’s witness together how the Chinese military accomplishes remarkable feats in an era of transformation.

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