The Two Sessions constitute the annual event composed of the National People's Congress (NPC) and the Chinese People's Political Consultative Conference (CPPCC), in which the economic and political orientation of the country is defined. As China continues to assert its global influence, it is important that Chinese businesses and those operating in the global economy pay close attention to the implications of the recent Two Sessions.
The Two Sessions of 2024, in fact, underlined the government's commitment to promoting economic stability. During these sessions, Premier Li Qiang announced an economic growth target of “around 5%”(1). This figure represents a significantly lower target than the double-digit target that has characterized the country for decades; This is because China is currently facing challenges such as weak domestic consumption, high local debt, a turbulent real estate sector, declining foreign investment and faltering business confidence. Although the target remains unchanged compared to the previous year, the absence of an initial market impulse resulting from the reopening of the country and the paucity of announced economic stimuli make it difficult to understand how China can achieve this ambitious growth target.
Economic Stability Amid Regulatory Uncertainty
For businesses, what matters is the composition of GDP growth. While China's economy still has a lot of potential, slower, and even negative, growth in some sectors is impacting the economy as a whole. Addressing the structural challenges affecting China's economy will require comprehensive reform, particularly through a shift from public spending-led growth to a consumption-based model. However, this seems unlikely to happen while the government is focused on pursuing economic stability.
To achieve ambitious growth rates, it is necessary to mitigate the concerns of foreign companies. In a certain sense, this was the message that the Two Sessions sought to convey, announcing the reduction of the negative list for cross-border trade in services, the easing of restrictions on access to the services market and the elimination of some restrictions on investments in the manufacturing sector(2).
However, a major concern for European businesses operating in China continues to be the regulatory environment. While the Two Sessions underlined the Chinese government's commitment to economic stability, regulatory uncertainty remains a significant challenge. As indicated by the Business Confidence Survey (survey on business confidence) of the European Chamber for 2023, confidence in the Chinese market has hit historic lows in several sectors and concrete steps from the government are still needed to address regulatory and market access barriers that prevent European companies from increasing their investments in the country(3).
New protectionist forces?
The concept of 'New Productive Forces' was a recurring theme throughout the Two Sessions. This concept refers to the promotion of technological innovation and emerging industries, which can transform China's future economic landscape; this includes sector technology such as artificial intelligence, electric vehicles, semiconductors and renewable energy. This goes hand in hand with the replacement of the real estate sector with manufacturing as the main driver of future growth(4).
For foreign businesses, China's focus on new manufacturing forces could be significant, as it offers opportunities for collaboration and partnerships with Chinese companies at the forefront of these technologies. Promoting innovation creates an environment conducive to joint ventures, technology transfers and knowledge sharing. Foreign companies that contribute complementary skills, resources or technologies can, in fact, benefit from access to China's vast market and long-term growth potential.
While the Two Sessions highlighted the importance of such innovation, international businesses face an uphill battle to compete with domestic competitors. China's focus on increasing research and development and supporting emerging industries appears to be aimed at strengthening Chinese companies rather than fostering genuine collaboration with foreign entities. This orientation must not, however, distort market competition, otherwise there is a risk of limiting the opportunities for international companies to contribute to the country's technological advances.
Economic development versus national security
During the Two Sessions, unmistakable signs emerged that China is embracing technological innovation and production through New Productive Forces in order to enhance the country's self-sufficiency. As highlighted in the recently published European Chamber report titled “Riskful Thinking: Navigating the Politics of Economic Security,” China has a long history of pursuing self-sufficiency. Against a backdrop of rising geopolitical tensions, this suggests that China intends to continue seeking international strategic advantages to address external challenges, such as export controls and sanctions.
European businesses in China are increasingly concerned about the growing interconnection between economic development and security issues. China's growing focus on national security has generated uncertainty among businesses, as the scope of “sensitive” issues related to that topic appears to expand, making it more difficult for companies to access the information needed to make investment decisions related to their operations. As the international community discusses security, it is critical to find an appropriate balance between security concerns and promoting openness to different markets.
Green development: Fertile ground for collaboration between the EU and China
The Two Sessions also highlighted the possibility of a change in China's economic landscape, with an increasing focus on high-tech industries and sustainable development. Businesses that align their strategies with these priorities can emerge as partners in promoting China's innovation-led growth; they can explore investment opportunities, expand their market presence and contribute to the country's goals in the areas of energy efficiency and low-carbon development. European businesses see great value in these prospects, considering that the speed of innovation in China requires constant adaptation to remain competitive.
The fight against climate change is an area where the interests of the EU and China overlap significantly and where European companies have great experience to bring to the Chinese market. While no further ambitious green initiatives were announced during the Two Sessions, China is the undisputed world leader in green technology, including batteries and renewable energy such as wind and solar. Therefore, China is an indispensable player in the EU's mission to reduce climate change. The country's green development will be essential to achieve global peaking and carbon neutrality goals. European companies, in fact, hope to be able to continue to access and participate in these markets.
Conclusion:
The Two Chinese Sessions of 2024, therefore, offer an overview of the complex scenario in which foreign companies engaging in China must navigate. Despite promises of economic stability and innovation, the reality on the ground continues to paint a picture of uncertainty. Regulatory barriers, limited market access and protectionist policies hinder fair competition, while the focus on self-sufficiency and national security impedes the growth of international businesses. Although China continues to be the largest market in the world, international operators often have to navigate a complex and often unfavorable environment. As the country's economic direction takes shape, the type of relationship China wants to have with foreign businesses becomes a growing question. The Two Sessions represent a signal for the current year, but there is still a possibility that China will take the path of structural reforms and prioritize economic development over security concerns, which would help strengthen China's confidence. businesses during this year.
By: Attorney Carlo Diego D'Andrea, Vice President of the European Union Chamber of Commerce in China
(1) Government of the People's Republic of China. China releases full text of government jobs report, March 12, 2024, https://english.www.gov.cn/news/202403/12/content_WS65f06025c6d0868f4e8e506c.html
(2) Ibid.
(3) European Business in China Business Confidence Survey (Business confidence survey) 2023, European Union Chamber of Commerce in China, 21 June 2023,
(4) The National Committee of the Chinese People's Political Consultative Conference. “Xi emphasizes the development of new productive forces, high-quality development.” February 2, 2024,
