China's National People's Congress Will Vote On Two Important Bills
This is the meeting that will see Xi Jinping and Li Keqiang appointed to the position of president and premier respectively.
For the most part, this is a meeting with few specifics.
But the NPC is expected to vote on two key measures, according to Societe Generale's Wei Yao.
- The amendment to the land management law - We have previously reported that China will prioritize land reforms as officials reiterate that urbanization is crucial to driving economic growth. This bill if passed will boost farmers' share of revenue from land sales.
- 'The Big Department System reform' - A bill to merge "the troublesome Ministry of Railways" with the Ministry of Transport.
What else should we expect?
Policymakers are expected to stick to goals they have already iterated. The Government Work Report, which is typically delivered by the premier and is considered the Chinese equivalent of the State of the Union speech, is expected to be along the lines of the "make progress while maintaining stability" theme of the Central Economic Work Conference in December, according to Yao.
She also expects officials to stick to the 7.5 percent GDP target, and 4 percent CPI target.
While the media has been suggest a fiscal budget deficit of 1.2 trillion yuan (that's 200 billion yuan more than last year), Yao warns that people shouldn't "interpret this as a green light for aggressive fiscal stimulus".
However, the Chinese central bank has been draining interbank liquidity, and Yao expects that money growth could be lowered to 13 - 13.5 percent, from 14 percent.
From Yao:
"Such a combination, if confirmed, will lend support to our projection of more preemptive monetary policies and thus less upside to the economic recovery than currently expected by the market. Chinese policymakers may strike sooner, in anticipation of rising inflation and systemic risk. Normalization of credit conditions seem to have begun in earnest, with the PBoC draining liquidity with open market operations. The State Council has outlined a five-point plan to tame renewed housing inflation, and concrete measures are expected to take shape in the coming months."
The NPC session will take place over roughly two weeks between March 5 - 17. The Chinese People's Political Consultative Conference (CPPCC) meeting began today. The CPPCC is considered the nation's top advisory board. Together the meetings are referred to as "liang hui" or two meetings.