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National People's Congress: key takeaways

The National People's Congress set forth three main economic targets for the next five years:achieve 6.5%-7% annual growth, maintain inflation around 3% and create 10 million urban jobs. Premier Li Keqiang pledged to relax restrictions in electricity, telecom, transport, petroleum, natural gas and public utilities. He also said that he would “remove hidden barriers” in order to increase private investment and participation in the reform of state-owned enterprises (SOEs). Private companies will get the same treatment as SOEs, in terms of verification, approval, financing, fiscal and tax policies and land availability. The remarks, despite lacking in specifics, sparked optimism among global investors. Billionaire George Soros said that although China will face challenges, a hard landing is unlikely to happen. The NDRC flagged the risks as well, warning against underestimating what it termed as mounting fiscal and financial threats. Premier Li's vow to lift restrictions could lead to greater transparency, and the encouragement of private investment in key traditional sectors will help trim bloated SOEs (although foreign involvement could still be hard to come by). What is ultimately important, however, is how these pledges are implemented. One must remember that the NPC is a feel-good event, not unlike a State of the Union address, and not everything that is said is immediately done.

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