Investors ready for action as President Xi would open NCP

The world’s leading investors are poised for action as China’s National People’s Congress (NCP) looks set to signal political and economic change.

According to reports, the NPC is one of the most important political events in the world’s second largest economy. It is the annual meeting of the highest body of state power and the country’s highest legislative body.

Commenting on the significance of the event, Nigel Green, CEO and founder of the deVere Group, one of the world’s largest independent financial advisory, asset management and fintech organisations, says: “Investors always watch the NPC closely for indicators of changes in economic policy that could impact financial markets and business in China – but this year’s event is more critical.

“This is the first NPC since China moved away from its zero-Covid policy to combat the pandemic. It also comes as Xi tightens his grip on power.”

“Global investors will be looking for signals about China’s policy priorities and goals, and potential opportunities and risks.”

Five sectors can benefit from NCP agenda

Green said up to five sectors could benefit from the latest policy agenda to be unveiled this weekend, listing technology, infrastructure, healthcare, renewable energy and consumer goods as the most likely targets for change.

“China’s focus on innovation and technology has been a major theme in past NPC events. Beijing has committed to increasing investment in areas such as artificial intelligence, semiconductors and 5G,” Green confirmed.

He continued: “Domestic and foreign companies involved in these sectors may receive increased public support.

“The NPC usually includes rhetoric about infrastructure investment, including plans for new roads, railways, among other public works projects.”

Addresses China’s aging population

A serious social problem facing China is its aging population. The one-child policy, implemented for decades as part of the communist regime’s population control strategy, has resulted in a reduced replacement rate for the younger generations. It has also caused a serious gender imbalance, with 30 million more young men in China than women.

This has compounded the problem of the aging population because fewer marriages are taking place, and the old One Child policy mantras still discourage young couples from growing their families beyond the “one child” limit.

Green notes that “China’s aging population has led to increased demand for healthcare, and the government has prioritized improving healthcare, including further investment in areas such as medical research, new hospitals and pharmaceuticals.”

China is reducing emissions

News that would be welcomed globally would be efforts by China to cut its global emissions. Currently, as the world’s manufacturing powerhouse, China’s green agenda has left much to be desired as Western nations struggle to reach 2030 net zero targets.

Green said: “Beijing has set ambitious targets for cutting greenhouse gas emissions, and the NPC often includes highlights of how it aims to meet those targets.”

Rise in consumerism among China’s middle class

But the emissions targets must be balanced with room to boost China’s growing demand for consumer goods, which shows no sign of slowing down. “As China’s middle class continues to grow, there is increasing demand for quality consumer goods. Entities involved in areas such as retail, luxury goods and e-commerce will benefit from increased consumer spending,” Green pointed out.

There is hope for change from sustainable finance directions as President Xi recently ordered China’s bankers to “clean up” their activities and embrace less hedonistic lifestyles.

“This reflects his broader goals of promoting traditional Chinese values, tackling corruption and maintaining social stability and a more modest lifestyle.”

Green added: “The importance of this event to global investors, which will shape the world’s second largest economy, cannot be overstated.”