VAT cuts announced at Two Sessions took effect 1 April 2019. The cuts are already making an impact: gasoline, diesel, electricity, natural gas, automobiles, and Apple mobile phones have all been priced down.
Approved by the top legislature on 15 Mar 2019, the Foreign Investment Law will come into effect on 1 Jan 2020 (see 29 March cp.signal: Foreign Investment Law outlook) At the Bo’ao forum on 28 Mar, Premier Li Keqiang 李克强 addressed implementation concerns, pledging central oversight and effective enforcement, as well as a shortened negative list and catalogue of encouraged industries by June 2019.
The Two Sessions were subdued in comparison to the full reorganisation of government in 2018, but the meetings were productive nonetheless. Major macroeconomic themes were consistent with the December 2018 Central Economic Work Conference, focusing on internal demand expansion through state-led infrastructure investment, tax cuts, and consumption promotion.
The highly anticipated Foreign Investment Law was passed 15 Mar 2019, coming into effect 1 Jan 2020.
On Friday 22 March, Ministry of Agriculture and Rural Affairs (MARA) foreshadowed targeted subsidies and support for pig farms aimed at stabilising the sector as impacts of African swine fever intensify.
The Government Work Report delivered by Premier Li Keqiang 李克强 on 5 March was sombre, reporting lower growth and referring repeatedly to economic headwinds. The implied political ‘risks and concerns’ he references are more difficult to parse but refer to the social effects of continuing trade pressure and slow growth. Long-standing ambitious targets have not been abandoned, but are subject to modification in light of new political and economic realities.
The 2019 government work report places heavy emphasis on the ‘new urbanisation’ initiative, pledging hukou reform, urban governance improvements, and better coordination, connectivity, and integration within city clusters.
Unleashing internal demand through state-led infrastructure investment, tax cuts, and consumption promotion is the macroeconomic theme; this flows from strategies set at the December 2018 Central Economic Work Conference and quarterly Politburo economic meetings.
The ‘Two Sessions’, annual legislative and consultative meetings now underway in Beijing are never as merely decorative as often portrayed. The bills voted on have been debated for months, sometimes years, and while appearance on the agenda makes their passage virtually certain, deliberation has often been lengthy and contentious.
World headlines were dominated first by US-China trade talks and then the Kim-Trump summit in Hanoi, heavy with China implications. Both resulted in stalemate, with decisions placed on hold or rhetorically finessed.
US-China trade negotiations are nearing their 2 Mar 2019 deadline before another tariff hike. After China promised to import more US products at a late January meeting, the two sides met again 14-15 Feb 2019 in Beijing before moving to Washington.