Formally, the legislative proposals from the Chinese government, which are now being presented, are to be approved by the approximately 3,000 members of the annual People's Congress. However, this is a show for the galleries in the one-party state of China.
Everything is always approved
Everything will be met with applause, according to Allan von Mehren, chief analyst and China expert at Danske Bank.
The People's Congress in China is often called a "rubber stamp" parliament. Everything that is presented to the Congress is always approved, he says.
He adds that the proposals have already gone through a long chain of preparatory decision-making in other parts of the Chinese state apparatus.
The People's Congress begins on Wednesday when Prime Minister Li Qiang presents his annual report. It will then normally last for a week, parallel to a large advisory conference where party delegates and representatives from different sectors of society gather.
China's economy is in focus, with the world's second-largest economy stuck in a deep property crisis for over three years.
The government's growth target for 2025 is expected to remain around 5 percent for the third year in a row – despite the average forecast among analysts being around 4.5 percent.
The inflation target has been 3 percent for over 20 years, but it is now speculated that it may be lowered to 2 percent, reports news agency Bloomberg.
Inflation has not been close to 3 percent for many years, says von Mehren, who also believes it may be lowered.
Thousands of billions for stimulus
He also expects China's government to increase the budget deficit to around 4 percent of the country's GDP this year. This would release approximately 8,500 billion kronor for new stimulus and reforms – including increased pensions and benefit levels in social insurance.
There will also be a series of press conferences with Chinese ministers, including Foreign Minister Wang Yi. This may include geopolitical signals, according to von Mehren – perhaps on how China will respond to new US tariffs or views on the conditions for a peace agreement between Russia and Ukraine.
But we know that China wants to maintain a good relationship with Russia. Xi Jinping had a phone call with Vladimir Putin the other day, where they confirmed the close relationship.
They will probably express themselves as they have done before on Ukraine.
Last year, China's GDP growth slowed to 4.8 percent, down from 5.2 percent the previous year. Analysts expect it to be even lower this year, around 4.5 percent.
Domestic demand is weak – marked by a property crisis that has pushed down property prices in the country for over three years.
Retail sales in China increased by only 3.5 percent last year, which can be compared to 7.2 percent the previous year. The growth in China's retail sales is thus, with the exception of pandemic years, the lowest in many years.
The economic headwind is also visible in the price development, where inflation averaged 0.1 percent last year after being 0.2 percent in 2023. The inflation target in China is 3 percent.
Source: Bofit, Finland's central bank
