China, and in a sense the wider world, is keenly awaiting the upcoming annual two sessions, which set the country’s policy priorities and targets for growth, inflation and government expenditures for the coming year, among others.
With the country’s economic strength and global influence continuing to grow, observers, business communities and even ordinary people are paying growing attention to the concurrent annual plenary meetings of the National People’s Congress (NPC) and the National Committee of the Chinese People’s Political Consultative Conference, that are usually held in early March, looking for guides to the development prospects of the world’s second-largest economy.
Last year, amid a complex and challenging landscape marked by mounting external pressures and internal economic difficulties, the central government responded with composure and comprehensive measures. Notably, the decisive deployment of a package of new policies in late September enabled precise and robust macroeconomic stimulation, effectively mitigating economic risks and bolstering market confidence, which led to a significant economic rebound. It is expected that this year’s two sessions will unveil new strategies and initiatives to promote high-quality development and atychieve the year’s socioeconomic goals.
Hong Kong is an independent economy, yet its economic ties with the Chinese mainland are getting increasingly close. Strategizing the Hong Kong Special Administrative Region’s future development by leveraging national policy insights from the two sessions is, therefore, a critical task for the SAR’s governance team. The following policy areas are of particular relevance to Hong Kong and thus warrant Hong Kong society’s attention.
Boosting ‘new quality productive forces’ momentum
China’s scientific and technological achievements in recent years, such as the recent emergence of DeepSeek, an AI model that has stunned the global tech community, were not attained by chance. Behind those achievements lies the central government’s strategic vision and efforts to promote the development of new quality productive forces for the purpose of developing strategic emerging industries and future industries in the country.
Last year’s government work report delivered by Premier Li Qiang to the NPC put an emphasis on vigorously advancing construction of a modernized industrial system and accelerating the development of new quality productive forces, signaling the transition of this concept from theory to concrete action. This year’s government work report is expected to outline new measures for accelerating the development of new quality productive forces, which deserve close attention.
The anticipated policy support from the two sessions for the private economy’s high-quality development is another area for Hong Kong society to watch closely. To make the most of the central government’s national development strategy, the SAR government and society will no doubt pay great attention to policies in these four areas
Expanding domestic demand
Consumption is one of the three key drivers of economic growth on the mainland. However, the mainland consumer market has underperformed since the COVID-19 pandemic receded. In September 2023, the central government introduced a policy mix aimed at enhancing income growth, social security, consumption subsidies and tax relief to stimulate domestic spending. This marked the most substantial policy package since 2009, and initial results are emerging. According to the National Bureau of Statistics, the mainland’s total retail sales of consumer goods grew 3.5 percent year-on-year in 2024.
Nevertheless, given the mainland’s vast economic scale, a 3.5 percent growth in retail sales remains insufficient to fully support overall economic expansion. There is still significant room to boost domestic demand and consumption.
National policies to expand domestic demand will benefit Hong Kong’s related industries. First, the tourism and retail sectors stand to gain. Last year, the central government rolled out policies to support mainland residents traveling to Hong Kong and Macao for sightseeing and shopping. If further measures are introduced to enhance income and social security, mainland residents may feel more confident about spending, leading to increased expenditures by mainland visitors in Hong Kong. Second, the cultural and entertainment industries could thrive. Hong Kong’s recent push for the development of an event-driven economy, including large-scale concerts, exhibitions and sports events, aligns with the policy of unlocking mainland consumption potential. Third, logistics may see growth. As mainland residents’ consumption preferences change, demand for high-end imported goods will rise, positioning Hong Kong — a key logistics hub — to capitalize on this trend. Specific measures to unleash consumption potential during this year’s two sessions merit close scrutiny by Hong Kong stakeholders.
Expanding export markets
Exports have long served as a major engine for the mainland’s economic growth. Post-pandemic, thanks to a series of central government policies to promote exports, the mainland’s export sector has begun to recover. In 2024, total exports reached 25.45 trillion yuan ($3.49 trillion), up 7.1 percent year-on-year. Notably, export market diversification has accelerated, with exports to Belt and Road Initiative participating countries growing 9.6 percent and to Association of Southeast Asian Nations 13.4 percent. China is now the primary trading partner for over 150 countries and regions.
As a global reexport hub, Hong Kong facilitates the flow of mainland goods to international markets. Simultaneously, its role as an international financial center enables it to provide financial services supporting mainland exporters. However, significant fluctuations in US-China trade could adversely impact the city.
Amid export market uncertainties, risk mitigation has become a pressing concern. The policy signals from the two sessions on this front will be significant for the SAR government and the business community.
Boosting the private economy
The private sector contributes 50 percent of the mainland’s tax revenue, 60 percent of GDP, and 80 percent of employment, making it a vital engine of the national economy. However, headwinds such as weaker market confidence, insufficient vitality and an unfavorable operating environment have emerged.
The central government attaches great importance to these headwinds and is addressing them through institutional reforms. The draft Private Economy Promotion Law, currently under deliberation, proposes 31 measures to improve the sector’s ecosystem, facilitating high-quality development of the private economy.
High-quality development of the mainland’s private economy will benefit Hong Kong in multiple ways. Financially, the growth of mainland private enterprises will spur demand for financing, initial public offerings and cross-border investments. Hong Kong’s financial sector will benefit from meeting growing demand for these services. In the area of technology and innovation, collaboration between mainland firms and Hong Kong — leveraging the city’s research resources, internationalized environment and intellectual property protection regime — may deepen, attracting mainland tech companies to establish research and development centers or pursue joint ventures. Additionally, expansion by mainland private enterprises could drive demand for Hong Kong’s commercial real estate.
The anticipated policy support from the two sessions for the private economy’s high-quality development is another area for Hong Kong society to watch closely. To make the most of the central government’s national development strategy, the SAR government and society will no doubt pay great attention to policies in these four areas.
The author is vice-chairman of the Committee on Liaison with Hong Kong, Macao, Taiwan and Overseas Chinese of the National Committee of the Chinese People’s Political Consultative Conference, and chairman of the Hong Kong New Era Development Thinktank.
The views do not necessarily reflect those of China Daily.
