China entered 2021 with cause for optimism as the country fared better than most during the pandemic and reported economic growth in 2020. However, to caveat, most of China’s gross domestic product (GDP) growth in 2020 can be attributed to the country resorting to former engines of growth such as gross capital formation (i.e. public infrastructure investment), while other sources of growth such as private consumption took a back seat as firms and households 

reeled from pandemic-induced interruptions. Fortunately, there have been signs that household consumption may be recovering, and although coming from a low base of comparison, the record GDP growth in the first quarter of 2021 affirms China’s recovery. With the economy recovering, the government will probably want to focus on supporting more sustainable drivers of growth. Interventions from monetary and fiscal policy will also be more targeted and direct, reining in risk at the same time. 

With this, the country’s more medium- and long-term planning is ready to take centre stage. March saw the culmination of the annual Two Sessions (Lianghui), which attracted widespread attention due to the release of the 14th Five-Year Plan (FYP), which included for only the second time since the 1990s a long-term vision to 2035. The Two Sessions highlighted issues such as increased environmental protection, securing food and energy security, boosting consumption, accelerating structural reform, innovation and digitalisation, rural revitalisation and more.