Growth target reiterated, all eyes on AI: What happened at China’s Two Sessions meetings

Some of this year’s highlights included announcements for investments in Artificial Intelligence (AI), and reiterating the target for 5% growth. What exactly happens as part of the meetings and what is their significance for the world’s second largest economy? We explain.

What happens at China’s Two Sessions meetings?

The two sessions see nearly 3,000 NPC deputies and over 2,100 CPPCC members from all parts of China (and the Special Administrative Regions of Hong Kong and Macao) congregate in Beijing for around 10 days.

Members of the NPC are elected through numerous provincial and municipal elections, and are also selected by the likes of the military for five-year terms. The NPC includes people who do not hold membership of the all-powerful Chinese Communist Party (CCP).

China’s Parliament is often described as a “rubber stamp” that lacks real power to accomplish legislative work. This is largely true, though some efforts have periodically been made to institute greater openness and accord the body a more important role. For instance, in 2008, it solicited public comments on major Bills.

It is the NPC’s Standing Committee, comprising around 150 members, which is more closely involved in lawmaking. Even then, the Chinese Communist Party maintains its overall control, as it does over other parts of the Chinese state. The party often makes decisions beforehand and the NPC only ratifies them.

The CPPCC, on the other hand, is a consultative body. It includes private individuals who may not always be members of the Communist Party. Its past delegates include movie star Jackie Chan and descendants of national leaders Mao Zedong and Deng Xiaoping.

What were the major announcements this year?

Economically, the meetings come at a time when China is witnessing slower growth rates compared to its rapid rise in the last few decades. Analysts have pointed to factors such as a crisis in its property sector, Covid-19 lockdowns and unemployment. Linked to all of these issues is low domestic consumption demand that needs to pick up to stimulate the economy.

More recently, China has imposed retaliatory tariffs on imports of coal and liquefied natural gas products, agricultural machinery and large-engine cars from the US, following US President Donald Trump’s new trade measures.

At the opening day of the meetings, Li Qiang acknowledged that consumption was particularly “sluggish” and noted there were “pressures on job creation and income growth”, the South China Morning Post reported. He also promised to “vigorously boost” household demand. On employment, he said targeted help would be provided to fresh graduates, migrant workers and those most in need.

China set its growth target at 5% and a debt-to-GDP ratio at 4% this year (up by one percent compared to the last). Military expenditure was increased by 7.2%, the same as last year, to $245 billion. Stimulus measures to boost spending were also announced.

In an analysis, Neil Thomas, a Fellow of Chinese Politics at the Asia Society think tank, noted, “Strengthening domestic consumption would reduce China’s reliance on what it sees as an increasingly unreliable West. Still, in the meantime, Beijing is more focused on investing in the innovation needed to indigenize high-tech supply chains and reduce dependence on the West.” Notably, a few days before the meetings, Chinese President Xi Jinping met with industrialists from top companies like Huawei, EV maker BYD, Xiaomi, and more.

Lizzi C Lee, a Fellow on Chinese Economy, noted the impact of the Chinese AI model DeepSeek, which took the markets by storm just this year: “That wake-up call made it clear that private firms are indispensable, especially against the backdrop of U.S.-China tech competition.”

Earlier this month, a “state venture capital guidance fund” was announced to focus on fields such as AI and quantum technology, with around 1 trillion yuan ($138 billion) to be mobilised over 20 years.

Local governments are also being encouraged to compete with one another to build AI clusters, robotics hubs and biotechnology centres, even as Xi has emphasised the need for a “nationally coordinated STEM talent pipeline”.