Author: Miro Li

Influence Matters’ Account Executive, Miro, has distilled valuable insights for international companies in China from the four main findings of the 2024 Two Sessions.

From March 5th to March 11th, the Second Session of the 14th National People’s Congress and the Second Session of the 14th National Committee of the Chinese People’s Political Consultative Conference (“Two Sessions”) were held in Beijing as scheduled. Influence Matters has been closely following the government work report, policy decisions, and relevant media coverage, aiming to provide policy interpretation and communication strategies for global investors and decision-makers of enterprises already operating in China who are concerned about the development of the Chinese market.

Source: Xinhua

1. New Quality Production Forces Guide High-Quality Development

*Editor’s Note: New quality production forces refer to “contemporary advanced productive forces generated by revolutionary technological breakthroughs, innovative allocation of production factors, and deep transformation and upgrading of industries. Their essence lies in the qualitative change of the optimal combination of laborers, labor materials, labor objects, and their core manifestation is the improvement of total factor productivity.”

“The new quality production forces have been formed and demonstrated strong driving force and support for high-quality development.” “General Secretary Xi Jinping has delivered important speeches on developing new quality production forces and solidly promoting high-quality development, summarizing and summarizing new quality production forces in theory and using them to guide new development practices.”

People’s Daily Commentator: Li Zheng

During the deliberations of the Jiangsu delegation at the Second Session of the 14th National People’s Congress, General Secretary Xi Jinping emphasized, “We must firmly grasp high-quality development as the primary task and develop new quality production forces in a way that suits local conditions.” In the 2024 government work report, “vigorously promoting the construction of a modern industrial system and accelerating the development of new quality production forces” is listed as the first of the ten major tasks, and specific deployments such as “promoting industrial innovation with technological innovation” have been made.

Li Jinghong, a member of the National Committee of the Chinese People’s Political Consultative Conference and academician of the Chinese Academy of Sciences, said in an interview with China Economic Times that the essence and driving force of productivity are undergoing unprecedented changes. Emerging and efficient technologies and management models are replacing the growth mode and structure of traditional productivity. New quality production forces are emerging as the emerging productive forces that can lead to industrial upgrading and social progress.

Influence Matters Insights:

Since the first introduction of the concept of “high-quality development” by the Chinese government in 2017, various sectors of society have begun to explore and practice the subversion of traditional productivity growth models. For example, since the advent of generative AI, the industrial sector has further moved towards intelligence based on automation and digitization. New energy vehicles have also gained the ability of intelligent driving on the basis of electrification. More industries vividly demonstrate the high-quality development trends empowered by AI and have become typical representatives of new quality production forces.

From a market perspective, strategic emerging industries and future industries undoubtedly serve as the main battlefield for the formation of new quality production forces. Against the backdrop of the comprehensive lifting of access restrictions for foreign investment in the manufacturing sector this year, industries such as new energy vehicles, new materials, information technology, and high-end equipment manufacturing have opened up avenues for foreign enterprises to develop new quality production forces.

Communication Strategy by Influence Matters:

Foreign enterprises in China, especially technology-based enterprises, should pay more attention to integrating product and technology, supply chain development, and sustainable development in their external communication processes. This reflects their roles and positive contributions in participating in and constructing new quality production forces.

2. Trade Goes Offshore, Improves Quality and Stabilizes Quantity

During the third session of the 14th National People’s Congress “Ministerial Passage” interview event, Yu Jianhua, the Commissioner of the General Administration of Customs, stated to the media that this year, on top of implementing the 16 measures to optimize the business environment introduced by the customs, they will enhance the level of service, further leverage the role of the “single window” for international trade, and create a “one-stop comprehensive service platform.” In terms of smart customs, the Chinese customs will strengthen communication and cooperation with customs administrations worldwide, enhance coordination with local governments, relevant departments, and enterprises, and achieve system interconnection, data sharing, and mutual utilization.

Insights from Influence Matters:

The Chinese customs is the world’s largest customs administration in terms of goods trade and faces the largest trade volume globally. In 2024, there is a plan to increase the proportion of enterprises expanding exports and imports by 23%. With the vigorous development of cross-border e-commerce, fragmentation of international trade, and diversification of foreign trade entities, the complexity of customs work has dramatically increased. From the perspectives of risk control and facilitating outbound trade, it is urgent for port departments and enterprises to jointly build a smart customs. The Chinese government has shown great openness and diversity in cooperation for smart customs construction, not only emphasizing collaboration with domestic enterprises but also actively seeking mutually beneficial cooperation with major trading partners.

From a market perspective, in the coming years, against the backdrop of high-quality development of the Belt and Road Initiative and deepening trade cooperation in the ASEAN region, from a technological perspective, smart customs empowered by AI, cloud computing, and big data will become a new infrastructure for deepening trade cooperation between China and countries along the Belt and Road and ASEAN countries. In terms of services, Chinese enterprises with in-depth understanding of destination countries’ policies and cultures and rich experience in regional cross-border trade will usher in a new round of growth.

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In the communication process of trade and supply chain digital technologies and service-oriented enterprises, it is particularly important to simultaneously focus on both 2G (Government to Government) and 2B (Business to Business) communication, highlighting the role of technology and services in enhancing trade digitalization, as well as the economic benefits and supply chain efficiency brought to cross-border trade and e-commerce enterprises. At the same time, by combining with the media attention generated by industry exhibitions such as the China International Import Expo, Digital Trade Fair, and Chain Expo, it is important to tell the story of enterprise participation in the construction of the industry ecosystem to explore more cooperative value.

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3. Unwavering High-level Opening to the Outside World

Premier Li Keqiang stated in the government work report that China will expand high-level opening to the outside world and promote mutually beneficial cooperation. China will actively align with high-standard international economic and trade rules, steadily expand institutional opening-up, enhance the linkage effect between the domestic and international markets and resources, consolidate the foundation of foreign trade and foreign investment, and cultivate new advantages in international economic cooperation and competition.

Similar to the past few years, the government work report for 2024 once again sends a positive signal that China will expand high-level opening to the outside world and promote mutually beneficial cooperation. Lai Mingyong, a member of the National Committee of the Chinese People’s Political Consultative Conference and part-time professor at Hunan University’s School of Economics and Trade, stated in an interview with Xinhua News Agency that China’s practice of opening up to the outside world demonstrates that only high-level opening can effectively respond to the increasingly urgent global development challenges.

It is worth mentioning that the State Administration for Market Regulation also emphasized the role of standards in expanding high-level opening to the outside world this year. China will expand institutional opening through standards and strongly support the equal participation of foreign-invested enterprises in the formulation of standards.

Many foreign companies, such as AstraZeneca, Panasonic, Royal Caribbean Group, Amazon, Amorepacific China, and Tensilk, have expressed that China’s stable and open economy and policies will continue to provide a broad space and abundant opportunities for foreign-invested enterprises. The government work report also proposes the comprehensive cancellation of restrictions on foreign investment access in the manufacturing sector, which is a strong testament to China’s determination to expand high-level opening to the outside world.

Insights from Influence Matters:

Against the backdrop of profound changes in the international investment environment, China is taking practical actions to enhance high-level opening to the outside world by expanding the scope and depth of openness and providing a stable, transparent, and fair policy environment for foreign-invested enterprises. The manufacturing sector, as a pioneer in high-level opening to the outside world, has completely lifted restrictions on foreign investment access, and this policy will be long-lasting. Institutional opening means that foreign-invested enterprises not only have access to the vast Chinese market but also enjoy rights and guarantees in terms of rules, management, standards, and intellectual property.

Communication Strategy by Influence Matters:

For foreign-invested enterprises in China, it is important to thoroughly understand China’s policy orientation and market environment in their communication efforts. Communication strategies should be developed based on both policy and market considerations that align with China’s national conditions. Brand reputation management becomes even more crucial, and foreign brands can actively build their corporate citizenship image in the Chinese market by emphasizing their investment, contributions, and integration in the Chinese market. By maintaining long-term relationships with mainstream and industry media, they can achieve a deep-rooted brand reputation.

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4. Renewal and Upgrading of the Domestic Market to Enhance Quality

During the “Two Sessions” (referring to the annual meetings of the National People’s Congress and the Chinese People’s Political Consultative Conference), Zheng Zhajie, the director of the National Development and Reform Commission, stated that in 2024, China will promote major initiatives for large-scale equipment updates and the replacement of consumer goods. In terms of equipment updates, the focus will be on seven sectors including industry, agriculture, construction, transportation, education, culture and tourism, and healthcare. The aim is to carry out updates and transformations in the directions of energy conservation and carbon reduction, ultra-low emissions, safety production, digital transformation, and intelligent upgrading. In terms of consumer goods, the government will encourage and promote the replacement of products such as automobiles, household appliances, and furniture.

Insights on Influence Matters:

In the industrial field, the comprehensive volume of the automobile, household appliance, and home improvement markets is huge, and the potential demand for updates has entered a period of concentrated outbreak. Just the replacement and upgrading of automobiles and household appliances alone can create a market worth nearly trillions of yuan. Due to the high market stock of industrial equipment, there is a high willingness among enterprises in various sectors to actively upgrade towards intelligence, greening, and digitization. From a market perspective, industries related to intelligent industrial equipment, smart home appliances, new energy vehicles, and recycling systems will experience accelerated development.

Communication Strategy by Influence Matters:

China’s promotion of large-scale equipment updates and the replacement of consumer goods aims to expand domestic demand through “enhanced quality.” Therefore, the relevant enterprises mentioned above should emphasize quality advantages, technological advantages, safety advantages, environmental advantages, and other topics suitable for key communication in the process of dissemination. At the same time, they should also highlight the cost-effectiveness of products and services within the framework of actively promoting the country’s economic circulation.