3 Things Singapore Investors Should Know From China’s National People’s Congress

The annual National People’s Congress (NPC) session in China is currently underway. The session, which kicked off over the weekend, typically lasts for 10 to 14 days. At the start of the session, Premier Li Keqiang delivered the annual work report.

China is Singapore’s largest trading partner. Meanwhile, many large Singapore-listed companies, such as Wilmar International Limited (SGX: F34)CapitaLand Limited (SGX: C31), and Global Logistic Properties Ltd (SGX: MC0), count China as a key geographical market. Thus, it might be important for us, investors in Singapore, to keep an eye on what the government in China is planning for 2017 and beyond.

Here are three things from Premier Li’s report that are worth noting.

Slower growth expected in China

Premier Li gave guidance of 6.5% for China’s economic growth in 2017. This is lower than the 6.7% growth rate achieved by the country in 2016. The lower growth projection highlights the decline in China’s economic growth and the fact that the country is faced with multiple challenges at the moment.

The country’s finance ministry will also be looking for ways to reduce local government debt. According to a research note from Swiss bank UBS, China’s debt-to-GDP ratio has risen from 254% in 2015 to about 277% in 2016.

More private sector involvement

The government is looking to promote more involvement from the private sector in markets that have traditionally been heavily controlled by state-owned enterprises (SOEs). Some of these markets are electricity, transport, petroleum, and telecommunications.

China would also be looking to move forward with major reforms of its SOEs in 2017. One particular sector that would be targeted is steel.

Environmental promises

Air quality has been a hot-button topic in China over the past few years as more and more cities are faced with smog-filled skies.

The government has promised to look into upgrading its coal power plants to improve efficiency and fight air and other forms of environmental pollution.

Foolish Summary

So, it seems that China is continuing on its path of reforms. Although the country is projecting slower economic growth, it’s worth keeping in mind that China is still one of the fastest growing countries in Asia. For context, Singapore is forecasting economic growth of between 1% and 3% for 2017.

China’s emphasis on promoting private businesses to compete with its SOEs is a great sign that the country’s economy is becoming more liberal. The promise to fight pollution is also a good step to take as the current environmental situation in the country is unsustainable. The upgrading and replacement of current pollutive infrastructure may mean more spending by the government.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Stanley Lim owns shares in Wilmar International.