What should investors take away from China’s National People’s Congress?

On March 5th, China began its most important annual political gatherings: the National People’s Congress and Chinese People’s Political Consultative Conference. These events highlight the central government’s priorities for the year ahead, with 2021 also a year with a new Five Year Plan (FYP). For the year ahead, the quality of growth will matter more than the quantity, with a focus on normalizing growth drivers and policy. Most importantly, the 14th FYP sets China’s path forward, focused on: 1) technological innovation, 2) domestic demand, and 3) energy transition. While the cyclical priorities grab the headlines and may drive some short-term volatility, the medium-term priorities are what investors should align themselves with and can boost structural portfolio returns.