The Increasing Insignificance of the Two Sessions

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Headquarters of the National Development and Reform Commission in Beijing. (Source: Wikipedia)

Executive Summary:

  • The annual “Two Sessions” meetings in Beijing are increasingly insignificant affairs, as the lack of genuine policy announcements and restrictions on delegates reduces the space for consultation and deliberation.
  • The government unveiled a new RMB 1 trillion national innovation investment guidance fund, but details are scant and its announcement was relegated to a press conference rather than in a policy document.
  • The new fund will be set up “in the near future” and focuses on strategic early stage “hard science and technology” investments, but its prospects for success are unclear given the track record of previous government guidance funds.

On Tuesday, March 11, The “Two Sessions” (两会) wrapped up in Beijing. These are the annual meetings of the National People’s Congress—the unicameral legislature of the People’s Republic of China (PRC) that comprises nearly 3,000 delegates from across the country—and the Chinese People’s Political Consultative Conference, a political advisory body of a similar size. The headline event is the delivery and approval of the “Government Work Report” (政府工作报告), which summarizes the legislature’s work over the previous year and sets the agenda for the year ahead. The Two Sessions are also an opportunity for a host of other meetings. For instance, President Xi Jinping met with the delegation from Jiangsu Province, various government leaders held press conferences, and groups from different policy constituencies held plenary sessions (Xinhua, March 7, March 8).

Holes in the Process of Democracy

If this year’s keystone political event was notable for one thing, it was the absence, for the most part, of politics. The Two Sessions have long been characterized in Western media as a vehicle for “rubber stamping” the Chinese Communist Party’s agenda with a show of what the Party terms “whole process democracy” (全过程人民民主). This label has been increasingly apposite in Xi’s so-called new era, leading to a waning in the importance of the Two Sessions. The meetings in Beijing have largely ceased to be a platform for major policy announcements, instead becoming avenues for confirming a pre-agreed trajectory. For instance, in this year’s government work report, Premier Li Qiang (李强) begins laying out economic plans for 2025 by encouraging officials to “comprehensively implement the spirit” (全面贯彻落实党的 … 三中全会精神) of the Third Plenum last July and to deploy policies in accordance with December’s Central Economic Work Conference (GWR, March 11). In other words, to continue on the course outlined in previous months.

The trend away from genuine consultation or even vaguely democratic processes at the Two Sessions is evident by comparing the 2025 event to previous years. Lasting only six days, this year’s Two Sessions were relatively curtailed. Prior to the Covid-19 pandemic, the standard was around 10 days—and extended to 15 in 2018, when Xi orchestrated the abolition of constitutional term-limits on the president and announced an overhaul of the government bureaucracy (China Brief, March 26, 2018). In another reduction in government transparency, this year’s meetings also took place without a press conference from the premier, cementing a shift that first took place in 2024. Perhaps most chilling this year was the adoption of amendments to the Law on Deputies (代表法), which forces deputies to “implement the decision-making and deployment of the CCP Central Committee” (贯彻落实党中央决策部署) and “strengthens the management and supervision of representatives in the performance of their duties” (强化代表履职的管理监督) (NPC, March 12). Tighter control on the conduct and scope of deputies hollows out a channel of effective feedback for the regime, and likely will reduce government efficacy (Substack/She Said Xi Said, March 12).

A Policy Announcement that Wasn’t

The Government Work Report makes clear—as do most high-level economic policy documents from the last year—that the leadership in Beijing is convinced that the country’s fortunes depend in large part on achievements in innovation, in particular in “hard science and technology” (硬科技) (PRC Government March 6). The report puts particular emphasis on biomanufacturing, quantum technology, embodied artificial intelligence (AI), and 6G. These sentiments have been reinforced in 2025 with the success around the AI firm DeepSeek. Observers could be forgiven for believing that Xi might have turned the page in his views of the private sector, after he called for the “spirit” (精神) of his February meeting with private entrepreneurs to be studied. This would be a mistake, however—Xi remains committed to enhancing the private sector’s role in supporting national strategic priorities.

At a press conference held by the heads of the National Development and Reform Commission (NDRC), the Ministry of Finance, the Ministry of Commerce, and the Central Securities Regulatory Commission focused on supporting technology innovation, the NDRC’s Zheng Shanjie (郑栅洁) announced a new national innovation investment guidance fund (国家创业投资引导基金) (NDRC, March 6). The fund is expected to total nearly RMB 1 trillion ($138 billion)—the propaganda messaging calls it as a “carrier-class” (航母级) fund—and focus on longer-term investments of up to 20 years. Targeted ventures will be early stage enterprises in the hard science and technology sectors, with the aim of using “market-oriented methods” (市场化方式) to foster the development of strategic emerging and future industries (PRC Government March 6; CCTV, March 7).

Despite its official unveiling, it follows policies NDRC announced in December 2024 along with the State-owned Assets Supervision and Administration Commission to promote the “high-quality development of the central enterprise venture capital fund” (中央企业创业投资基金高质量发展). These policies encouraged state-owned enterprises to set up venture capital funds that focus on early-stage, small-scale, long-term and core-technology investments—in short, targeting the same enterprises that the new fund is intended support (Xinhua, December 2, 2024; WeChat/Economic Observer, March 7).

The new national innovation investment guidance fund was not explicitly addressed in the NDRC’s report delivered on March 13. The report does refer to efforts to build up the country’s strength in strategic science and technology, provide greater fundamental support for scientific and technological advances, and take systematic steps to develop major scientific and technological infrastructure. It also cites plans to provide long-term, sustained support for basic disciplines and original innovation in frontier areas, and—crucially—to “improve the multi-level system of financial services, boost the development of patient capital, and increase support for venture capital through policy-backed finance” (健全多层次金融服务体系，壮大耐心资本，强化政策性金融对创业投资支持) (NDRC, March 13). But the fund itself is not mentioned. Its actual unveiling apparently was relegated to the press conference, though it did receive a dedicated section in a government explainer, which noted that it would be set up “in the near future” (近期).

Responses have been broadly positive, if judged by venture capitalists quoted in state-run media. For instance, an article for the Securities Times reports that the new fund will improve the PRC’s venture capital markets and positively impact the growth of science and technology enterprises. The managing director of a venture capital firm in Beijing interviewed for the piece calls it a “milestone-style major event” (‘里程碑’式的重大事) (STCN, March 10). The new fund does have potential and could become a success, especially if it attracts more market-oriented funds to participate. It appears to have drawn on lessons from Israel’s national fund as well as Shenzhen’s primary government guidance fund, which is one of the country’s most active investors in hard technology (163, March 9).

There are causes for pessimism, however. One issue is the party-state’s poor track record of backing winners. This difficulty is likely to be an acute problem for a fund that, per state news service Xinhua, is not designed for “solely pursuing financial returns” (Xinhua, December 2, 2024). The overarching goal of trying to support innovation in specific, strategic sectors could also limit the likelihood of success. As one article notes, the new fund marks the shift of the PRC’s venture capital system “from ‘market-led’ to ‘national strategy-led + market operation,’ and is the first time that the central government has systematically intervened in the field of early-stage investment” (从‘市场主导’转向“国家战略引领+市场运作”新模式) (WeChat/Economic Observer, March 7). Moreover, research on previous government guidance funds presents a mixed picture. According to an article published in China Quarterly, while such funds “promise to provide a powerful jump-start to nascent tech ventures” in principle, in practice they often “fall short of policy goals, and they may even create some unintended problems.” The authors go on to note that only 26 per cent of guidance funds analyzed—nearly all of which had invested predominantly in state priority sectors—met their target capital size by 2021, and roughly two thirds of them had not made a single investment (China Quarterly, April 19, 2023).

Conclusion

The announcement of a RMB 1 trillion national innovation investment guidance fund contains a number of indications of the declining importance of the Two Sessions as a venue for serious policy-making. The nature of the announcement itself does little to inspire confidence in the venture. Not only was it not directly announced in the NDRC’s report, it also was unveiled with minimal detail and as something that would be established “in the near future.” The announcement of similar—if smaller-scale—funds in early December also suggest there is little novelty in the proposed policy. One unwanted effect that the fund could signal is more corruption. The Government Work Report warned that it remains a common problem; corruption cases before both the Supreme Court and Supreme People’s Procuratorate shot up over 20 percent and 34 percent, respectively, in 2024; and even national champion Huawei has recently has admitted to internal corruption issues (Caixin, March 8; Economic Observer, March 11). The PRC’s technological capabilities may be formidable, and the potential for impactful investment is likely large, but there is much about this new policy that suggests it will underwhelm in the final analysis.