China’s legislature meets this week and next

Starting Wednesday, the 3,000 members of China’s legislature, the National People’s Congress (NPC), will begin its annual round of meetings. The meetings will last until next week and during this time, the NPC will pass bills, approve the budget and endorse leadership nominations. The Chinese People’s Political Consultative Conference (CPPCC), which began to hold meetings today, will host meetings alongside the NPC. The CPPCC comprises more than 2,200 delegates from all sectors of society, including non-Communist Party members. The CPPCC is meant to be an advisory body offering opinions and advice on policies.

This year, the NPC is expected to approve a massive restructuring plan for the government, including a major reshuffling of Premier Wen Jia-Bao’s cabinet. New vice-premiers, Li Ke-Qiang, Zhang De-Jiang and Wang Qi-Shan, will likely take up more prominent roles in the government. Two other vice-premiers, Wu Yi and Zeng Pei-Yang, are expected to step down. Overall, a new leadership in the cabinet, judiciary and military will be formed.

The NPC is also expected to proceed with the streamlining of China’s ministries. The number of ministries is likely to be reduced sharply. Some departments which have overlapping briefs with others will be eliminated. For instance, agriculture, forestry and water may be merged into one entity and the transportation ministry may eventually oversee communications, railways and aviation. The hope is that efficiency will be boosted and policy-making will be more effective.

If any surprising policy implications come out of the meetings, both China and Hong Kong’s stock markets could be impacted. Some expect measures to come out that will be favorable to share prices and, as a result, China’s domestic stock markets rose today, although Hong Kong’s fell. It could be an interesting week ahead, or it could be a non-event. Time will tell.