The National People’s Congress (NPC): The World’s Largest Legislative Body

With approximately 3,000 delegates, the National People’s Congress (or NPC, as it tends to be abbreviated) represents the #1 legislative/parliamentary body worldwide in terms of sheer size but… realistically speaking, not that much else.

Why?

Technically speaking, the NPC is supposed to be the #1 organ of the state according to the 1982 constitution, with Xi Jinping himself as well as the other Politburo Standing Committee (a topic covered through a stand-alone article) members also being National People’s Congress deputies. In reality, however, its role is oftentimes to the point of pretty much always rather formal.

To put it differently, let’s just say laws are drafted well before they reach the NPC floor, with the NPC essentially giving them the proverbial seal of approval, a status quo which revolves around the ceremonial dimension more so than meaningful separation of power. In fact, the Ash Center for Democratic Governance (Harvard University) famously or infamously called the NPC “a ceremonial legislature” and not much else.

Simply put:

1. There are indeed approximately 3,000 delegates who hold office for 5 years but they only formally gather once per hear
2. As such, a so-called standing committee of roughly 150 members (which meets every couple of months) and consists of members chosen from the previously mentioned delegates holds more influence
3. Theoretically speaking, the NPC is allowed to enact laws and even alter the constitution (even the top leaders of China are elected by it, including the President and Vice-President) but in reality, pretty much all initiatives originate from the Communist Party of China, with the fact that most delegates are also CPC members speaking for itself
4. There have been instances where the NPC delayed the passing of laws such as a one involving a controversial fuel tax back in 1999, but such episodes (even if they have increased in frequency) are sporadic
5. When it comes to certain aspects (for example drafting laws pertaining to human rights), the NPC does tend to have a greater degree of independence, with “greatER” being the operative term… let’s just say that, again, it would be overly optimistic at best to expect Western separation of power levels

Does this mean the NPC doesn’t have that much of a “real-world” utility?

Not necessarily.

While it is true that its role is oftentimes ceremonial, at least we are referring to… well, the most important ceremonies that have to do with China and its interests/goals.

For example, the most important policy directions of China are famously announced via the NPC platform, with the most recent headline-grabbing example most likely being the 2018 decision of eliminating term limits from the equation, thereby paving the way for Xi Jinping to remain the Paramount Leader… indefinitely, something which can most definitely be considered a game changer with respect to geopolitical implications.

Formally speaking, it is also worth noting that the so-called Chinese People’s Political Consultative Conference takes place at the same time as the gathering of 3,000 NPC delegates, with the two of them being referred to as “lianghui” as a duo, the “two sessions” if you will. Again, grandeur and festivity are the operative terms, with the events in question being hard to ignore, from headline value (the important policy shaping initiatives that are announced) to prestigious attendees and guest speakers.

All in all, when it comes to this topic and many (many!) others, we are once again in “this time it’s different” territory.

The manner in which things work over in the National People’s Congress is in downright blasphemy territory from the perspective of Western democratic values. Why? Simply because in the West, meaningful separation of power represents a core pillar of democracy, with systems of checks and balances meant to ensure that independent entities keep each other in check.

But China is… well, not a democracy.

As such, as true as it may be that the activity of the NPC tends to be in masquerade territory compared to the far more independent Western parliamentary bodies, you as an investor in Chinese assets simply have to come to terms with the realities surrounding China. Not just the pleasant ones which revolve around generational wealth building opportunities but also (or should we say especially?) the less than pleasant ones.

The de facto Communist Party of China dominance is here to stay.

China is not exactly in a hurry to embrace democracy.

Socialism with Chinese characteristics isn’t going anywhere anytime soon.

China doesn’t make embracing Western-level human rights values a priority.

Legislatively speaking, China is anything but an oasis of predictability, with a select few entities being powerful enough to shape policy in whichever manner they deem necessary and the NPC as a legislative body oftentimes doing little more than granting a formal seal of approval.

The list of “things are different in China” examples could go on and on. As an investor in Chinese assets, you can literally not afford to be a contrarian when it comes to the direction toward which China is heading. You may very well be right and your values may very well be a better choice for China’s future but it matters little what you think at the end of the day.

China is what it is, with the good, bad and frequently ugly this tends to come with. Your journey as an investor will therefore be anything but a walk in the park compared to more established jurisdictions but, needless to say, there financial incentives more than make sense. Should you be interested in guidance from a team of experts with its fingers firmly placed on the pulse of the “real” China and who don’t hypocritically hide under various platitudes with little actual real-world applicability, the ChinaFund.com team is only a message away.