China's NPC: Here's what to watch for

What to expect from China's NPC

With concerns over the stability of China's financial system at the fore, all eyes will be on the meeting of the country's parliament, the National People's Congress, next week for insight into the government's assessment of the economy and agenda for the coming year.

Beginning March 5, around 3,000 delegates will convene in the Great Hall of the People for a session that is expected to last around nine days.

The NPC is the highest organ of state power that meets yearly to approve policies, laws, the budget and significant personnel changes.

ChinaFotoPress | Getty Images

The two main issues to watch for will be the major economic targets for 2014 and whether authorities will walk the talk of reforms.

Premier Li Keqiang is set to deliver the key economic targets at the opening of the NPC next Wednesday. Although Beijing has toned down the importance of gross domestic product (GDP) growth, it remains the most important economic indicator to watch out, say economists.

The government is widely expected to maintain a 7.5 percent GDP target and 3.5 percent inflation target for 2014 to ensure expectations of stability.

(Read more: Is China'sgrowth slower because it's cleaner?)

"Reform action plans and its implementation will be the focus at NPC and afterwards. To ensure effective delivery of reform measures, Beijing will maintain growth targets at a comfortable range and will likely keep GDP, inflation and targets unchanged," Qu Hongbin, co-head of Asian economics research at HSBC wrote in a report.

However, some believe the government may add some flexibility to the GDP growth target, by setting a "bottom line" for growth or saying "about" 7.5 percent.

What will the reforms focus on?

Aside from economic targets, the government will unveil further details on its reform initiative following last year's Third Plenum meeting in November.

"We expect "reform, innovation and upgrading" to be the buzzwords at the NPC meeting," strategists at Barclays wrote in a report.

(Read more: Can Chinaprotect its prized 7% growth level?)

The key policy priorities will be deepening reforms, mitigating financial risks and stabilizing growth, the bank said.

As such, tackling the country's local government debt problem could be top of the agenda, say economists.

China's renminbi in focus

"We expect local governments will be legally allowed to run fiscal deficits to finance public projects and will be officially given the access to banks and capital markets during the NPC meeting," Sylvia Sheng and Ting Lu, economists at Bank of America Merrill Lynch wrote in a report.

"These measures will provide China's local governments a new source of long-term financing which could help local governments to replace short-term bank and trust loans with longer-duration bonds," they added.

Other key target areas for reforms include the opening up the state-owned enterprise (SOE) sector, financial liberalization, regulating the shadow banking sector as well as tackling environmental issues as cities across China suffer hazardous pollution levels.

(Read more: Get ready for more China shadow-banking defaults)

Announcements that are likely to draw market attention, according to Barclays, include the following: moves to allow private and foreign capital entry into services and state-controlled sectors, more free trade zones, measures to improve rural-urban integration and Hukou reform.

Qu of HSBC says judging by the government's recent positive track record on carrying out reforms, he is optimistic on the implementation of reforms in the months to come.

"A quick review over the 60-point bold reform plan issued after the Third Plenum suggests that action plans over 31 of those have been announced already. These range from the reform of SOEs, the local implementation of the relaxing of the one-child policy…and many more. This recent progress, plus the presence of the Central Leading Group on Reform headed by President Xi, makes us optimistic on the delivery of reforms in the year ahead," he said.

—By CNBC's Ansuya Harjani. Follow her on Twitter @Ansuya_H