China outlines economic priorities at NPC opening

Chinese authorities have set a GDP growth target for this year at between 6 to 6.5-percent. The goal has been laid out during the opening of the NPC session in Beijing.

Premier Li Keqiang announced the projected growth target while delivering the government’s work report to the National People’s Congress, China’s top legislature, which opened its second session Tuesday morning at the Great Hall of the People in Beijing.

“Our main forecast of economic growth targets for this year are a GDP growth of 6 to 6.5 percent, creating over 11 million new urban jobs, a surveyed urban unemployment rate of around 5.5 percent, a registered urban unemployment rate within 4.5 percent, and a consumer price index increase of around 3 percent,” says Li Keqiang.

Last year, China’s economy grew 6.6 percent, above the official target but lower than the 6.8-percent growth registered in 2017. This comes as the Chinese government has chosen to shift its growth model from an investment-and-export-driven one toward a more sustainable style that draws strength from consumption, services and innovation.

In a bid to strengthen a more sustainable growth model, authorities have announced plans to increase value-added tax reforms. The government will reduce the current value-added tax rate of 16 percent for manufacturing and other industries to 13 percent. Tax rates in the transportation, construction, and other industries will be reduced from 10 percent to 9 percent.

Supporting measures, such as increased tax deductions for producer and consumer services, will be brought in to ensure tax burdens across all industries do not go up.

“We will introduce general benefit and structural tax cuts, focusing primarily on reducing tax burdens on the manufacturing sector and on small and micro businesses. We will reduce the tax burdens and social insurance contributions of enterprises by nearly 2 trillion Yuan this year.”

The country is also planning to upgrade traditional industries and speed up the growth of emerging sectors. Premier Li Keqiang says more is going to be done to bolster innovation, while integrating the development of advanced manufacturing and modernized services.

“We will increase support for basic research and application-oriented basic research, step up original innovation, and work harder to achieve breakthroughs in core technologies in key fields. We will build enterprise-led mechanisms for bringing together firms, universities, and research institutes to engage in innovation. Innovation cooperation with other countries will be expanded,” says Li Keqiang.

The government will also strengthen intellectual property rights protection across the board, toughen the fines for IPR offenders, while promoting the goal of creating more Chinese-developed inventions and their industrial application.

Meanwhile, authorities say they intend to do more to attract foreign investment this year. The government is going to relax market access and shorten the negative list for foreign investment, which should mean more access to foreign investment.

“We will continue to implement measures for reform and opening-up for financial and other industries, and perfect policies for the further opening of the bond market. We will construct a fair market environment that treats domestic and foreign investment enterprises equally and without discrimination, with fair competition. We will also strengthen protection for the legitimate rights and interests of foreign entrepreneurs,” says Li Keqiang.

Authorities have also laid out a new fiscal deficit target of 2.76 trillion yuan, or 2.8 percent of GDP. This is up slightly from the 2.6 percent of GDP the deficit rose last year.

Total government spending is budgeted at over 23 trillion yuan, up by 6.5 percent from last year. The Premier says the increase in government spending is being done to stabilize economic growth.

The government also intends to expand investment, while accelerating a number of key projects. Some 800 billion yuan will be invested in railway construction, as well as 1.8 trillion yuan in road construction and waterway projects this year.