China
China remains committed to stabilizing jobs and clinching poverty alleviation target
Due to the novel coronavirus disease (COVID-19) outbreak, the session had been postponed by more than two months and the report had been revised several times to adapt to the changing landscape. With its length slashed by half, it became the shortest of its kind and probably the most modified one in the past four decades. However, it carried no less weight
By Li Nan  ·  2020-05-29  ·   Source: NO.23 JUNE 4, 2020
The Third Session of the 13th National People's Congress opens at the Great Hall of the People in Beijing on May 22 (XINHUA)

There are several new things about the 2020 Report on the Work of the Government that Chinese Premier Li Keqiang delivered at the Third Session of the 13th National People's Congress (NPC), China's top legislature, on May 22.

Due to the novel coronavirus disease (COVID-19) outbreak, the session had been postponed by more than two months and the report had been revised several times to adapt to the changing landscape. With its length slashed by half, it became the shortest of its kind and probably the most modified one in the past four decades. However, it carried no less weight.

While it mentioned no specific GDP growth target due to the global uncertainties caused by the virus, it highlighted the major measures to be taken to cope with the new situations and upcoming challenges. Employment, keeping enterprises afloat, poverty alleviation and unsurprisingly, COVID-19 prevention and control, were the buzzwords in the report.

Jobs over GDP

The government has set no specific target for economic growth this year. "This is because our country will face more factors that are difficult to predict in its development due to the great uncertainties regarding the COVID-19 pandemic and the world economic and trade environment," the premier said at the session.Last year, China's GDP reached 99.1 trillion yuan ($13.8 trillion), representing a 6.1 percent increase over the previous year, according to the report. However, the COVID-19 outbreak dealt a heavy blow to China's economy, which contracted by 6.8 percent year on year in the first quarter, the first decline since 1992, when the official quarterly growth data was first released.

But although there is no specific goal for economic growth, employment remains a highlight, Liu Shijin, Deputy Director of the economic committee of the National Committee of the Chinese People's Political Consultative Conference, the top political advisory body, said in an online interview. The word jiuye, or employment, was mentioned 39 times in the report.

Liu said setting no economic growth target is both due to the special reasons and an attempt to explore new ways for development. "If the employment rate reaches an appropriate level or stable employment can be ensured, from the perspective of the economy it means that social resources would be fully used," he said.

Wen Bin, chief economist with China Minsheng Bank (CMB), told Beijing Review that stabilizing employment is a priority task for the government this year as the epidemic has led to fewer new urban jobs during the past months compared with the corresponding period last year. According to the Ministry of Human Resources and Social Security, 2.29 million urban jobs were created in the first quarter this year, shrinking by 950,000 year on year.

This year, China aims to create over 9 million new urban jobs, keep the surveyed urban unemployment rate at around 6 percent, and the registered urban unemployment rate at around 5.5 percent.Michael Zakkour, founder and CEO of 5 New Digital, a business consultancy, echoed Wen. Keeping employment close to the pre-crisis levels and boosting consumption are two major priorities for the Chinese economy to come out of the COVID-19 crisis, he told Beijing Review. The need is "to get everybody back to work", he said, "which means everybody has paychecks coming in regularly, and hopefully, that's going to lead to increased consumption.""Besides the impacts of the epidemic, the decision to focus on jobs can be attributed to the shift in the economy from high-speed growth to high-quality development, as the government will further focus on stabilizing employment and improving people's wellbeing," Wen said.

Liu's suggestion is that in the future as well, China does not have to necessarily set a specific goal for economic growth. Instead, an employment target as well as requirements regarding the consumer price index, risk prevention and control, environmental protection and resident income should be set to achieve high-quality and sustainable development.

However, local governments should still set specific economic growth targets according to their conditions, he added. "In this way, a healthy dose of competition will still exist among different regions. After all, regional competition has long been a key driving force for China's economic growth." In addition, the Central Government can offer corresponding policy support for different provinces, municipalities and regions based on an assessment of their development.

Zheng Chuanjiu (left), an NPC deputy from Guizhou Province, southwest China, and General Manager of Zunyi Shenqu Musical Instrument Production Co., tries out a newly made guitar at his factory in Guizhou on April 21 (XINHUA)

Keeping businesses afloat

"To ensure employment and people's wellbeing, we must instill confidence in over 100 million market entities; and we must do our utmost to help enterprises, particularly micro, small and medium-sized enterprises (MSMEs), and self-employed individuals to get through this challenging time," Premier Li said.

Taxes and fees will be further cut, which will save enterprises more than 2.5 trillion yuan ($348.8 billion) throughout the year. Measures, including reducing electricity prices for industrial and commercial businesses, and lowering rates for broadband and dedicated Internet access services, will be taken to reduce their production and operating costs.

Also, the government will increase financial support to keep business operations stable, allowing MSMEs to postpone principal and interest repayments on loans till the end of next March.

In addition, the deficit-to-GDP ratio this year is projected to be more than 3.6 percent, with a 1-trillion-yuan ($140 billion) increase in the country's deficit over last year. On top of this, 1 trillion yuan of government bonds for COVID-19 control will be issued. "Most of the 2 trillion yuan ($280 billion) will be used to protect MSMEs because keeping market entities afloat is saving jobs," Liu told Beijing Review.

Zheng Chuanjiu, an NPC deputy from Guizhou Province, southwest China, is also general manager of Zunyi Shenqu Musical Instrument Production Co. Last year, his company made 600,000 guitars, 90 percent of which were exported to the U.S., Japan, Brazil and Spain. However, the pandemic has dealt a heavy blow to the global guitar industry."In the past, we produced 1,500 guitars every day. Now the number has been slashed to about 700," Zheng said. To survive the difficult time, he has turned back to the domestic market and is adapting to domestic needs. At present, overseas orders account for only 20 percent of the company's orders and it has resumed just 60 percent of its production capacity.

The preferential policies released in the report are a shot in the arm for enterprises like Zheng's company. "These measures, including fee and tax cuts and financial support, will help keep MSMEs afloat and employment stable," he told Beijing Review.

As an NPC deputy, he has focused on further support for micro and small enterprises. "Micro and small enterprises have contributed to rural economic development, creating jobs for rural residents and accelerating urbanization. These companies are now encountering difficulties and challenges amidst the COVID-19 outbreak," he said.

Therefore, he suggested building more incubation hubs to help these businesses set up more factories. Also, he said different chambers of commerce should be established to create a more enabling environment for them.NPC deputies from big companies, especially those in tourism, are seeking to transform their business models to tide over the current difficulties. "Tourism is one of the hardest-hit industries in the epidemic," Huang Xihua, General Manager of Guangdong Provincial Tourism Holdings and an NPC deputy from Guangdong in south China, told Beijing Review.

In the first quarter, the added value of the hotel and catering sectors fell by 35.3 percent year on year, according to the National Bureau of Statistics (NBS). The report said the Central Government will "support the recovery and development of the food and beverages industry, brick-and-mortar shops, culture, tourism, domestic services and other consumer services, and promote the integration of online and offline consumption."

Huang believes digital technologies, including cloud tourism and live-streaming, will be a new way to integrate online and offline tourism. In fact, in the past months, she and her company tested the waters of online tourism to survive. "From president to staff, we all started to sell our products online, learning how to promote our services by live-streaming," she said. "We do our best not to fire any employee because every employee has a family to feed."

She suggested more support be provided for online tourism and regulations rolled out as soon as possible to improve the industry.

Huang Xihua (center), an NPC deputy from Guangdong Province in south China and General Manager of Guangdong Provincial Tourism Holdings, live-streams to promote products and services of her company in Guangzhou, Guangdong, on May 17 (XINHUA)

Keeping a commitment 

Last year, remarkable achievements were made in poverty alleviation: China's rural poor population was reduced by 11.09 million and the poverty headcount ratio fell to 0.6 percent, according to the report.

However, there are still 5.51 million poor rural residents, according to the NBS. "This is a huge number, and most of them are living in abject poverty," wrote Ning Jizhe, Vice Minister of National Development and Reform Commission in a recent article in Beijing-based Qiushi Journal. He said the epidemic has made it more difficult to increase the poor population's income. What's worse, the risk of people falling back into poverty is increasing.

"Eliminating poverty is an obligatory task we must complete in order to build a moderately prosperous society in all respects," the premier said. China will take stronger steps to implement poverty reduction measures.

Greater energy will be spent to ensure poor counties and villages as well as rural migrant workers from these areas have stable jobs. Programs will be launched to boost the consumption of products from poor areas, and support businesses involved in poverty alleviation to resume operation. Also, agricultural production will be bolstered, increasing the area of high-standard cropland by 5.33 million hectares.

Unshaken position

The pandemic has sent the world economy into severe recession, disrupted industrial and supply chains, caused a contraction in international trade and investment and volatility in commodity markets, the report said. In the first quarter, China's total import and export of goods decreased by 6.4 percent year on year, and the actual use of foreign capital decreased by 10.8 percent, according to the NBS.

"More efforts are needed to drive up foreign investment and trade. They should include enhancing financial support for foreign trade enterprises, expanding international markets, exploring cross-border e-commerce and boosting pilot free trade zones," Wen said.

According to the report, the negative list for foreign investment will be significantly shortened, while a negative list will also be drawn up for cross-border trade in services. Last but not least, preparations will be made for the Third China International Import Expo to expand import.

"China is one of the largest importers of goods of every kind, whether natural resources, raw materials, consumer products, technology products or fashion apparel," Zakkour said.

He thinks China's role as a manufacturing hub is not going to erode in any significant way any time soon. "Chinese businesses are moving up the value chains to produce products with higher value added and higher margins, and are more innovative and technologically driven," he said, adding that the trend has been accelerated by COVID-19.

"As long as stable employment and consumer prices can be ensured and poverty alleviation is continued, China is expected to complete building a moderately prosperous society in all respects, for which this year is the deadline, despite slower GDP growth," Wen said.

(Ge Lijun, Wei Hongchen and Li Xiaoyang contributed to this report)

(Print Edition Title: A Steady Hand on the Tiller)

Copyedited by Sudeshna Sarkar

Comments to linan@bjreview.com

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