GREAT OUTLINE: Premier Li Keqiang delivers the Report on the Government Work at the annual legislative session in Beijing on March 5 (HUANG JINGWEN)
On March 5, Premier Li Keqiang delivered the Report on the Government Work at the opening of the Third Session of the 12th National People's Congress, China's top legislature, in Beijing.The premier's report covers a wide range of topics including decentralizing government powers, refining the growth targets for this year, better protecting the environment, as well as further enhancing people's livelihood—all important for the nation's development ahead. Edited excerpts follow:
Focusing on achieving the dual objectives of maintaining a medium-to-high-level growth rate and moving toward a medium-to-high-level of development, China needs to maintain continuity between new and old policies and keep expectations stable while moving forward with reform and structural adjustment. This comes alongside a need to create twin engines to drive development: popular entrepreneurship and innovation, paired with increased supplies of public goods and services. This will ensure that China's growth rate is adjusted without weakening momentum and that growth in quantity is underpinned by greater quality, thereby achieving a better-quality, more efficient and upgraded economy.
The target growth rate of approximately 7 percent takes into consideration what is needed and what is possible. This target is both aligned with our goal to finish building a moderately prosperous society in all respects and is appropriate in terms of the need to grow and upgrade our economy. It also keeps with the objective laws of development as well as conditions in China. If the economy can grow at this rate for a relatively long time, China will secure a more solid material foundation for modernization.
At the same time, the aim of maintaining stable growth is to ensure employment. As the service sector becomes larger, the number of small and micro businesses grows, and the economy gains ground, a growth rate of approximately 7 percent will ensure ample employment. Local governments need to set targets based on local conditions, be motivated to make progress, and tap into their full potential so as to deliver better outcomes.
To deliver a good performance in the work of the government this year, China needs to concentrate on the following three areas:
First, ensuring continuity in and making improvements to macroeconomic policies.
China will continue to implement a proactive fiscal policy and prudent monetary policy. It will pay greater attention to anticipatory adjustments, fine-tuning, and targeted regulation and will put both existing and additional financial resources to good use, focusing particularly on strengthening weak spots. China will improve micro-level vitality to underpin macroeconomic stability, explore new ways of achieving supply to boost demand, and balance total supply and demand through structural adjustments to ensure the economy performs within an appropriate range.
Our proactive fiscal policy must sustain the momentum of economic growth and increase economic returns. The government budget deficit for 2015 is projected to be 1.62 trillion yuan ($264.7 billion), an increase of 270 billion yuan ($44.12 billion) over last year, which means that the deficit to GDP ratio will rise from last year's 2.1 percent to 2.3 percent. Of this amount, the central government deficit will account for 1.12 trillion yuan($183 billion), an increase of 170 billion yuan($27.78 billion), and local government deficit will account for 500 billion yuan($81.7 billion), an increase of 100 billion yuan($16.34 billion). China needs to find the right balance between managing debt and maintaining steady growth. It will develop and improve mechanisms for local governments to secure financing through bond issuance. China will allow local governments to issue an appropriate amount of special bonds, ensure continued financing for eligible projects already under construction, and guard against and defuse risks and latent dangers. China will improve the mix of budgetary spending, redouble its efforts to put government funds on hand into use and strengthen the effectiveness of government spending.
China will continue to make structural tax reductions and cut fees across the board so as to further lighten the burden on enterprises, particularly small and micro businesses.
China will pursue a prudent and balanced monetary policy. The M2 money supply [covering cash in circulation and all deposits] is forecasted to grow by around 12 percent in 2015, but the actual supply may be slightly higher than this projection, depending on the needs of economic development. China will work to strengthen and improve macro-prudential regulation, adopt a flexible approach in using of monetary policy tools including open market operations, interest rates, required reserve ratios, and re-lending, and maintain steady growth in the supply of money and credit as well as aggregate financing in the economy. China will speed up the turnover of funds, improve the credit structure, increase the proportion of direct financing to total financing and reduce the cost of financing, thereby allowing more financial resources to be channeled into the real economy.
Second, maintaining a proper balance between ensuring steady growth and making structural adjustments.
In its current stage of development, China has to deal simultaneously with the slowdown in economic growth, making difficult structural adjustments, and absorbing the effects of previous economic stimulus policies. As resource-related and environmental constraints grow and costs for labor and other factors of production rise, a model of development that draws on high levels of investment and energy consumption and is heavily driven by quantitative expansion becomes difficult to sustain. China must therefore improve the economic structure while ensuring steady growth. The growth rate must be kept steady to ensure that economic performance is stable, and that employment and personal incomes continue to increase, thus creating a favorable environment for making structural adjustments and transforming the growth model.
At the same time, structural adjustments must be made to consolidate the foundation for ensuring steady growth. China needs to increase research and development spending, raise total factor productivity, improve quality, standards, and brand-building, strengthen the service sector and strategic emerging industries and increase their share of the economy, improve the overall structure of economic growth, and work harder to foster new areas of growth. With these efforts, China can ensure that economic upgrading and development reinforce each other.
Third, nurturing and hastening the birth of a new force for driving economic and social development.
As the force that has traditionally driven economic growth is weakening, it is imperative that China intensify structural reform, boost efforts to implement the strategy of pursuing innovation-driven development, and upgrade traditional engines while creating new ones for driving development.
China will increase the supply of public goods and services, increase government input in areas like education and healthcare, and encourage non-governmental participation to improve the efficiency of supply. This will bolster weak spots and benefit the people, as well as increase demand and promote development.
At the same time, China will also encourage people to start their own businesses and innovate, which will not only create more jobs and increase personal incomes, but also improve social mobility, social equity and justice.
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Economic and Social Development Targets for 2015
- Increasing the GDP by approximately 7 percent
- Keeping the increase in the consumer price index (CPI) at around 3 percent
- Creating over 10 million jobs in urban areas
- Ensuring that the registered urban unemployment rate does not rise above 4.5 percent
- Increasing imports and exports by around 6 percent
- Achieving a basic balance of payments
- Ensuring that personal incomes increase in step with economic development
- Cutting energy intensity by 3.1 percent, and continuing to reduce the emissions of major pollutants
Areas for Further Reform And Opening Up
- Streamlining administration and delegating more powers to lower-level governments and to society in general while improving regulation
- Taking multiple measures to reform the investment and financing systems
- Taking timely action to accelerate price reform
- Making progress in the reform of the fiscal and tax systems
- Moving ahead with financial reform to better serve the real economy
- Deepening the reform of state-owned enterprises and state capital
- Transforming and upgrading foreign trade
- Taking a more active, more effective approach to using foreign capital
- Speeding up the implementation of the "go global" strategy
- Fostering a new environment in all-round opening up
- Promoting multilateral, bilateral and regional opening up and cooperation