Chinese Premier Li Keqiang has promised various reforms meant to stimulate China’s economy as he set an economic growth target of 6 to 6.5 per cent for 2019 at the opening of the annual parliamentary session.
The range would mark China’s slowest economic growth in almost three decades. Last year, the economy grew 6.6 per cent, bogged down by a trade war with the United States and rising government debt.
Li warned on Tuesday of the “many difficulties” facing the economy as he addressed the 2,948 delegates gathered at the cavernous Great Hall of the People in Beijing. The parliamentary session, known as the National People’s Congress, will last until March 15.
The government work report presented by Li outlined additional tax cuts meant to stimulate economic growth.
Most importantly, the VAT in manufacturing and other industries will drop three percentage points to 13 per cent. Enterprise contributions to social insurance schemes will be reduced, and private businesses will have access to better financing, Li said.
“The many risks and potential problems that have built up over the years demand stronger mitigating action,” Li said.
In a nod to international financial institutions such as the IMF who have warned of China’s soaring debt, Li said the country must “defuse risks step by step” and “forestall any systemic and regional risks”.
He said the government must now avoid pursuing short-term stimuli, such as by pouring money into infrastructure projects, as China did after the 2008 global financial crisis to avoid recession.
Speaking of the slowing global economy, Li decried “mounting” protectionism and unilateralism. “Instability and uncertainty are visibly increasing, and externally-generated risks are on the rise,” he said.
Li promised to advance reforms in a series of areas that have been sore spots in China’s months-long trade war with the US. Chinese and US teams have indicated they are nearing a resolution in the conflict, which saw Washington slap tariffs on $US250 billion ($A353 billion) worth of Chinese imports.
Washington wants Beijing to eliminate its support for key tech sectors and state-owned enterprises, as well as lower tariffs and improve the protection of intellectual property rights.
Li promised to open up the economy, ease some bureaucratic hoops and upgrade traditional industries.
Chinese and foreign companies will be “treated as equals,” Li said, acknowledging complaints from US and European businesses that China favours domestic firms.
As for the national defence budget, it is set to grow by 7.5 per cent this year, below last year’s growth rate of 8.1 per cent.
Li warned that China will “resolutely oppose and deter any separatist schemes or activities seeking ‘Taiwan independence.'”
China’s defence budget has grown steadily in the past few years, as the country seeks to modernise its military, expand its footprint in disputed territories in the South China Sea, and build new army bases abroad.