Date
20 September 2017
Premier Li Keqiang says the government will maintain a prudent monetary policy and promote fiscal transparency. Photo: Reuters
Premier Li Keqiang says the government will maintain a prudent monetary policy and promote fiscal transparency. Photo: Reuters

China targets 7.5% GDP growth this year, Li says

Premier Li Keqiang {李克強} said Wednesday that China will target 7.5 percent economic growth this year and cap inflation at 3.5 percent.

The unemployment rate will be kept at 4.6 percent as the government presses wide-ranging economic reform, Li said in a work report at the opening of the second plenary session of the 12th National People’s Congress in Beijing.

The government will maintain a prudent monetary policy and promote transparency in its fiscal affairs. Budgets and financial reports will be opened to the public and extravagant spending curtailed, Li said.

Money supply (M2) growth will be held at 13 percent.

China’s fiscal deficit will increase by 150 billion yuan (US$24.4 billion) to 1.35 trillion yuan this year, the Ministry of Finance said in its budget report.

Total fiscal income is expected to grow 8 percent to 13.95 trillion yuan while total fiscal expenditure may increase 9.5 percent to 15.3 trillion yuan.

The government will expand a pilot program on e-commerce and ramp up industrial upgrading by encouraging exports of telecommunications, railway and electrical equipment, Li said.

It expects bilateral trade to increase 7.5 percent this year against actual growth of 7.9 percent in 2013.

To deepen financial reform, the government will further liberalize interest rates and widen the trading band of the Chinese currency.

It will encourage private investors to establish or buy stakes in small and medium-sized financial institutions.

Also, private capital will be allowed to invest in certain key industries such as oil, gas, railways, electricity, telecommunications and utilities to stimulate competition, Li said.

Meanwhile, the government will strengthen protection for public property rights.

Capital market

In the capital market, the government will ramp up reform of the initial public offering mechanism to a registration-based process from an approval-based system and encourage the development of agricultural insurance.

More than 200 administrative approvals will be simplified or cancelled to promote investment.

At the same time, the government will introduce a deposit insurance scheme and speed up development of a multi-layer capital market.

Subsidies for basic health care will increase to 320 yuan under a medical reform program that includes expanding public hospitals to 1,000 counties, covering 500 million people.

The government will invest 457.6 billion yuan in affordable housing, energy saving and railways in central and western China. It will set aside 70 billion yuan for water resources projects and agricultural modernization.

Production overcapacity will be curbed by eliminating 27 million metric tons of steel, 42 million metric tons of cement and 35 million boxes of plate glass.

– Contact the reporter at [email protected]

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Ayishah Ma is a financial reporter on Greater China issues.

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