Date
17 December 2017
Li has signaled his resolve to press ahead with reforms while maintaining stable growth. Photo: Reuters
Li has signaled his resolve to press ahead with reforms while maintaining stable growth. Photo: Reuters

WEEKENDER: Li fights for stable growth, deeper reform

Against the backdrop of several, albeit unrelated, negative developments at home and overseas recently, China’s leaders, at two key annual meetings this week, sought to reaffirm their commitment to maintaining stable economic growth while venturing into difficult reforms and tackling a slew of chronic issues.

Delivering his first government work report at the National People’s Congress plenum on Wednesday after taking the helm of the State Council last year, Premier Li Keqiang set the economic growth target for 2014 at “about 7.5 percent”, similar to the goal last year. In 2013, China’s actual gross domestic product growth was 7.7 percent.

The growth target for this year, which matched market expectations, signals the leadership’s keenness to prevent the economy from slowing further, given the pressure on the jobs front. Li set the unemployment rate at or below 4.6 percent and revised upward the total number of new jobs targeted for city dwellers this year to 10 million, from last year’s nine million.

Speaking at a press conference on Thursday, Finance Minister Lou Jiwei said the bottom line was to keep employment stable.

Although the growth target of 7.5 percent is substantially lower than the double-digit expansion the country achieved in the past two decades, it could arguably be described as a moderately-high pace of growth taking into account the present stage of the Chinese economy, now the second-largest in the world.

While keeping the moderate pace of growth going, Li was keen to put his mark in history as a pro-reform, can-do premier in his debut work report. He mentioned the word “reform” 77 times in his 32-page work report speech, which was delivered in 100 minutes. In a show of his determination to improve the nation’s air quality, Li said: “Like our declaration of war against poverty, [we must] resolutely fight the battle against pollution.”

He admitted that a host of problems remain unresolved. They include unemployment, housing, food and drug safety, medical and elderly services, education, income distribution, land confiscation, law and order, and corruption.

Li said government officials must first ask themselves whether they are indeed the problem, not the solution. He put administrative reform on top of a list of reform measures on the government’s work agenda. Government, he said, must undergo “self-transformation” through the devolution of powers to market.

Of the original 1,700 items that required a stamp of administrative approval, Li has abolished more than 400 items since he took office in March last year. In his work report, he announced plans to cut another 200 items from the list.

The crux of cutting red tape is to beat vested interests and let market forces prevail in the allocation of resources.

Despite the strong rhetoric, skeptics have good reason to pour tons of salt on the leadership’s pledge to dismantle vested interests in the drive to deepen reform.

Heightened tensions in Ukraine that could precipitate a major geopolitical crisis engulfing Russia and the United States has sent a sharp reminder to Beijing’s leaders about the risks surrounding the global economy.

At home, a terrorist attack against civilians at the Kunming railway station on the eve of the NPC plenum and a parallel Chinese People’s Political Consultative Conference plenary session has rung alarm bells over lingering problems in ethnic minorities regions.

Meanwhile, talk that Shanghai Shaori Solar Energy Science & Technology may become the first company to officially default on debt in China has fueled fears about the risks in the country’s huge domestic corporate-bond market.

On the pollution front, faced with mounting public anger over smog, Li has gone into length on the plans and strategy to clean up the air. At heart of the battle against pollution, however, is the so-called “GDP growth” mentality, which runs deep in the set minds of local government officials.

As local officials’ promotion prospects had hinged upon the performance of GDP growth, it has led to blind pursuit of growth over the years, causing severe, long-term damage to the environment.

Any serious moves by the leadership to reduce the damage to the environment will inevitably slow the pace of growth of the economy.

Economic data released in the first two months of 2014 has sparked concern about slowing growth. Analysts said Beijing might face pressure to step up liquidity to boost the economy if the present trend of slow-growth continues in the second quarter.

Li was long in his rhetoric on reform in his work report to the NPC, which could be seen as a sign of the enormity of resistance within the ruling party against changes that could upset vested interests and powers.

Zhu Rongji, Li’s predecessor, had ventured into reform of state-owned enterprises in 1998 with no less political courage and powerful words. Sixteen years on, Li took the torch of reform as he confronts similar, if not harder, wall of opposition from within the party-led government against real changes.

Chris Yeung is deputy chief editor of the Hong Kong Economic Journal. This column appears every Friday.

– Contact the writer at [email protected]

RC

 

He was editor-at-large at the South China Morning Post and, more recently, deputy chief editor of the Hong Kong Economic Journal.

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