"Difficult" transition ahead as China sets lower growth targets

China is expecting weakened economic growth for at least the next five years, Premier Li Keqiang announced at Saturday's opening session of the nominal parliament, the National People's Congress (NPC).Li's speech outlined a government report on budget and key economic policies for the coming year, projecting gross domestic product growth of 6.5 per cent.

"The larger the economy grows, the greater the difficulty of achieving growth," Li said on stage, with sweat on his brow. 

"Every percentage point of GDP growth today is equivalent to 1.5 percentage points of growth five years ago or 2.5 percentage points of growth 10 years ago," Li told delegates in the Great Hall of the People. 

His report stressed the importance of making supply-side structural reform, to address overcapacity in the steel and coal industries, cut government red tape and encourage business startups. 

The new five-year plan draft presented to the nearly 3,000 delegates sets an annual growth rate of 6.5 per cent until 2020.

China's economy grew last year by 6.9 per cent - the weakest growth in more than a quarter of a century - missing the 7-per-cent target announced at last year's congress.

Amid global financial problems and slowing Chinese export growth, the government is aiming for more sustainable, energy efficient development driven by domestic consumption.

A report from the Ministry of Finance presented to delegates on Saturday said China planned to increase its military budget for this year by 7.6 per cent, compared with an increase of 10.1 per cent in 2015 and 12.2 per cent the previous year. 

President Xi Jinping and other party leaders were among nearly 3,000 delegates at the opening of the plenary session.

The congress, dismissed as a rubberstamp parliament by critics, is showcased by the party as evidence of its development of "socialist democracy."

However, some delegates were willing to discuss what they thought should be government priorities. 

Lin Tiegang, president of the Tianjin branch of China's central bank, said the country's overcapacity problems would "take quite long" to overcome. But the government should let the market "make the adjustment and [not use] administrative means," Lin told dpa.  

Li Mei, a delegate from Shanxi province and director of a traditional opera organization, said industrial pollution was a top concern. 

Northern China has been experiencing high levels of air pollution in the past several days, with harmful particulates reaching nearly 500 micrograms per cubic metre in Beijing on Friday. 

"Last year when we attended the NPC, the air was so clear, I was so impressed," she said. "This year is worse than last year, so I'm a little disappointed. I think the government should intensify measures to deal with the smog." 

As expected, most delegates expresed confidence in Xi's leadership ability to tackle the country's problems.

"I think he’s great. He has channeled our collective power. He makes strong decisions," said Chang Wen, a delegate from northern Shandong province. 

By the end of the session, the parliament is expected to approve a proposal for an economic and social development blueprint for 2016-20 that will guide policy at all levels of government and state-owned enterprises. 

The draft called for the creation of more than 50 million new urban jobs, improvements to expressways and high-speed railways, and to have the science-and-technology sector make up 60 per cent of economic growth. 

The Communist Party of China's 13th five-year plan will be the first to be approved during Xi Jinping's presidency, and thus has the potential to influence his legacy.  

Some 2,000 members of a political advisory body and hundreds of journalists and observers also attended the opening of the congress in Beijing. The meetings are followed closely by global markets for signs on the direction of the world's second-largest economy.

Last update: Sat, 05/03/2016 - 10:45
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