Highlights from Premier Li Keqiang’s press conference
Mar-20-2017 By : fcccadmin
Chinese Premier Li Keqiang took a wide range of questions during his media briefing at the end of the annual session of the National People’s Congress (NPC) on March 15 in Beijing, including on the economy and China-U.S. relations. Premier Li highlighted the damage that any trade war between China and the U.S. would inflict, saying American companies would be the first to suffer. “We don’t want to see any trade war breaking out between the two nations. That wouldn’t make our trade fairer,” Li said. “Our hope on the Chinese side is that no matter what bumps this relationship hits, we hope it’ll continue to move forward in a positive direction. I believe whatever differences we may have we can all sit down and talk to each other and work together to find solutions.” Li added he felt optimistic about the development of Sino-U.S. relations. Li dismissed allegations by U.S. President Donald Trump that China was stealing American manufacturing jobs, saying trade with China created over 1 million jobs in the U.S. last year alone.
On relations with Hong Kong, Premier Li gave details of the new initiative to allow Hong Kong investors to invest in the Chinese bond market, which will be launched this year. The scheme follows the stock connect system between Hong Kong, Shanghai and Shenzhen, and will help maintain Hong Kong’s position as an “international financial center” as well as opening more investment channels for Hong Kong residents, the Premier said. On tensions in the South China Sea, Li said China does not want to see Southeast Asian countries compelled to “pick a side” between Beijing and Washington, and China would continue to support ASEAN’s leadership role in regional affairs. Talks with ASEAN over a code of conduct in the region have made substantive progress, he added. On the economy, Li said his big achievement over the past four years since he took office as Premier was that he has kept the Chinese growth rate at a reasonable range. Fears last year about a hard landing turned out to be premature as the Chinese economy stabilized, largely thanks to government-backed infrastructure spending. “The talk that there will be a hard landing in China should end now,” he said. Li added that China’s steady economic growth over the past four years was not achieved by all-out stimulus, but by upgrading industry and increasing consumption. About the growth target of 6.5% for 2017, Li said the growth rate was “not low, and not easy to achieve”, and China would remain an important force empowering global economic growth. Li said the biggest challenge was to reduce administrative procedures and red tape.
Li also said that “tensions on the Korean peninsula may lead to conflict” and bring harm to all parties. “It’s common sense that no one wants to see chaos on their doorstep,” he said, but he did not mention the dispute with South Korea and the U.S. over the deployment of the THAAD anti-missile system in South Korea. Premier Li said China will continue to support a united European Union and a strong euro. He did not say anything about the Communist Party Congress to be held later this year, which will see changes among the top leadership. Neither did he touch on corruption, human rights, Tibet or Xinjiang during his answers to journalists’ questions, the South China Morning Post reports.
CPPCC concludes its session in Beijing
By : fcccadmin
The Chinese People’s Political Consultative Conference (CPPCC) concluded its annual session on March 13, with more than 2,000 members participating in the 11-day session having provided 5,210 proposals for policymakers. Economic issues were the focus of 34.7% of all proposals, down from 42% in 2016. Last year, CPPCC National Committee Members submitted 5,375 proposals. Although the number fell this year, “the quality of proposals has risen significantly”, according to a CPPCC document. Proposals addressed issues such as energy consumption, poverty reduction, and the production of safe, quality goods. More attention was focused on environmental protection and social development. Poverty reduction was also an important focal point this year. China lifted 12.4 million people in rural areas out of poverty in 2016, although there were still 43.35 million people living below the poverty line at the end of 2016, the China Daily reports.
Central bank Governor on the exchange rate, reserves and fintech
Mar-13-2017 By : fcccadmin
People’s Bank of China Governor Zhou Xiaochuan explained at a press conference on the sidelines of the National People’s Congress session that the yuan’s exchange rate was stabilizing following the structural reform of the Chinese economy and the resurgence of international confidence. There would be “no big changes” in forex policy this year, but existing polices would be implemented “more delicately”, he said. The yuan exchange rate should be relatively stable this year. He also said fluctuations in the yuan exchange rate in the second half of last year were due to China’s accelerated outbound investments and the surprising result from the U.S. presidential election. On the U.S.-China interest rate difference, Zhou said it was true that in the short-term, money flowed to countries where interest rates were higher. But for the medium-term, countries decide their interest rates based on economic growth, employment, confidence and inflation. Interest rate differences did not necessarily lead to persistent speculation and capital flow, he said, citing the example of Japan, which has kept its rates low for a long time. Financial products should serve the real economy, but there were too many different standards, lots of arbitrage opportunities and too strong speculation in the wealth management product market, Governor Zhou said.
On the opening of China’s bond market, Zhou said Beijing was not implementing any special policies to aggressively pursue the inclusion of yuan-denominated bonds in any index, but was eyeing gradual progress. Pan Gongsheng, Director of the State Administration of Foreign Exchange (SAFE), said China would take measures to make its bond market more attractive. At the end of last year, foreign institutions and firms had issued more than CNY60 billion of so-called panda bonds. Zhou said the recent move to raise money market rates should not be overinterpreted. “A loose policy will not have enough pressure for reform,” he said, adding that financing difficulties would be eased gradually. Zhou said companies with high leverage should reform themselves and banks should not support such companies excessively.
On third-party payment services, Fan Yifei, PBOC Vice Governor, said the sector had accumulated lots of risks amid its rapid development in the past several years. There were many players in the market, leading to over-competition, Fan said. He warned that internal risk control was loose as there was insufficient protection for investors. On fintech, Governor Zhou Xiaochuan said the development of technology would lead to big changes of future payment services. China encouraged the development of financial technology, especially internet technology and virtual currency, and would cooperate with industry participants, he said. The PBOC would also try to prevent risks that might hamper the sector’s healthy development.
The 12% M2 monetary growth target set in this year’s government work report was an expectation, not a task, the central bank governor said. “We will fine-tune financing and loans when necessary,” he said. The decline of China’s foreign reserves from their peak of USD4 trillion to USD3 trillion was “not bad”, he said, adding that reserves were meant to be used and that people should not overreact. The decline was also partly a result of capital that had flowed into China following the financial crisis in 2008, now flowing back out, according to the central banker.
At the end of the press conference, Zhou, who is 69 and already past retirement age, refused to answer a question about his possible retirement this year after being central bank Governor for more than 14 years. Zhou created a buzz among the journalists attending the press conference by wearing an Apple watch, the South China Morning Post reports.
Economic growth and blue skies central themes in work report
Mar-06-2017 By : fcccadmin
The National People’s Congress (NPC) and the Chinese People’s Political Consultative Conference (CPPCC) started their yearly sessions at the Great Hall of the People in Beijing on March 5 and March 3 respectively. China faces “far more complicated and graver situations” both at home and abroad as it steps up economic development and seeks to play a greater international role, Premier Li Keqiang said in his report to the 5th session of the 12th NPC.
China aims for an economic growth of about 6.5% this year “or higher if possible in practice”, according to the work report. The target compares with a 6.5% to 7% range in 2016 and an actual GDP growth of 6.7%. Premier Li also set the inflation target at 3%, unchanged from last year. China aims to create 11 million new urban jobs this year, more than last year’s 10 million. Steel capacity will be cut by 50 million tons and coal by 150 million tons this year. Li stressed repeatedly in his speech that his government’s top priority in 2017 would be to ensure the success of the upcoming Communist Party congress and to rally around President Xi Jinping’s core leadership. It was the first of 17 major tasks Li listed for 2017.
On the exchange rate, Li said the government would stick to market-oriented reform and maintain the Chinese currency’s importance in the global market. For the first time in an annual government report, the requirement to ensure the stable global status of the yuan was included as one of its major tasks, dropping the line “keeping a stable yuan at a reasonable and balanced level” that has been including in the report for the past three years. “The renminbi exchange rate will be further liberalized, and the currency’s stable position in the global monetary system will be maintained,” Premier Li told the National People’s Congress delegates. The new wording may indicate that Beijing will be more tolerant of yuan exchange rate moves against the dollar and gradually reduce its intervention in the foreign exchange market this year. Beijing’s efforts to make the yuan an international currency were largely shelved in the past year. In Hong Kong, the primary offshore yuan market, yuan deposits at the end of 2016 dropped 46% from a peak in December 2014.
Li Keqiang also said that “officials who do a poor job in enforcing the law, knowingly allow environmental violations, or respond inadequately to worsening air quality will be held accountable.” He to make the country’s smoggy skies blue again and “work faster” to address pollution caused by burning of coal for heat and electricity. Li said “people are desperately hoping for” faster progress to improve air quality. “We will make our skies blue again,” he declared to almost 3,000 delegates in the Great Hall of the People in Beijing.
China’s military budget will rise by around 7% this year, a bit more than projected GDP growth, and down from 7.6% last year. But for the first time in decades the government did not reveal total defense spending, an attempt to downplay the sensitive figure. The total military budget has long been included in the Ministry of Finance’s report but was omitted this year. The government deficit would be 3% of economic output, unchanged from last year, as stability remains the key and no new major economic initiatives are planned. In infrastructure, China will pump CNY800 billion into new railways, CNY1.8 trillion into roads and waterways and begin 15 major hydraulic projects. Monetary policy would be “prudent and neutral”, with the broad M2 money supply to grow 12%.
Zhang Yiping, Economist at China Merchants Securities, said Beijing was moving to reduce financial risks and reliance on debt-fueled growth – China’s total debt surged to 260% of its GDP last year, up from 125% in 2008, the South China Morning Post reports. Property and the stock market are two sources of risk that the government has been trying to address. Premier Li said that China must remain alert to “non-performing loans, bond defaults, shadow banking and internet finance”, vowing that China would erect a “firewall against financial risks”.
China made good start in 13th Five Year Plan
By : fcccadmin
Yu Zhengsheng, Chairman of the Chinese People’s Political Consultative Conference (CPPCC) National Committee, delivered a work report to more than 2,000 political advisors who gathered to discuss major political, economic and social issues. Wang Guoqing, Spokesman for the annual CPPCC session, said China has made a good start in its 13th Five Year Plan (2016-20) and the country contributed about a third of world growth in 2016, more than any other country. “China’s steady growth has brought in greater demand, investment and products to the world economy and created many opportunities for cooperation,” Wang said at a news conference. Political advisors submitted 5,769 proposals in 2016, focusing on poverty alleviation, industrial transformation and reform of the medical and healthcare system.
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