Premier Li Keqiang’s “Report on the Work of the Government”, the “Report on the Implementation of the 2016 Plan for National Economic and Social Development and on the 2017 Draft Plan for National Economic and Social Development” by the National Development and Reform Commission (NDRC), and the “Report on the Execution of the Central and Local Budgets for 2016 and the Draft Central and Local Budgets for 2017” by the Ministry of Finance can be downloaded from the website of The Wall Street Journal here.

The annual session of the National People’s Congress (NPC) concluded on March 16 with the Delegates approving Premier Li Keqiang’s Report on the Work of the Government. After making dozens of people-oriented changes, the NPC also approved the blueprint for the13th Five Year Plan (2016-20) with 2,778 “yes” votes, or 97% of the total. NPC and CPPCC Delegates made 57 revisions to the draft plan during nearly two weeks of deliberations. The session also adopted China’s first Charity Law, which will come into effect in September. The Fourth Session of the 12th NPC voted on nine draft resolutions, including the annual government work report, the 13th Five-Year Plan and the judicial work reports.

The annual government report by Premier Li Keqiang received only 27 “no” votes from the 2,857 Delegates. The 13th five-year plan received 53 objections, down by about 10% on vetoes for the previous five year plan in 2011. The NPC gave the annual work reports of the China’s Supreme People’s Court (SPC) and Supreme People’s Procuratorate (SPP) its highest support since 2000. The SPC work report received 2,600 votes, or 91.1%, with 208 votes against and 46 abstentions, while the SPP work report received 2,560 votes, or 89.8%, with 239 against and 52 abstentions. In 2009, the SPC and SPP work reports were supported by only 75.3% and 76.8% of the NPC Delegates, respectively.

Delegates to the China People’s Political Consultative Congress (CPPCC) session in Beijing finished their meeting on March 14, having submitted more than 5,375 proposals to the central government, 42% of which focused on economic development. The proposals included proceeding with supply-side economic reform, encouraging entrepreneurship and innovation, reducing the tax burden on enterprises, improving the quality of consumer goods and the service industry, speeding up the implementation of the Free Trade Area strategy, and the development of e-commerce in rural areas. 1,972 Members of the CPPCC National Committee (89.1% of the total) submitted proposals. CPPCC Chairman Yu Zhengsheng said all Members of the CPPCC should fulfill their duties by focusing on economic development during the 13th Five Year Plan (2016-20) period.

Chinese Premier Li Keqiang met hundreds of domestic and foreign journalists at the Great Hall of the People in Beijing. The Premier said that is pushing ahead supply-side reforms, such as streamlining regulatory procedures and cutting taxes, to free up market vitality. While China’s economy was presently facing difficulties, hopes were bigger than the difficulties. China had the policy reserves to handle headwinds from the global economic slowdown. “We are full of confidence in the long-term good prospects of the Chinese economy,” Li said. He added that the central government would try its best to solve issues concerning people’s livelihoods, such as pension payments and health insurance. “There will be absolutely no problem for the government to meet the public’s pension payment needs,” Li said. The national pension insurance reserve recorded a surplus of CNY340 billion last year, taking the cumulative figure to CNY3.4 trillion since it was established in 1998. said China would try to avoid mass lay-offs in its economic restructuring process. “We will press ahead to reduce capacity, but we must ensure that the rice bowls of workers are still there, or we must give them new rice bowls,” he said. The central government had already set aside CNY100 billion to help laid-off workers, and Beijing was ready to boost the fund if necessary, he said.

Foreign journalists were mainly interested whether the Chinese economy would face a hard landing. Premier Li said new forces would replace old forces to keep on powering the economy and avoid a hard landing. Li said the required reserve ratio (RRR) and interest rate cuts were not quantitative easing measures. China took measures last year to manage abnormal volatility in the stock market, and the measures had achieved their desired effects. Still, the Premier said, China needed to improve its financial regulatory system. Premier Li expressed confidence over Beijing’s ties with Washington, regardless of the outcome of the U.S. presidential election later this year. China became the U.S.s’ top trading partner, with two-way trade reaching USD560 billion last year. Li said both countries need to follow the principles of equality and mutual benefit, such as in negotiations on a bilateral investment treaty.

About 24 million people took part in a poll organized by China Daily and online news portal Toutiao.com asking them to choose three out of 10 questions they would like to ask the Premier. The top question was: “How to achieve national portability of medical insurance plans”. Premier Li said the government “is resolved” to achieve national portability of health insurance plans “at a faster pace” and that provincial-level portability will be achieved within the year. At present, patients face difficulties to have their medical expenses reimbursed outside their hometown as listed in their household registration. Hundreds of millions of migrants are affected by the policy.

Some issues were not mentioned at all during the press conference, including environmental pollution, soaring property prices, the reform of China’s state-owned enterprises (SOEs), ties with Europe, and ethnic tensions.

China can afford to expand its fiscal deficit this year while reining in risks associated with the overall debt level, Finance Minister Lou Jiwei said in response to Premier Li Keqiang’s Government Work Report, which vowed to continue to fund massive state-led infrastructure projects while lowering tax levels for more industries. The government will raise the level of deficit to allow for the capital outlays needed for the new projects, Lou said. China plans to raise the deficit-to-GDP ratio to 3% this year, from 2.3% in 2015. Finance Minister Lou Jiwei also ruled out the possibility of raising the monthly income tax exemption threshold, which has remained unchanged since being raised in 2011 from CNY2,000 to CNY3,500. He said the government instead is considering adopting various exemption standards based on individual financial burdens.

The annual sessions of the National People’s Congress (NPC) – the parliament – and the Chinese People’s Political Consultative Conference (CPPCC) – the advisory body – started in the Great Hall of the People in Beijing on March 5 and March 3 respectively. In his work report to the NPC, Premier Li Keqiang told the Delegates that the target for China’s GDP growth would be between 6.5% and 7%. Last year he set the target at “around 7%” and the actual growth rate was 6.9%, the slowest rate in 25 years. The government hereby indicates that it expects the economic growth rate to further drop moderately. Defense spending would be raised by 7.6%to CNY954.4 billion, the slowest increase in six years. China’s defense budget rose by 10.1% last year. Premier proposed a national fiscal deficit of 3% at CNY2.18 trillion this year, while the target was 2.3% last year. The increase in the deficit would mainly be used to reduce taxes for enterprises and safeguard social welfare. The consumer price index (CPI) target was set at 3%. The government did not propose a specific trade growth target this year after a disappointing performance in 2015 in which exports and imports combined fell 7% in renminbi terms and 8% in dollar terms. China vowed to create more than 10 million new urban jobs and cap the urban registered unemployment rate at 4.5%.
On the monetary side, China has targeted 13% growth in the broad money supply for 2016, up from the 12% target last year. For the first time, the government also included a growth target for outstanding aggregate social finance – setting it at 13% for 2016, echoing comments by People’s Bank of China (PBOC) Governor Zhou Xiaochuan last month that China would lean towards monetary policy easing. China is unlikely to repeat the reckless development of the past five years – China used more cement between 2011 and 2013 than the U.S. used in the entire 20thcentury. On transport links, China plans to boost its high-speed railway network to 30,000 km by 2020. It already had 19,000 km of track by the end of 2015 – more than the rest of the world combined. Even a cross-strait railway line linking Fuzhou in Fujian province on the mainland and Taipei in Taiwan is under consideration.

The NPC Delegates also reviewed the draft of the 13thFive Year Plan (2016-20). This year is the first year of the new plan. Premier Li said that innovation was the primary driving force for the country’s development. China aims to become a world leader in advanced industries, such as semiconductors, and in the next generation of chip materials, robotics, aviation equipment and satellites. R&D spending will be boosted to 2.5% of GDP in the next five-year period, compared with 2.1% of GDP from 2011 to 2015.