Remarks by Ministers and Deputies on the economy, finance and foreign affairs
March 13, 2018 Category NPC '& CPPCC sessions, Weekly
Latest developments: The National People’s Congress (NPC) voted on March 11 to scrap the two-term limit for the President and Vice President, clearing the way for President Xi Jinping stay on the job for a third term starting in 2023. The legislature also agreed to set up a National Supervisory Commission at the national and local levels to combat corruption. It will have jurisdiction over all public sector employees and report to the NPC.
Members of the NPC and CPPCC continued their discussions on economic policy. China will push high-quality economic growth this year and will have a greater tolerance for a slower growth rate, CPPCC members said. Yang Weimin, Deputy Director of the Office of the Central Leading Group on Financial and Economic Affairs, said that slower growth is a natural process for a country that has experienced rapid economic expansion. There is no need to panic about a slight rise or drop in the GDP growth rate, he said. For this year, China set its economic growth target at around 6.5%, which is 0.4 percentage point lower than the growth rate of last year. It shows the country’s shift from fast growth to high-quality growth,” said Qian Yingyi, Dean of the School of Economics and Management of Tsinghua University. Hu Xiaolian, Chairwoman of the Export-Import Bank of China, said China should tackle the rising risks from big financial holding companies and their risky practices, such as excessive borrowing and high capital leverage.
China is fully confident in fending off systemic debt risks and expects no major changes in the government’s debt ratio in the coming years, Finance Minister Xiao Jie said. The debt-to-GDP ratio, an indicator of the country’s ability to pay back its debt, dropped to 36.2% in 2017 from 36.7% in 2016, Xiao said at a news conference. It is still far below the global warning line and lower than debt levels of other major economies and some emerging-market countries, he said. By the end of 2017, China’s outstanding debt had reached CNY29.95 trillion, with CNY16.47 trillion in local government debt, or 55% of the total. The proposed total deficit this year is CNY2.38 trillion, unchanged from last year, but the annual target of the deficit-to-GDP ratio is set to be 2.6%, down from 3% in 2017, representing the first downgrade since 2013. Xiao said that a 7.6% increase in budgeted fiscal expenditure to CNY20.98 trillion this year could support stronger investment in infrastructure projects. China’s once-expanding debt has been curbed under tightened governing measures and regulations, leaving more space for further financial opening-up and reforms, said Zhou Xiaochuan, outgoing Governor of the People’s Bank of China (PBOC). Financial reforms would be speeded up, including pushing forward the yuan’s internationalization and lowering market access barriers in the financial sector, he said.
The proactive fiscal policy is also reflected in the proposed reduction of taxes and fees by nearly CNY1.1 trillion this year to lower the operational costs of enterprises. China will actively push forward property tax and personal income tax reforms as it continues to overhaul its fiscal system. The drafting of a reasonable and appropriate national taxation system on property ownership is in full swing, said Shi Yaobin, Vice Minister of Finance. “The tax will be based on the estimated value of the property and will have appropriate tax reductions for low-income families,” he said. A draft of the property tax law will be submitted to the NPC Standing Committee for review soon. The tax could be introduced in parts of the country at the end of 2019 or during 2020. China also plans to set up an institution to financially support homebuyers. Another tax reform measure is the raising of the personal income tax threshold.
Foreign Minister Wang Yi at a press conference for domestic and foreign journalists emphasized that China has no need or intention to replace the United States’ international role, and he warned that if the U.S. wages a trade war, it will “backfire”. Speaking on China-U.S. ties, Wang said there can be competition between the two countries, but they don’t have to be rivals and should be partners instead. He also said that the Belt and Road initiative is a “global public good” that follows international rules. It follows market principles and is a transparent initiative that follows the “golden rule” of extensive consultation, joint contribution and shared benefits. “Everything is in the open. There is no backroom deal, and every step is transparent,” Minister Wang added.
He also highlighted four events China is hosting this year that feature high on the diplomatic agenda:
• The Boao Forum for Asia annual conference in Hainan in April, focusing on reform and opening-up;
• The Shanghai Cooperation Organization (SCO) summit in Qingdao in June;
• The Forum on China-Africa Cooperation summit in Beijing in September, focusing on the Belt and Road initiative;
• The First China International Import Expo in Shanghai in November, focusing on further market opening.
Robin Li, Chairman and CEO of leading Chinese search engine Baidu said that a national investment fund for developing self-driving vehicles should be set up and the authorities should issue licenses to suitable enterprises. China urgently needs to ramp up innovation in the policy sector, he added. Baidu, which is pushing AI to fuel growth, with a special emphasis on self-driving vehicles, is confident that such vehicles can hit the roads next year. The company aims to put autonomous mini-buses that can operate in designated areas into mass production and trial operation by the end of this July, in cooperation with bus manufacturer Xiamen King Long United Automotive Industry Co. It also plans to launch self-driving cars in 2019 in cooperation with manufacturers JAC Motors and BAIC, as well as Chery Automobile Co.
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