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Source:Global Times Published: 2015-3-16 22:48:01

Two sessions focus on key economic issues

Editor's Note:

The annual sessions of China's top legislative and political advisory bodies, commonly known as the two sessions, concluded on Sunday in Beijing. During the two sessions, which set the tone for Chinese politics and the country's economic plan for 2015, policymakers reaffirmed their commitment to a "new normal" of slower but more sustainable economic growth and pledged to make fresh breakthroughs in major reforms. The Global Times presents some of the key phrases and highlights of reforms pledged during this year's two sessions, offering an insight into China's future policy goals and direction. 

Deputies of the National People's Congress (NPC) walk out of the Great Hall of the People after the conclusion of the third session of the 12th NPC on Sunday. Photo: IC

Two goals

In the annual government work report he delivered at the annual session of the National People's Congress (NPC) on March 5, Premier Li Keqiang said China will seek to achieve "two goals" - maintaining medium-to-high-speed economic growth and reaching a medium-to-high level of economic development.

The country will stick to the combination of maintaining policy continuity and stabilizing expectations while advancing reforms and restructuring, Li said.

One of the highlights of the two sessions was the issuance of guidance for businesses and local governments on how to assess and understand the current economic slowdown, Wang Jun, an economist at the China Center for International Economic Exchanges, a Beijing-based think tank, told the Global Times Monday.

"People should not continue concentrating on fast growth, but should instead pay more attention to the quality of growth, and to environmental protection," said Wang, adding that new drivers of economic growth could be found during industrial reforms and innovation.  The government work report set China's annual economic growth target for 2015 at around 7 percent, with the country having posted GDP growth of 7.4 percent in 2014, the slowest in 24 years. 

Instead of causing a big stir in the market, the 7 percent growth target, according to analysts, is in line with market expectations and signals that policy­makers feel increasingly comfortable with the idea that China is undergoing an economic restructuring toward a "new normal" of slower growth.

Zhou Xiaochuan, governor of the People's Bank of China, the central bank, said at a press conference during the two sessions on Thursday that a new normal in economic growth does not mean there will be a change in the country's prudent monetary stance.

Zhou also said China will move to launch a deposit insurance system in the first half of the year and will probably remove the ceiling on deposit interest rates in 2015, two key reforms seen as vital steps toward full liberalization of the country's financial sector.

Liberalization of the financial sector is at the heart of the government's economic reform agenda, and China watchers see policymakers' efforts to overhaul the sector as a sign of their commitment to the overall economic reforms.  

"The primary beneficiaries of deposit rate liberalization would be households. A 1 percentage point increase in deposit rates would result in a shift of income to households equivalent to 0.8 percent of GDP. So the move should support consumption," economists at Capital Economist said in a research note on Thursday.  

To ease concerns over a slowdown in the economy, Premier Li also said at a press conference at the close of the NPC that China has sufficient policy tools to maintain growth.  

"Premier Li Keqiang was correct to emphasize that China has many tools available, if necessary, to meet the 7 percent growth target. China's means of macroeconomic management in its 'socialist market economy' are much stronger than in any Western capitalist economy because it is able to use not only monetary and fiscal policy but also direct investment," John Ross, a senior fellow with the Chongyang Institute for Financial Studies at the Renmin University of China, told the Global Times on Monday. 

Double-engine plan

Premier Li said in the government work report that encouragement for mass entrepreneurship and innovation as well as an increase in the supply of public goods and services could form two new engines for the country's economic growth. 

Li promised at the close of the NPC on Sunday that the government would continue to "remove roadblocks and pave the way for entrepreneurship" by relaxing market access barriers and making it easier for people to obtain business licenses.  

China will continue to see many young people joining the Internet bandwagon, an area where there are not strict controls, Tang Jianwei, a senior macroeconomic analyst at Bank of Communications, told the Global Times Monday.

Traditional sectors such as the financial industry will also have room for newcomers, as the government is lowering the entry threshold, Tang said.

Small and medium-sized private financial institutions, such as banks, can now be established, and the central government will not set any quotas for this, according to the government work report.

The "double-engine plan" can generate new employment, and will also help with the process of urbanization, analysts said.

Better public services, such as education and healthcare, are expected to facilitate the long-term settlement of migrant workers in big cities, said Tang.

Internet Plus

Premier Li officially introduced the "Internet Plus" action plan in the government work report, which aims to enhance the integration of mobile Internet services, cloud computing, big data and the Internet of Things with modern manufacturing industry.

The Internet Plus policy aims to push forward the combination of Internet technology, mainly on the mobile front, with traditional industries that are suffering tepid growth, Sun Jianbo, chief strategist at China Galaxy Securities Co in Beijing, told the Global Times Monday.

Traditional industries can save costs and enhance customer services via the introduction of Internet technology, he said.

"The Internet Plus strategy can improve the efficiency, quality, innovation and marketing capability of manufacturing industry and create huge investment opportunities in the sector," Li Ning, assistant to the general manager of the investment and research department at Tianhong Asset Management Co, said in a research note on Sunday.

Made in China 2025

In the government work report, Premier Li also outlined guidelines for "Made in China 2025," which emphasizes innovation-driven development, green development, application of smart technologies, strengthening foundations and seeking to upgrade China from a big manufacturing country to a strong manufacturing power.

The initiative clarifies the future development direction for China's manufacturing industry, said Sun.

The Made in China 2025 strategy will help deepen industrial reform and the transformation from labor-intensive industry into a model based on value-added and technological advances, said Tang of Bank of Communications.

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