On Wednesday, March 5, China opened the annual full session of its parliament, the National People’s Congress, lasting 10 days in Beijing.

In his first speech as premier to the National People’s Congress, a two-hour recital of the government’s intentions, Premier Li Keqiang promised to maintain rapid growth, contain inflation, create 10m new jobs, rein in extreme pollution and tackle growing financial risks while simultaneously transforming the country’s growth model.

Beijing will make domestic demand “the main engine driving growth,” Li said. He promised to promote consumer spending by raising incomes and encourage growth of service industries such as education, tourism and care for the elderly. “We will enhance people’s ability to consume,” said Li.

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Here are a few highlights from the rest of the speech:

GROWTH

Beijing left the growth target for this year unchanged from 2013 at 7.5 per cent. This year’s target, Mr Li said, was set “on the basis of careful comparison and repeatedly weighing various factors as well as considering what is needed and what is possible.” He also said China would “keep inflation at around 3.5%”. Growth is likely not at the usual 8% because enough jobs for the 7.3m university students who will graduate this year  must be created as well as for the more than 6m new migrant workers who pour out of the countryside each year.

The country’s top economic planning agency said in a report to parliament that the government will target 17.5 percent annual growth in fixed-asset investment and 14.5 percent in retail sales growth in 2014.

CONSUMPTION

The target for household consumption growth was also left unchanged at 14.5 per cent for the year, but the government missed that target by a wide margin last year as retail sales grew by only 13.1 per cent. Premier Li Keqiang said Beijing will encourage competition, ease exchange rate controls and improve access to credit for productive businesses.

Li’s pledges were in line with Communist Party plans issued in November that call for promoting market forces and domestic consumption to replace a model based on exports and investment that delivered three decades of explosive growth but has run out of steam.

“We need to make sure the market plays a decisive role,” said Li. He promised to “break mental shackles and vested interests” — a reference to possible resistance from state companies that might lose subsidies and monopolies. Li has hinted at reforms to increase competition in specific industries  which would boost domestic consumption. He also promised to open state-controlled industries such as banking, oil, power generation, railways and telecommunications to private investment. He pledged to “level the playing field” for Chinese and foreign companies to promote competition.

Entrepreneurs and investors are watching for details of how the party will carry out its  pledge. Beijing has issued a flurry of minor changes such as simplifying processes for registering new businesses but has yet to take action on major tasks such as overhauling the state-run banking system.

POLLUTION

Some of Mr Li’s strongest language came in the section of his speech about improving the dreadful air quality that so often afflicts Beijing and other Chinese cities. The smog, Mr Li said, is “nature’s red-light warning” that China’s blind rush toward development is unsustainable, and that is time to “declare war” against pollution.

His challenge, of course, will be to ensure that his economic growth target is not the first casualty. The government will start by reducing PM10 and PM2.5 emissions, and focus on improving the industrial structure, raising energy efficiency, reducing vehicle exhaust emissions, and preventing and monitoring wind-borne dust, Li said. You can read more about Li’s remarks on the “War Against Pollution” here.

You can find a full run down of what you should know about the meeting from Businessweek here.

 

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