China expects “serious fight” around the growth – Reuters Germany

Beijing with a massive expansion of future technologies China wants to keep the domestic economy permanently in motion.

plans for the coming years the government growth rates of at least 6.5 percent. But she agrees the country a on a hard transition. The conversion of the dominated by heavy industry world’s second largest economy to a high-tech giants will bring substantial changes. “The development of our country is facing more and greater challenges,” warned Prime Minister Li Keqiang at the annual parliament meeting. “We must therefore prepare for a serious fight.”

In the past year were the problems out into the open. Growth slowed to 6.9 percent, the lowest level since a quarter century. The demand at home and abroad weakened to investments spiked. There were also financial turmoil that caused uncertainty. All this through ‘to the global economy. Also German exporters obtain the slowdown in China clearly felt, which will continue in the current year, according to experts. Economists expect a further slowdown to 6.5 percent, while the government seeks a rate between 6.5 and seven percent.

RISE TO HIGH-TECH GIANTS

The old growth model has come to its limits. Conventional industries suffer from overcapacity and exacerbate pollution. Numerous alive artificially held by billionaire cash infusions SOEs have dramatically lost its competitiveness. At the same time, these so-called “zombie companies” have piled huge debts. That should change in the coming years: Inefficient parts of the manufacturing sector are restructured, the economy will be more based on services and high technology. Innovation is the driving force for the development of the country, Li said at the opening of the twelve-day People’s Congress.

According to his plans, the People’s Republic is the leader are in the semiconductor industry, robotics industry, aircraft equipment and satellite technology worldwide. At the same time it is to promote the development of the Internet and ascend to the Cyber ​​Power. The new five-year plan, the deputies should approve, provides for an increase in research spending to 2.5 percent of gross domestic product (GDP). In the period 2011-2015, the rate was still at 2.1 percent.

However, the leadership in Beijing is trying not to let government spending get out of hand. Although it is aiming for this year a higher deficit of three percent of GDP to 2.3 percent in 2015. Many investors had hoped but to a higher setting. Therefore, the economist and former central bank advisor Yu Yongding called for an increase in the deficit threshold. Commerzbank economist Zhou Hao stressed contrast, China was reluctant to high infrastructure investments in order to prevent the weakening of its own creditworthiness.

COMBAT THE ZOMBIE COMPANY

The government must create a difficult balancing act. Firstly, it wants to put growth on a healthier basis. Secondly, a hard landing for the economy is to be avoided, since otherwise threaten social unrest. The transformation is already difficult enough, Li wants the “zombie companies” to the collar. They are to be recovered or settled its viability through mergers. Five to six million workers of state companies will probably lose in the next two to three years, their work, such as the recent two familiar with the process said persons. Affected are mainly coal and steel industries. However, at the same time are in other industries tens of millions of new jobs arise, Li announced. The unemployment rate in cities is 2016 remain below 4.5 percent.

The problem of rampant pollution intends to tackle the communist leadership. For the first time the Commission set an upper limit on the energy consumption. There are also certain requirements in order to make the water more efficiently. Specific benchmarks for foreign trade are in the new plans but not named after such targets have been missed in recent years.