With ambitious reforms China wants to fight against the weaker economy. To kick off this year’s session of the People’s Congress on Saturday in Beijing lowered Prime Minister Li Keqiang its growth forecast for this year to 6.5 to 7 percent – where more than for a quarter of a century no longer. He called for comprehensive structural reforms. The second largest economy stand at “more and more difficult problems,” the Premier told the nearly 3,000 delegates. “We must be fully prepared to beat a tough battle.”
The new five-year plan, the Li Keqiang also presented, nevertheless provides a long-term growth of “at least 6.5 percent” annually by 2020. Despite the economic problems of the Premier affirm also the goal of the party, to double the income and economic performance over 2010-2020. In the cities, 50 million new jobs should be created over five years
military spending grow less -. But still disproportionately
Given the fiscal deterioration growing military spending by 7.6 percent so slow as not in six years more. Due to the ongoing reconstruction of the People’s Liberation Army and the tensions in the South and East China Sea, however, the defense spending continue to rise faster than the total expenditure in the new budget with seven percent.
The budget deficit is 560 billion yuan to 2.18 trillion yuan (converted 304 billion euros) rise and account for three percent of gross domestic product. The ratio is lower than in other major economies, Li Keqiang stressed. So is the deficit “necessary, feasible and safe”. Last year, the ratio stood at 2.3 percent. The increase in the deficit should cover in particular the reduction of taxes and other burdens on businesses in the amount of more than 500 billion yuan (790 billion euros).
Rising risks and growing instability
in his report Li Keqiang painted a bleak picture of the problems for China’s economy, which is no longer grown as slowly as 25 years last year, with 6.9 percent. “The downward pressure on the economy is increasing,” said the Premier. World trade is weak. Also there were fluctuations in the financial and commodity markets. “Geopolitical risks increased”, Li Keqiang said. “There is growing instability and uncertainty in the external environment of China.”
In China, problems and risks have accumulated over the years and are obvious. There were difficulties in the restructuring. The growth was slower. The transformation of the driving forces of the economy show problems. China will not let the challenges but intimidated. “There are no problems that we can not overcome.” China’s economy had “great potential and plenty of room for growth,” assured the Prime Minister.
reforms against overcapacity
Li Keqiang wants to expand the fight against overcapacity, reform the state-owned enterprises and the market is a “crucial role” grant. Given excess production, especially in the steel and coal industry said the Prime Minister, the offer must better anticipate demand. The capacity building must be more tightly controlled. Local governments should play a leading role in structural reform, while the central government strip their support.
The problem of “zombie factories” with large overcapacity should, “pro-active but prudent” mergers, reorganizations debt relocations, resolutions and bankruptcies are dissolved. The government will provide 100 billion yuan (14 billion euros) to support it
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