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China sets new growth target and unveils sweeping industrial reforms

Published 05/03/2016

A Chinese military band conductor at the opening session of the annual National People's Congress in Beijing (AP)
A Chinese military band conductor at the opening session of the annual National People's Congress in Beijing (AP)

China's leadership tried to quell anxiety about its slowing economy as it cut its growth target and promised to open oil and telecoms industries to private competitors in sweeping industrial reforms.

Premier Li Keqiang announced a growth target of 6.5 to 7% in a report to the national legislature on Beijing's plans for the year.

That was down from last year's "about 7%" and reflects the ruling Communist Party's marathon efforts to replace a worn-out model based on trade and investment with more self-sustaining growth driven by consumer spending.

Mr Li, the senior economic official, warned China faces "more and tougher problems" including weak export demand, but he expressed confidence that Communist leaders can maintain stable growth.

"China has laid a solid material foundation and its economy is hugely resilient," the premier said in an address to nearly 3,000 delegates at the National People's Congress, a 12-day affair that began on Saturday.

"As long as we work together as one to surmount all difficulties, we will definitely achieve the targets for economic and social development in 2016."

In a wide-ranging speech lasting nearly two hours, the premier said Beijing will "oppose separatist activities" in Taiwan, the self-ruled island China claims as part of its territory.

The premier promised more measures to clean up China's badly polluted air, water and soil and more spending on science and industrial research and development to create technology and better-paid jobs.

Chinese leaders are struggling to reassure their public and global markets about their ability to steer the world's second-largest economy following a plunge in stock prices and currency turmoil.

Spreading protests by laid-off workers have fuelled questions about whether Beijing can manage its ambitious economic transition.

The latest growth target is the minimum Chinese leaders say is required to achieve the official goal of doubling incomes per person from 2010 levels by 2020.

Economists warn anything higher could set back reforms by forcing Beijing to prop up growth with more wasteful investment.

Last year's economic growth declined to a 25-year low of 6.9%. Private sector forecasts suggest even achieving Mr Li's lower target will be a challenge. The International Monetary Fund expects this year's growth to drift down to 6.3%.

The party's reform plans require it to cut the dominance of state companies that dominate industries from banking and telecoms to oil and steel and give entrepreneurs a bigger role.

Mr Li promised to open electric power, telecoms, transport, oil, natural gas and municipal utilities to private competition, though he failed to say whether foreign companies might be allowed in.

He said private companies would receive the same treatment as state-owned enterprises in project approval, finance and tax policy.

"We must deepen reform across the board," the premier said. He said the market "must play a decisive role".

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