Premier Li Keqiang delivers final govt work report, anticipated economic growth target in China for this year set to be around 5% (Updated: 10.32am)

Premier Li Keqiang delivered his final government work report this morning.

5th March 2023 – (Beijing) The 14th National People’s Congress commenced its first session at the Great Hall of the People in Beijing on Sunday (5th), with Premier Li Keqiang delivering his final government work report during his tenure. In his one-hour report, Li noted that 2022 is a crucial year for the Communist Party of China and the country as a whole. The successful 20th National Congress of the Party paved the way for the construction of a modern socialist state, while also addressing challenges posed by domestic reforms and global turbulence. The report indicated that the country achieved an annual GDP growth rate of 3% and created 12.06 million new urban jobs, while the surveyed urban unemployment rate declined to 5.5% by year-end. Additionally, the fiscal deficit rate was kept under control at 2.8%. The anticipated economic growth target for this year is set to be around 5%.

To continue this trend of growth, Li emphasised the need to respond to new downward pressures on the economy with timely and decisive policy adjustments. He highlighted the importance of using policy tools reserved in recent years and introducing a package of policies and follow-up measures to stabilise the economy. Supply-side structural reforms will also remain a top priority, with the government focusing on employment, prices, and stable growth.

According to Premier Li Keqiang’s government work report, the annual GDP grew by 3%, indicating steady economic growth in China. Furthermore, the surveyed urban unemployment rate dropped to 5.5% at the end of the year, with the creation of 12.06 million new urban jobs. The rise in consumer prices was modest, with an increase of 2%. In terms of trade, the total volume of imports and exports of goods increased by 7.7%, reflecting China’s resilience in the face of global economic challenges.

The report also highlighted China’s prudent fiscal policies, with the fiscal deficit rate controlled at 2.8% and the central government’s revenue and expenditure being in line with the budget. The international balance of payments remained balanced, and the RMB exchange rate was relatively stable among the world’s major currencies.

In terms of agriculture, grain output was 1.37 trillion catties, representing an increase of 7.4 billion catties. Moreover, the quality of the ecological environment continued to improve, emphasising China’s commitment to sustainable development.

Li praised the strong leadership of the Party Central Committee, led by Comrade Xi Jinping, for uniting the people of all ethnic groups across the country to face difficulties and successfully implementing epidemic prevention and economic stability measures. Despite the challenges faced in 2021, China’s development has achieved hard-won achievements, and the premier expressed confidence in the country’s ability to continue to grow and prosper in the future.

Premier Li Keqiang’s report focused on boosting domestic consumption, promoting innovation, and increasing investment in research and development to reduce the country’s dependence on foreign technology. He also highlighted China’s commitment to achieving carbon neutrality by 2060 and reducing carbon emissions per unit of GDP by 18% this year.

The expected economic growth target of around 5% for 2021 is in line with analysts’ projections and indicates the country’s confidence in its ability to continue its economic recovery. However, the global economic outlook remains uncertain due to the ongoing pandemic and geopolitical tensions, and China’s economic growth may face challenges in the coming year.

To address the challenges faced by businesses, the government is stepping up its support efforts. The ongoing pandemic and other factors have led many enterprises and individual industrial and commercial households to encounter unprecedented difficulties. To alleviate their plight, the government has implemented a range of measures. These include exceeding 2.4 trillion yuan in annual value-added tax credit and refund, more than 1 trillion yuan in new tax cuts and fee reductions, and over 750 billion yuan in tax and fee deferrals.

To effectively implement these tax and fee reduction policies, the central government has significantly increased transfer payments to local governments. Additionally, financial institutions are being guided to extend more credit and reduce financing costs. This has led to the average interest rate of newly issued corporate loans reaching the lowest level since statistics were first collected, while the interest rate for inclusive small and micro loans has been gradually reduced.

To stimulate market vitality, reform methods are being employed to promote greater economic activity. These measures are particularly beneficial for micro, small, and medium-sized enterprises, as well as individual industrial and commercial households in areas with a high concentration of such businesses.

In order to address the issue of insufficient effective demand, a number of measures were taken to boost investment, encourage consumption, and stabilise foreign trade. The direct impact of the epidemic on terminal consumption and investment was evident. To counter this, the implementation of some major construction projects in the “14th Five-Year Plan” was accelerated, while local government special bonds were issued and utilised in a timely manner. Furthermore, the special debt balance limit was effectively leveraged to invest 740 billion yuan in policy-oriented development financial instruments in two phases to provide capital for major project construction. Key areas were supported through policies such as special refinancing and fiscal interest discounts to promote equipment upgrades. To enhance efficiency in project approval, measures such as joint office and local commitment were also adopted.

Infrastructure and manufacturing investment increased by 9.4% and 9.1% respectively throughout the year, driving fixed asset investment to grow by 5.1%, which to some extent made up for the contraction in consumption. Innovative consumption patterns were developed, and measures such as reducing or exempting vehicle purchase tax were implemented to boost automobile consumption. Sales of new energy vehicles increased by 93.4%. Efforts were made to promote green and intelligent home appliances and green building materials in rural areas, while the total retail sales of consumer goods remained relatively stable. Financial support measures were introduced to meet the rigid and improved housing demand, and efforts were made to ensure stability in the lives of people who are living in precarious housing. Assistance was provided to foreign trade enterprises to address issues related to raw materials, labour, and logistics. Port transportation efficiency was improved, and concerns of foreign-funded enterprises were timely addressed and resolved. The volume of import and export of goods was better than expected, and the actual use of foreign investment maintained stable growth.

In response to the growing pressure on employment, the Chinese government has implemented policies aimed at stabilising and expanding job opportunities. Last year, the urban unemployment rate increased significantly, prompting a greater focus on job stability in policies related to finance, taxation, investment, and other areas.

To support struggling industries and businesses, the government has allowed for delayed payment of social security fees and significantly increased the proportion of unemployment insurance funds dedicated to stabilizing and expanding employment. Additionally, subsidies have been provided to support job stability and expansion, while initiatives such as guaranteed loans and rent reductions have been put in place to support entrepreneurship.

The government has also placed a strong emphasis on supporting the employment of recent college graduates and individuals facing difficulties in finding employment. Special assistance programs have been launched to help these groups find jobs, while the promotion of employment through work-for-pay programs has been encouraged in key construction projects.

Notably, the number of individuals who have been lifted out of poverty through employment has exceeded 32 million, with stable growth in employment overall. Despite the challenges posed by the COVID-19 pandemic, the Chinese government remains committed to ensuring a stable and expanding job market for its citizens.

In response to the impact of high global inflation, China has focused on ensuring stable supply and prices of food and energy. Last year, global inflation reached its highest level in over 40 years, placing significant pressure on domestic price stability. To effectively address severe natural disasters such as floods and droughts, efforts were made to ensure timely planting and harvesting of crops and coordinate the passage of agricultural machinery. Three batches of agricultural subsidies were also distributed to grain farmers to ensure a bountiful harvest and stable supply of key agricultural products. China has also increased coal-based energy production and provided support to power generation and heating companies to ensure a stable supply of energy.

To address the increasing difficulty in basic living for some people, China has strengthened basic livelihood guarantees. Social security policies such as subsistence allowances have been gradually expanded to cover more vulnerable groups, while unemployment insurance coverage has been extended to over 10 million people. Price subsidies have been provided to more low-income individuals, benefiting around 67 million people. In addition, interest on national student loans for economically disadvantaged college graduates in 2022 has been waived, and repayment has been allowed to be deferred. Temporary assistance has also been provided to those affected by the COVID-19 pandemic and natural disasters to ensure the bottom line of people’s livelihoods.

Through hard work, there have been significant improvements in consumer demand, market circulation, industrial production, and business expectations. Economic growth is stabilising and on the rise, and China has tremendous potential and development momentum.

Li Keqiang pointed out that the past five years have been extremely unusual and extraordinary. Under the strong leadership of the Party Central Committee with Comrade Xi Jinping at its core, China has withstood multiple tests, such as the accelerating changes in the world situation, the impact of the COVID-19 pandemic, and the domestic economic downturn. China has won the battle against poverty as scheduled, built a moderately prosperous society in all respects, achieved the first centenary goal, and embarked on a new journey towards the second centenary goal. Regions and departments across the country have adhered to the guidance of Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, deeply understood the decisive significance of the “two centenary goals,” strengthened the “Four Consciousnesses,” firm confidence in the path, theory, system, and culture of socialism with Chinese characteristics. China has fully implemented the spirit of the 19th National Congress of the Communist Party of China (CPC) and the plenary sessions of the 19th CPC Central Committee, thoroughly implemented the spirit of the 20th CPC National Congress, adhered to the general principle of pursuing progress while ensuring stability, fully and accurately implemented the new development philosophy, constructed a new development paradigm, promoted high-quality development, coordinated development and security, and achieved remarkable achievements in China’s economic and social development, which have attracted worldwide attention.

Li Keqiang added that over the past three years since the outbreak of the COVID-19 pandemic, the Communist Party of China, with Xi Jinping at its core, has consistently prioritised the people’s lives and health. The Party has strengthened medical resources and material guarantees, spared no effort in treating COVID-19 patients, and effectively protected the safety and health of the people. By optimising and adjusting prevention and control policies and measures according to the situation, the Chinese people have persevered and achieved a major decisive victory. Throughout this extraordinary anti-pandemic journey, various regions, departments, and units have done a lot of work. People from all walks of life have overcome difficulties together, and healthcare workers have tirelessly fought against the pandemic. Most notably, millions of people have overcome multiple challenges and made sacrifices, which was not easy at all. Together, they have successfully faced the major challenges posed by the pandemic and are still continuously consolidating the achievements in pandemic prevention and control, as well as economic and social development.

Premier Li Keqiang pointed out that in the past five years, China has thoroughly implemented the decisions and plans of the Party Central Committee with Comrade Xi Jinping at the core, innovated macroeconomic regulation, and kept the economy operating within a reasonable range. Despite facing severe challenges such as rising trade protectionism and the impact of the pandemic, China has innovated its macroeconomic regulation methods, avoided excessive reliance on investment, and coordinated the use of fiscal and monetary policies to support the relief and development of market entities.

China has taken a comprehensive and organic approach to grasp the main annual expected goals, strengthened interval control, directional control, timely control, and precise control. China has been both decisive in increasing efforts and avoiding a “flooding” of the economy while not sacrificing the future. China has continued to do a good job in the “six stabilities” and “six guarantees,” strengthened the protection of employment and basic livelihoods, supported market entities, ensured food and energy security, stabilised industrial supply chains, and ensured smooth grassroots operation. China has thus promoted economic growth and continued progress.

China has persistently implemented an active fiscal policy, reasonably controlling the scale of the deficit. Over the past five years, the overall deficit rate has been kept within 3%, and the government debt rate has been controlled at around 50%. The structure of expenditures has been continuously optimized, ensuring strong support for key areas such as education, technology, ecological conservation, and basic livelihoods. China has implemented large-scale tax cuts and fee reductions, combining institutional arrangements with phased measures. After the outbreak of the pandemic, China further increased the intensity of tax cuts and fee reductions, which became a crucial measure to cope with the impact.

The tax cuts and fee reductions are fair, inclusive, efficient, and direct. Over the past five years, China has reduced taxes by a total of 5.4 trillion yuan and lowered fees by 2.8 trillion yuan. This has not only helped enterprises weather the storm and preserve their assets but also stimulated economic growth and nurtured tax revenue. The number of taxpayers has increased by over 11 million households annually, including enterprises and individual businesses subject to taxation. Despite considering the factors of withheld tax refunds, the central government’s budgetary revenue has almost doubled over the past ten years. Governments at all levels have tightened their belts, controlled general expenses, and reduced expenditures. Central government departments have taken the lead in cutting expenditures, revitalised stock funds and idle assets, and used the released funds to benefit enterprises and the people. Over 70% of China’s fiscal expenditure has been used for people’s livelihoods.

Li emphasised the need for China to maintain stable macroeconomic policies, implement prudent monetary policies, and effectively support the real economy. To this end, the government will maintain reasonable and sufficient liquidity levels, utilise policy tools such as reserve requirement ratio cuts and re-lending to support small and medium-sized enterprises (SMEs), and maintain the exchange rate of the yuan at a reasonable and balanced level.

Furthermore, the government will continue to prioritise employment policies, with stable employment being a key indicator of the economy’s healthy operation. Efforts will be made to promote market-oriented and socialised employment, support enterprises in stabilising and expanding their workforce, and reduce the payment ratio of pension insurance from 20% to 16% while increasing the national social security fund reserves from over RMB 1.8 trillion to over RMB 2.5 trillion.

Finally, the government will also maintain overall price stability by ensuring a steady supply of food, energy, and transportation, as well as strengthening market regulation and maintaining normal price order.

Meanwhile, Li Keqiang also stressed the importance of fully and accurately implementing the “One Country, Two Systems” policy in Hong Kong and Macao. He emphasised the need for “One Country, Two Systems” to be steadfastly carried out, with Hong Kong and Macao people governing their respective regions with a high degree of autonomy and in accordance with the law. He emphasised the need to maintain the constitutional order of the special administrative regions as defined by the Constitution and the Basic Law, and to implement the principle of “patriots governing Hong Kong” and “patriots governing Macao”. Premier Li also expressed his support for the economic development and improvement of people’s livelihoods in Hong Kong and Macao, as well as for maintaining their long-term prosperity and stability. Looking back at the past five years of work, he noted that progress has been made in the work in Hong Kong, Macao, and Taiwan. The full exercise of governance authority over the special administrative regions in accordance with the Constitution and the Basic Law has been effectively implemented, and the National Security Law for the Hong Kong Special Administrative Region has been formulated and implemented. The construction of the Guangdong-Hong Kong-Macao Greater Bay Area has been deeply promoted, and support has been provided for the economic development and improvement of people’s livelihood in Hong Kong and Macao, as well as for epidemic prevention and control and maintaining stability.

In his address, Li Keqiang emphasised the need for continued efforts in various economic and social development areas as this year marks a change in government. Here are the key points of his speech:

  1. Maintaining stable economic growth – this involves optimising economic structure, promoting innovation, improving the quality of development, and maintaining a stable economic growth rate.
  2. Deepening reform and opening up – this involves promoting market-oriented reforms, improving the socialist market economy system, enhancing the rule of law, and expanding opening up to the world.
  3. Strengthening supply-side structural reform – this involves optimising the supply structure, improving the quality and efficiency of the supply system, and promoting innovation and development.
  4. Attracting and utilising foreign investment – this involves expanding market access, increasing openness in the modern service industry, implementing national treatment for foreign companies, and promoting high-standard trade agreements.
  5. Effectively preventing and resolving major economic and financial risks – this involves deepening financial system reform, improving financial regulation, preventing the formation of regional and systemic financial risks, and preventing the disorderly expansion of the real estate industry.
  6. Maintaining stable food production and promoting rural revitalisation – this involves stabilising the planting area for food crops, improving the supply of agricultural materials, promoting the upgrading of agricultural production capacity, and strengthening the development of rural industries.
  7. Promoting green development – this involves deepening the prevention and control of environmental pollution, strengthening the construction of urban and rural environmental infrastructure, promoting the efficient and clean use of coal, accelerating the construction of a new energy system, and promoting resource conservation and environmental protection.
  8. Ensuring basic livelihoods and developing social programs – this involves improving the housing security system, promoting balanced and high-quality compulsory education, developing vocational education and innovation in higher education, expanding quality medical resources and promoting regional balance, improving elderly care services, and protecting the legal rights of vulnerable groups.