As one of the most important annual political gatherings in China, the NPC lays out the leadership’s plans and priorities for the coming year. Outcomes from the legislature are closely scrutinised by global businesses keen to anticipate the future direction of the Chinese economy and plan accordingly.
Chinese Premier Li Keqiang’s annual government work report, delivered to the NPC earlier this month, featured a number of important announcements related to the following areas:
- Lowered expectations for economic growth: China’s GDP growth target was lowered from 7.5% in 2014 to 7% this year, with Premier Li characterising the lowered expectations for economic growth as the “new normal”. Last year, the Chinese economy grew at its slowest pace since 1990, and the government is clearly accepting this lower rate of expansion as it continues to focus on restructuring the economy. Following Premier Li’s speech, the head of the National Development and Reform Commission (NDRC) emphasised that China will not introduce strong stimulus measures to boost economic growth this year.
- Supporting employment and job creation: Premier Li said that over 10 million jobs would be created in urban areas in the coming year. With the number of college graduates expected to reach nearly 7.5 million this year, job creation is a top priority for the government. Premier Li also pledged to help people who have lost their jobs due to structural adjustments or steps taken to reduce overcapacity to secure new employment.
- Improving environmental protection: As the government continues to focus on reducing pollution and improving environmental protection, energy intensity will be reduced by a target of 3.1% this year to cut emissions from major polluters.
- Fighting corruption: Premier Li reiterated the government’s commitment to continue fighting corruption and pledged to tighten supervision over public funds and state-owned assets.
- Opening up China’s stock exchanges: Premier Li announced plans to link up the Shenzhen and Hong Kong stock exchanges on a trial basis, similar to the scheme launched between the Shanghai and Hong Kong bourses last November.
- New plans for infrastructure investment: China plans to invest more than RMB 800 billion in railway construction and another RMB 800 billion in major water conservation projects in 2015.
- Encouraging greater foreign investment: Premier Li vowed to further open up the service and manufacturing sectors by reducing the number of industries in which foreign investment is still restricted by half.
- Supporting economic growth through Internet applications: Premier Li announced an Internet-plus action plan, which aims to further accelerate the contribution of new Internet applications to the Chinese economy. McKinsey forecasts that Internet applications could fuel between 7-22% of China’s incremental GDP growth until 2025.