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Report by Li Keqiang reflects challenges ahead for China
South China Morning Post
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Report by Li Keqiang reflects challenges ahead for China

Premier Li Keqiang has delivered a government work report that reflects the times to the national legislature. It is shaped to brace for the social and economic impact of the Covid-19 pandemic and the fallout of deteriorating relations with the United States. Amid all the uncertainties, Li set the tone by breaking with the practice of setting a target for economic growth, or gross domestic product.

Bypassing a GDP growth target takes some pressure off local governments to blindly pursue growth and helps underline the priorities. Instead Li emphasised the areas to which China must devote energy and resources to maintain a basis for growth and meet imperative goals such as job creation. They include job security, basic living needs, market operations, food and energy security, stable industrial and supply chains, and local government functions.

This will entail deficit spending, for which China still has some leeway, so that money can be channelled into the real economy. To enable small-to-medium sized businesses to weather headwinds, Li also announced a 500 billion yuan (US$70 billion) cut in taxes and fees in addition to those over the past two years.

These measures do not come without cost, in the form of spending cuts in other areas disclosed separately in the budget. These also reveal a clue to the thinking of China’s leaders about where the country needs to invest for its security and prosperity. It is to be found in the decision to spare science and research from budget cuts, with double-digit growth in spending.

The overall tone of the report is summed up in two words. One is focus, particularly on job security in the wake of Covid-19. The other is flexibility, in taking whatever measures are necessary to achieve the target of creating 9 million jobs. Another reason for flexibility is the need to meet the target of poverty elimination in rural areas and poor counties and to prepare the 14th five-year plan. Both have to be achieved by the end of the year.

Bringing 5,000 delegates together for meetings of the parliament and an advisory body may represent a bold step in the wake of the pandemic. But the tone of the work report reflects the uncertainties and challenges, and the need to focus on what can be achieved.


South China Morning PostShen Yi

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