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China sets growth target of 6-6.5pc

AAP  |  05 Mar 2019Text size  Decrease  Increase  |  
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The Chinese government has set an economic growth target of 6 to 6.5 per cent for 2019, according to a government work report released at the opening of the annual parliamentary session.

The range would mark China's slowest economic growth in almost three decades. Last year, the economy grew 6.6 per cent, bogged down by a trade war with the US and rising government debt.

The national defence budget is set to grow by 7.5 per cent this year, below last year's growth rate of 8.1 per cent.

The government is planning for a deficit-to-GDP ratio of 2.8 per cent, a 0.2 percentage point increase over last year.

The National People's Congress annual parliamentary session began on Tuesday with a sombre tone after Chinese President Xi Jinping in January warned Communist Party leaders about "complicated and grim" international conditions for China, with "the global sources of turmoil and risks having increased".

Some 3000 delegates, forming the country's largely rubber-stamp parliament, have convened at Beijing's Great Hall of the People for the session, which will last until 15 March.

The party leadership will indicate how it will tackle mounting government debt and the structural changes to the economy demanded by Washington.

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Chinese and US teams have been negotiating an end to a months-long trade war, which saw Washington slap tariffs on $US250 billion ($353 billion) worth of Chinese imports.

"The economy is slowing down and in a chaotic state," said Wu Qiang, an independent political commentator. "Therefore, this year's National People's Congress will focus on the stability of the economy."

Premier Li Keqiang has been under pressure to present a progressive reform agenda seemingly independent of the US demands, Wu added.

Washington wants Beijing to eliminate its support for key tech sectors and state-owned enterprises, as well as lower tariffs and improve the protection of intellectual property rights.

China's GDP last year expanded at its slowest pace since 1990 due to the trade war and Beijing's crackdown on financial risks, which raised corporate borrowing costs and hurt investment.

A longer-term campaign to curb polluting and low-value industries also slowed China's vast manufacturing sector.

To help shore up the economy, China's fiscal policy will become "more forceful", Premier Li Keqiang said, with the government pencilling in cuts of nearly two trillion yuan ($421.23 billion) in taxes and fees for companies.

Value-added taxes will also be reduced to support the manufacturing, transport and construction sectors.

With the economy losing steam, China's top leaders are closely watching employment levels as factories could be forced to shed workers, despite a more resilient services sector.

China will monitor more closely the job situation at exporting companies heavily exposed to the US market, Li said.

The government aims to create more than 11 million new urban jobs this year and keep the urban unemployment rate within 4.5 per cent, he added, unchanged from its 2018 goals.

Beijing has lowered reserve requirements for commercial lenders five times in the past year to spur loans to small and private companies - vital for growth and jobs.

This year, the government has set a budget deficit target of 2.8 per cent of GDP, up from last year's 2.6 per cent, reflecting lower tax revenue and higher government spending.

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