China unveils targets for 2015: Li Keqiang’s speech as it happened

PUBLISHED : Thursday, 05 March, 2015, 9:14am
UPDATED : Thursday, 05 March, 2015, 6:05pm

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Seven per cent – that is the much-awaited GDP target figure that Premier Li Keqiang is announcing this morning at the opening of the annual National People’s Congress. Figures were released to the media ahead of the speech.

Our correspondents on the ground and five commentators will be following the speech closely and giving their comments as Li addresses the 3,000-member delegation at the Great Hall in Beijing. The five commentators are: Zhao Xijun, professor of the School of Finance, Renmin University; Zhang Lifan, an independent Beijing-based scholar; Ye Haibo, professor of law at Shenzen University; Andy Xie, Shanghai-based independent economist, and Cary Huang, a veteran China journalist with the SCMP.

CONCLUSION

Li wrapped up his speech in under two hours, leaving much for analysts to interpret on the year ahead for China. The focus for today at least will be on the growth target and the immediate market sentiments. CPPCC chairman Yu Zhengsheng, anti-graft head Wang Qishan and Propaganda Chief Liu Yunshan beamed at Li as he concluded his speech. President Xi remained impassive, his expression hard to read, but he and Li began conversing soon after the speech. Xi also spoke to State Councillor Yang Jiechi, Minister for Public Security Guo Shengkun and President of the Supreme People’s Court Zhou Qiang behind him, and later shook hands with Zhou. The leaders were all smiles as they and the delegates began filing out of the Great Hall.

Over the next 10 days, until Sunday, the delegates will go into huddle-mode as they discuss the work report and the targets they must meet. At the end of the annual plenum, the delegates will cast a vote on whether to accept the targets and premier Li will give a wrap-up of this year’s congress, the equivalent of China’s parliament.

Are analysts and market watchers impressed? Find out in our reports online today and in print tomorrow.

Summing up his own assessment of the work report, independent scholar Zhang Lifan said:

“The whole work report covered a lot of issues, but lacked new and attracting points, suggesting that China’s top leadership faces really heavy pressures in the year ahead.

“They must maintain a 7.0% growth rate. Rapid economic growth has been a critical foundation for the Party’s legitimacy. Further economic stagnation will bring risks to this legitimacy foundation. On the other hand, Xi’s comprehensive anti-corruption has impacted almost everyone – all interests groups, and even all civil servants. Amid an economic slowdown, Xi needs to have a really tight grip of everything. Otherwise, the foundation of this whole government system could be shaken.”

HONG KONG AND MACAU

Li Keqiang says China will “firmly” uphold and implement the principle of “One Country, Two Systems”. He says China will adhere to the policy of letting Hong Kong people govern Hong Kong and Macau people govern Macau. The two special administrative regions will enjoy a “high degree of autonomy.”

He says China will handle the issues of Hong Kong and Macau “strictly in accordance with the Chinese constitution and the Basic Law”. It is the first time Li Keqiang in his work report has said Hong Kong affairs should be handled according to the Chinese constitution. In the past the Premier only mentioned the Basic Law - the city’s mini-constitution.

He says China will fully support the chief executives of Hong Kong and Macau to govern the two SARs in accordance with the law. The central government will help the two cities to develop economy, improve people’s livelihood, and promote democracy and social harmony. He says mainland China will expand exchanges with Hong Kong in “all areas”. 

Ye Haibo, Professor of the Centre for Hong Kong and Macau Basic Laws at Shenzhen University notes that this marked the first time the premier's working report highlighted the need for Hong Kong to “strictly comply with the Constitution and the basic laws” in the implementation of “one country, two systems”.

However, Ye notes that Li also reinstated the phase of "the people of Hong Kong governing Hong Kong" – a reference that was conspicuously absent in last year’s speech.

He says the remarks on the Constitution were consistent with other previous remarks made by state leaders since the third plenary session of 18th central committee.

The significance of highlighting the role of Chinese constitution in the working report, he said, was to stress that the disputes in interpreting the Basic Law on controversy issues such as political reform must be resolved by looking to the provisions of the Chinese constitution.

But he doubted that the remarks have undermined the city's autonomy and “one country, two systems” because of Li’s reinstatement of the phrase “the people of Hong Kong governing Hong Kong” and the reassurance that Hong Kong enjoys a “high degree of autonomy”, as mentioned in previous years’ speeches.

“This is clearly a response to the worries and doubts made by Hong Kong people and international society and to reassure the 'one country, two systems' direct remain firmly upheld.”

TAIWAN

Li Keqiang says mainland China and Taiwan must adhere to the political consensus they reached in 1992, which confirms the “One China” principle. He says China will oppose any Taiwan independence movement and will push for more cross-strait dialogue.

He says the Chinese government will strengthen people-to-people exchanges with Taiwan, particularly among young people. The central government will protect Taiwan people’s rightful interests [on the mainland]. He hopes that people on both sides of the strait could have better mutual understanding. “We firmly believe that the peaceful development of cross-strait relations is an irreversible historic trend.”

RESPONSE ON SOCIAL MEDIA

Premier Li Keqiang’s remark “[Those] with power must not be capricious” made during the government report has become an instant hit on China’s social media.

When talking about simplifying administrative procedures and delegating power to lower levels, Li said: “The ultimate truth is the simplest, [those] with power must not be capricious."

Users on Weibo, the mainland’s popular microblogging platform, quickly picked up the phrase and applauded Li for making such a remark.

The word “capricious” has been one of the most popular internet phrases on the mainland since last year, referring to the capricious and surprising behaviour of the rich, in a sarcastic tone.

During a press conference of the Chinese People’s Political Consultative Conference on Monday, spokesman Lu Xinhua also used the word “capricious” to refer to the public’s firm stand on fighting corruption and finding the next big “tiger” – meaning corrupt top official.

Quoting popular internet language in official speeches is becoming a common practice among Chinese leaders, who are famous for their dull bureaucratic tone and political jargon.

CORRUPTION

Li says all government officials should abide by the constitution and they should respect the laws. He vows to curb corruption.

“A common phenomenon of corruption is rent seeking. That is why we need to streamline power (officials enjoy) in order to strengthen clean governance,” he says.

“We would firmly eliminate the room for rent seeking and we will make efforts to remove the soil for corruption,” he adds.

Cary Huang:

“The government under premier Li Keqiang has made efforts to advance the law-based government administration. In the past one year, Li and his colleagues have apparently changed their style in governance by focusing their effort on ‘formalising’ and ‘institutionalising’ the governance in economy and public administration through making a great number of rules and regulations. The government has made efforts to strengthen the rule by law as set by the fourth party plenum in October 2014.

"However, the push for constitutional rule and rule by law is just beginning and we need more time to observe such progress in the coming few years. And Li has been tasked to launch a meaningful overhaul and streamline the programme to restructure the government in order to achieve the goals set by the party’s ambitious goals in the comprehensive reform approved by the party’s third plenum in late 2013.”

Since they took power two years ago, the new leadership under Xi Jinping has been trying to repair the battered relationship between the public and the government - a result of rampant corruption over the past two or three decades, therefore the graft crackdown has been a key feature.

Measures highlighted in this year’s government work report - including governing by the law, improving government efficiency, eliminating rent-seeking opportunities through cutting red tape – all fall in this framework to amend the relationship.

Zhang Lifan:

“Eliminating room for rent-seeking through cutting red-tape could reduce business costs for enterprises and individuals, which brings benefit for the public. It’s a right move, yet the anti-corruption drive also introduces a by-product, where the government officials are no longer doing their jobs properly.

"The reduction in extravagance and “grey incomes” has also dampened their enthusiasm in work. How to address this problem? Will this be cured through Party’s propaganda efforts? I don’t see any solutions offered in this government work report.”

POLLUTION

China vows to reduce carbon intensity by 3.1 per cent. 

Energy efficiency, Li said earlier, has improved by 4.8 per cent.

Li says that the government will work on legislation for environmental protection tax and must strictly enforce environmental laws and regulations, crack down on those guilty of illegal emissions and ensure they pay a heavy price for their offences.

“We will promote the use of new-energy vehicles, reduce vehicle exhaust emissions, raise the national production standards for and improve the quality of fuel, and provide motor gaolsine and diesel fuel that meets National-V standards to all key cities in key areas,” Li adds.

Li Yan, head of climate and energy at Greenpeace East Asia on the environment and energy:

"There was the 'declaration of war on pollution' in Li Keqiang’s speech a year ago. One year on, the focus seems to be shifting on actual implementation in this year’s work report. For instance, targets for pollution reduction have been slighted strengthened.

"The attitude towards new energy also becomes more proactive – from 'encouraging' to 'promoting' the development of wind, solar and biomass energy. 
Targets for energy and carbon intensity have also been on a good track for fulfillment. Meanwhile, the share of non-fossil fuel in total energy mix already reached 11.2 per cent by 2014, previously China has set a target for 11.5 per cent by the end of 2015, meaning China could well beat this target."

IMPROVING LIVELIHOODS

“This year there are 7.49 million university graduates and that is record high,” the premier says.

He says encouraging university students to start their own businesses is important, and the government will “support business start-ups for new industries".

Elderly people in urban government pension schemes will receive 70 yuan a month, rising from 55 yuan.

He also promises help to vulnerable groups including disabled, the elderly and children. He says the government will continue to reform the registration of social organisations.  

ECONOMY AND FINANCE

Li says the government will cut red tape for businesses and will relax controls over private capital to enter the market .

He emphasises the reform of state owned enterprises and says the government will accelerate reforms in power, petroleum and natural gas enterprises, while also strengthening supervision of the assets of the state enterprises.

He promises the government will “unswervingly” support and encourage the private sector.

Li says China’s investment in railways will be maintained at above 800 billion yuan.

It will also accelerate modernisation of agriculture and maintain grain output.

He also pledges to cut the number of rural poor by 10 million. He says the government will ensure the amount of farmland will not be reduced. The government will introduce experiments in reforming the use of rural residential land, which is now banned from being used for other purposes.

Li says the government wants to continue to modernise large towns, while limiting the population size of megacities.

The government, he says, is also hoping to change the structure of the economy to allow high tech industries and innovation to thrive. It has set up a fund of 40 billion yuan for emerging industries and it will raise more funds to support new industries, also encouraging research and development.

Touching upon disputes with neighbours, he says: ”We will firmly protect our interests in the oceans and we will properly handle marine disputes. We will advance to our goal to be a strong oceanic power."

THREE AREAS OF FOCUS

Li Keqiang says the government needs to focus on three areas this year:

* To ensure a stable macro economy policy and money supply.

* To restructure the economy and increase investment on science and technology research.

* To create a level playing field and encourage fair competition. China, he says, needs to create an environment that allows entrepreneurs to flourish.

IN THE HALL

As Li speaks before a hushed audience, President Xi Jinping and his colleagues are in the front row listening intently. Earlier, both were seen scrutinising the report, before Li went to the lectern to deliver his speech.

The other party leaders, Hu Chun Hua and Guo Jinlong, chatted amiably before they took their seats. While other leaders could be spotted busy taking notes, Xi, Vice Premier Wang Qishan, the party’s number 4 Yu Zhengsheng do not have any pens on their desks.

When Li finished speaking on the issue of corruption, the hall broke into applause, but Xi, the main force behind the corruption crackdown, sat poker faced.

Xi finally applauded when Li Keqiang thanked the delegates for their contributions.

Xi Jinping sat through the beginning of the speech with a poker face. While delegates applauded Li several times, Xi sat quietly. He finally applauded when Li expressed gratitude to all.

Earlier, Zhang Dejiang, chairman of the National People’s Congress, made a mistake when he announced the number of attending delegates to be 2,097, rather than 2,907.

2015 ECONOMIC TARGETS

Li Keqiang says [economic] development is the key to solve China’s problems and to help the country to avoid the so-called middle-income trap. He said China needs to keep a reasonable growth rate while at the same time deepen reforms and restructure its economy.

“Our economy still faces huge downwards pressure… this year will be even more difficult than the last year.”

He said China’s economic growth target would be set at around 7 per cent. Last year’s target was 7.5 per cent and the actual growth came in at 7.4 per cent.

The urban employment rate will be kept around 4.5 per cent – it is slightly lower than last year’s target of 4.6 per cent.

“Seven per cent economic growth can ensure ample employment.”

Zhao Xijun says:

"The GDP growth target of around 7.0% means the government accepts a growth rate higher or a little lower than 7.0%. Before 2014, Beijing used to think it's important to have a GDP growth rate no lower than 7.2% which is crucial for employment. However, with the help of the ongoing economic restructuring, the importance of manufacturing sector is giving way to service sector, which has convinced the Chinese government that even a lower GDP growth rate can lead to good employment.

"China will go ahead with fiscal reforms this year which includes budget reform and tax reduction measures. So fiscal revenue is set to decline. Meanwhile, fiscal expense will probably increase as outlays are needed to improve social security system, environment protection, medical services and other aspects to improve people's livelihood. As a result, fiscal deficit will rise.‍"

Cary Huang:

“By setting the rare low growth rate, the government has acknowledged the fact that the era of fast growth is over. It is also suggesting that the government sees the need to focus on the quality of growth. However, by setting the moderate 7.0 percent growth rate, the government also aims to achieve stable and sustainable growth amid an inevitable slowdown.

"The slower growth rate enables the government to focus on balancing growth and deepening reforms. The government’s medium and long term objectives should be to achieve what has been set by a comprehensive reform blueprint approved by the third party plenum in November 2013."

Yuan Gangming

"An around 7.0%‍ GDP growth target is realistic. It was very difficult for China to achieve a 7.5% GDP growth target in preview years, which forced it to excessively increase investment and made it hard to push ahead with economic restructuring. A lower GDP target will not hamper employment. The service sector and SMEs will create jobs to ensure employment.

Andy Xie said he did not find concrete solutions being offered to address the economy’s problems.

“China's economy is in difficulty. In the short term, China should reduce taxes to increase household income and for a longer term it should restrict the spending of governments and state-owned enterprises. Under such circumstances, the fiscal deficit should be bigger than the government report suggests, given the deflation pressure and the need for tax reduction. The employment target is not hard to achieve. The target of creating 10 million urban jobs is flawed as a measure for employment, as it ignores people who retire.”‍

ACHIEVEMENTS IN 2014

In a total of 28 provinces, children of rural migrants were allowed to participate in university entrance examinations last year, Li says.

Education spending was more than 4 per cent of GDP last year, he adds.

Food security law is under review. The government has allowed organisations such as community groups, industrial groups to register as social organisations.

Last year, the government has made a big effort in clamping down on extravagant spending while spending on banquets, travelling, and transport by the government officials have been put under effective control. The party has punished a “batch” of corrupt officials, he says.

He hails a “fruitful” year on China’s diplomacy last year. State leaders including president Xi Jinping have attended a wide range of international events.

“Big nation diplomacy has been promoting stability” while there were new developments with relations with developing countries.

“China’s economic diplomacy has achieved notable results.”

Li wishes all the delegates and all Chinese people, a Happy Lantern Festival, to applause

ECONOMY AND LIVELIHOOD

Li keqiang said the government has expanded tax privileges to SMEs and rural businesses.

He also said the government has started free trade zone in Fujian, Guangdong and Tianjin and expanded the one in Shanghai last year.

The government has spent 70 per cent more on improving livelihood despite pressure on economic slowdown, he said. (applause) 

This is Li’s third year delivering the annual work report. In the red-carpeted hall, delegates from all over the country are listening intently to his speech that will likely last until noon. Senior ministers, PLA generals, state representatives and others are going through their copy of his speech, turning the pages as he reads.