China sets robust growth target to shore up cooling economy

BEIJING (AP) – China’s government announced a robust annual economic growth target and a 7.5 per cent rise in military spending yesterday at a legislative session overshadowed by a tariff war with Washington.

In a bid to defuse United States (US) and European complaints the Chinese system is rigged against foreign companies, Premier Li Keqiang promised in a speech to the National People’s Congress they will be “treated as equals” with Chinese competitors.

Li, the country’s top economic official, set this year’s growth target at six to 6.5 per cent, reflecting official determination to shore up a cooling, state-dominated economy and prevent politically dangerous job losses in the face of US tariff hikes and weaker global demand. It is off slightly from last year’s 6.6 per cent growth, a three-decade low, but would be among the world’s strongest if achieved.

The Premier promised to “promote China-US trade negotiations”, but gave no details of talks aimed at ending the fight with US President Donald Trump over Beijing’s technology ambitions and complaints it steals or pressures companies to hand over technology.

Li pledged higher spending on technology development the ruling party sees as a path to prosperity and global influence and more money for education, social programnmes and public works construction.

Chinese President Xi Jinping and Chinese Premier Li Keqiang at the opening session of China’s National People’s Congress at the Great Hall of the People in Beijing. – AP

Li warned the second-largest economy faces a “graver and more complicated environment” and risks that “are greater in number and size.”

The two-week gathering of the cong-ress’s 3,000-plus delegates in the cavernous Great Hall of the People is China’s highest-profile event of the year but does little lawmaking work. Instead, it serves as a platform to highlight plans for the year and set the tone for government work.

President Xi Jinping’s government is expected to use this year’s session to announce measures to support economic growth including tax cuts and more support for entrepreneurs who generate China’s new jobs and wealth.

Companies and investors are looking for details of how Beijing will carry out promises to curb the dominance of state industry. Legislators also are due to endorse a law that aims to ease tensions with Washington and Europe by discouraging officials from pressuring foreign companies to hand over technology.

A gathering of groups held at the same time draws tech billionaires, movie stars and ethnic minorities to the Chinese capital.

Government spending plans reflect “emphatic pro-growth efforts” and a “commitment to offset external headwinds,” said Vishnu Varathan of Mizuho Bank in a report.

Proposed tax cuts of up to USD300 billion would put “significant spending power” in the hands of consumers and companies and help to buoy sagging demand for autos, household appliances and other goods, said Varathan.

The government wants to “ensure a soft landing,” said Varathan.

Li, the No 2 leader in the ruling party behind Xi, said Beijing will spend more on technology development including artificial intelligence, electric cars, biotechnology and new materials.

China’s emergence as a competitor in smartphones, telecom equipment, solar power and other technologies has increased the range of products available to consumers and helped to drive down prices. But it rattles Washington and other governments that worry Chinese competition is a threat to their industries and employment.

Spending on the party’s military wing, the People’s Liberation Army, will rise to USD178 billion, according to a separate report issued by the finance ministry. China’s total military outlay, the second-largest behind the US, is estimated by independent experts to exceed USD220 billion a year when off-budget expenses are added in.

Li said the central government budget deficit would rise from 2.6 per cent of total economic output to 2.8 per cent, reflecting higher spending to stimulate the economy.