Chinese Premier Li Keqiang delivered his last government work report at the first session of the 14th National People's Congress (NPC), which convened at the Great Hall of the People in Beijing on March 5. He is expected to hand over the Prime Minister's job to his successor Li Qiang, a former Party Secretary of Shanghai with no central government experience. Outgoing Premier Li Keqiang (67) said that the Chinese economy faced an unprecedented harsh time last year as he emphasized government efforts to stabilize the economy after China “secured a victory over the coronavirus pandemic”.
He announced that China will strive to reach a GDP growth rate of “around 5%” this year, a target the country failed to reach last year with a 3% growth. In the past three years, average GDP growth was 4.5%. The Chinese government aims to create around 12 million new urban jobs this year – more than last year’s target of 11 million, but around the same as the 12.06 million new jobs created in 2022. The government also aims to keep the surveyed urban unemployment rate at around 5.5% in 2023, unchanged from last year. China aims to keep inflation at around 3% this year after the CPI increased 2% last year. Premier Li also highlighted China’s innovation and hi-tech drive, as well as infrastructure development. China plans a fiscal deficit of 3% in 2023, compared to 2.8% last year. The quota of special-purpose bonds for local governments will be increased to CNY3.8 trillion from last year’s CNY3.65 trillion.
Li said China should aim to build self-reliance in science and technology. He also called for a bigger role for the government to push key technological breakthroughs, while enterprises should be the drivers of innovation. The Chinese government is concerned about growing external uncertainties this year, as Premier Li mentioned high global inflation, a weaker global economy and the fast rise of “external containment”. He said the domestic economic recovery is not solid, private investment is still weak, and risks remain in the property market and small financial institutions. China will intensify efforts to attract foreign investment and facilitate the launch of landmark foreign-funded projects. It will expand market access, continue to open up the modern services sector and ensure national treatment for foreign firms. The Foreign Investment Law improved the business environment for foreign investors, Li said. The number of items on “negative lists” was reduced by 51% across the country and by 72% in pilot free trade zones, of which 21 have been established, including the new Hainan Free Trade Port.
Li said China will take active steps to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). “We should continue to leverage the role of imports and exports in driving economic growth,” he added. China will launch a number of technological innovation projects this year and press ahead with building international and regional innovation centers. Government expenditure on basic research will double over the next five years.
Manufacturers and medium and small technology firms will be allowed to deduct 100% of their R&D spending from their taxable incomes, according to the government work report. Li Keqiang says China has promoted “high-quality cooperation” under the Belt and Road Initiative (BRI). Imports and exports between China and Belt and Road countries increased 13.4% last year, and exchanges and cooperation with these countries have shown “steady progress” in a wide range of areas, the Premier said.
Aged care services will be improved and the three-child policy is being implemented. China’s population declined for the first time in more than six decades last year, while the population continues to rapidly age, fueling concerns of a deepening demographic crisis.
Turning to foreign policy, Li said China has conducted “major country diplomacy with Chinese characteristics” over the past five years. He highlighted the participation of President Xi Jinping and other leaders in multiple diplomatic events, including the Group of 20 Summit, APEC economic leaders’ meetings, and summits with the European Union. “As a responsible major country, China played significant and constructive roles in enhancing international Covid-19 cooperation and addressing global challenges and regional hotspot issues, thus making important contributions to global peace and development. We resolutely safeguarded China ’s sovereignty, security, and development interests. We actively expanded global partnerships, worked to build an open world economy, safeguarded multilateralism, and promoted the building of a human community with a shared future,” Premier Li added.
Li said China will take resolute steps to oppose “Taiwan independence” and promote reunification. “We should advance economic and cultural exchanges and cooperation across the Taiwan Strait and improve the systems and policies that contribute to the wellbeing of our Taiwan compatriots,” he added.
China has improved pollution control and is pursuing green and low-carbon development, according to Li. The proportion of days with good air quality is now 86.5% in more than 300 cities. The installed capacity of renewable energy has increased from 650 gigawatts (GW) to 1200 GW in the past five years, and the share of clean energy in total energy consumption has increased from 20.8% to over 25%. The South China Morning Post mentioned that in his last work report as Premier, Li allocated 25 pages to reviewing the achievements and problems in the past five years and only six pages on the plans for this year. A year ago more than 76% of the nearly 18,000-word report was dedicated to policy directions for the year.
The defense budget will increase by 7.2% to CNY1.55 trillion, according to the government finance report. The increase compares to a 7.1% rise to CNY1.45 trillion last year. China has maintained single-digit growth in its annual defense budget since 2016.
China’s central government will increase spending on science and technology by 2% to CNY328 billion this year, amid a years-long drive by the United States to contain the development of Chinese technology. China's total expenditure on research and development (R&D) surpassed CNY3 trillion in 2022, 10.4% more than a year earlier and accounting for 2.55% of GDP, according to the National Bureau of Statistics (NBS). The central government’s spending on R&D was largely unchanged last year, but once local government outlays were factored in, the combined total was 7.2% higher than in 2021. The government will also set aside CNY132.8 billion for grain and oil reserves, a rise by 13.6% from the previous year.
This overview is mainly based on the live blog of the South China Morning Post and additional reporting by the China Daily.
