China to slash taxes, boost lending to shore up slowing economy

The Chinese army

The Chinese army

China has lowered its annual growth target and announced tax cuts and infrastructure spending to stimulate an economy weakened by its trade dispute with the United States.

At a press conference ahead of the parliamentary session, National People's Congress spokesman Zhang Yesui pointed out that China's defence spending has maintained single-digit growth since 2016, and accounted for 1.3 per cent of GDP previous year, while the defence budgets of other major developed countries took up 2 per cent or more.

Almost 3,000 delegates from across the country gathered under tight security, with legislation aimed at improving conditions for foreign investors topping the agenda of the two-week session.

The current budget of China, which is the world's second largest military spender after the USA, is three times higher than that of India.

China's GDP growth slowed down to 6.6 percent past year, the slowest pace since 1990, but it fit within the official forecast.

Li made the announcement during the opening of the second session of the 13th National People's Congress (NPC) at the Great Hall of the People here in Beijing.

Indeed, in his speech Li said that it was a "crucial year" for the economy and that "China must be fully prepared for a tough struggle".

Li told the legislators that policymakers are targeting economic growth of 6 to 6.5 percent this year, a slight cut from last year's target of 6.5 percent.

"The real economy faces many difficulties", he said, adding that the issues related to providing accessible, affordable financing to small and micro business have not yet been effectively solved. It is also the lowest number in the 15 years the survey has been produced, Hurun said. "This could cause problems in the longer term".

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Li said that more sectors will be opened to foreign investment, and that a new encouraged list for foreign investment will be released. Li also confirmed that China's GDP grew by 6.6 percent in 2018.

The Premier promised higher spending on technology development which the ruling Communist Party sees as a path to prosperity and global influence, and more money for education, social programmes and public works construction.

"The lessons these incidents left us with should never be forgotten", he said.

It was unclear whether Mr. Trump would be mollified by the technology measure, part of law on foreign investment that state media say the congress is due to endorse. The sessions would go on for the next 10 days.

Li's comments come, somewhat counterintuitively, as Beijing and Washington look to be close to securing a deal on trade after weeks of negotiations between senior figures in both nations.

The Chinese parliament introduced a new budget plan at the opening of the country's annual meeting on Tuesday, offering tax cuts for all companies.

He has already increased the tariffs on over Dollars 250 billion Chinese exports to the United States and threatened to extend tariffs on USD 200 billion Chinese imports to 25 per cent. But he gave no details of how far that might extend for foreign competitors.

In this area, Li said that China aims to create at least 11 million new urban jobs in 2018 while maintaining the urban unemployment rate below 4.5 percent.

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