National People’s Congress hears of China’s reform plans

Delegates gathered in the Great Hall of the People in Beijing

yesterday for the National People's Congress listened to the Communist Party's plans for rural reform and methods to tackle local government debt, issues that are seen as threats to stability in China.

Some 3,000 delegates in the red flag-bedecked hall were still digesting the lengthy Government Work Report delivered by Li Keqiang on Thursday, in which the premier said the economy would grow by a less-than-expected 7 per cent this year.

Justin Yifu Lin, former chief economist of the World Bank, told a news conference on the sidelines of the congress that China still has great economic development potential in many industries and could beat the 7 per cent figure.

Growth rate

“The Chinese economy has the potential to grow around 8 per cent for about 20 years . . . if we can deliver a good job, China’s economic growth rate this year can be higher than 7 per cent,” Mr Lin said.

He said the focus was on better-quality growth, and ensuring a proper balance between steady growth and structural adjustments.

Areas China needs to focus on include equipment manufacturing, e-commerce, internet finance, new energy and environmental protection, he said.

Local government debt

One threat to political and economic stability is dramatic growth in local government debt, and a key reform would be Beijing putting a lid on local governments issuing too many bonds and borrowing too much, especially as the property market slows drastically.

Finance minister Lou Jiwei said: "China's local government debt problem is a fact . . . the government is guarding against regional financial risks. On the whole, the risk of China's local government debt is controllable."

However, many analysts say local governments will not be put on too tight a leash, because investment in infrastructure projects is needed to kickstart slowing growth.

In a country of 1.3 billion people, with more than 20 per cent of the world’s population but only 7 per cent of its arable land, food security is always a big issue. Vice agriculture minister Yu Xinrong said China’s food security situation was “at its best time” despite rising imports in recent years, after 11 years of bumper grain harvests and records in indicators such as total grain output.