China recently held the 12th National People’s Congress in Beijing. Premier Li Keqiang announced a number of key policies and initiatives which sets the country’s economic direction. These changes will have profound implications on the business landscape in 2017 and beyond. As part of the Congress, Chinese Premier Li Keqiang delivered the Government Work Report which provides a review of:
I. Government’s achievements in 2016;
II. Government’s goals and priorities for 2017; and
III. Government’s plans and actions to improve quality and effectiveness of growth.
Key highlights of the Report
Economic growth rate
- GDP growth rate for the coming year has been set realistically at “around 6.5%, or higher if possible in practice,” relative to the range of 6.5-7% for 2016.
Fixed and private investments
- The government will invest 800 billion yuan in railway construction and 1.8 trillion yuan in highway and waterway projects in 2017 while continuing its massive investments in major state projects.
- To encourage growth in private investments, the government plans to improve policies as well as public administration and promote Public Private Partnerships.
Emerging industries and investment hot-spots
- The government plans to accelerate the R&D and commercialisation of new materials, artificial intelligence, integrated circuits, and bio-pharmacy and 5-G mobile communications.
- The government has also set aggressive targets for environmental protection and plans to launch extensive ‘Fitness-for-All’ initiatives, creating business opportunities in education, elderly care, healthcare, tourism, e-commerce and creative services.
- The government plans to make service industries, manufacturing, and mining more open to foreign-invested firms (FIEs).
- There are also plans to treat FIEs the same as domestic firms on applications, standards-setting and government procurement and allowing FIEs to enjoy the same preferential policies under the Made in China 2025 initiative.
Real estate sector
- In 2017, the government will establish robust long-term mechanisms to promote steady and sound development of the real estate sector to restrict further investment and “speculative” purchases by residents and investors.
RMB exchange rate and bad debt
- To address the rising non-performing loans, Premier Li has pledged to reform the financial regulatory system and work systematically to defuse major potential risks.