Economic Situation Still Bright

　　Despite challenges， the Chinese economy is in good condition to fulfill its development objectives

　　China will increase the GDP by approximately 7 percent and keep the increase in the CPI at around 3 percent， as it states in the government report by Premier Li Keqiang. Lowering the target from 8 percent， which China has maintained for quite a few years before 2012， to 7 percent is a reasonable adjustment under the global economic and political situation.

　　One of the major reasons for this adjustment is that the labor demand-and-supply situation is experiencing profound changes. There is a decrease in the amount of new labor； therefore the lower economic growth will not significantly affect the employment market.

　　Another reason is that the world is now entering a relative depression that might last for a long time. If China tries to stick to the high growth rate， it will be very difficult and the nation most probably will pay high price for this. China need to input more energy into income distribution and social equity.

　　“We must be adamant in pursuing economic development as our central task and do a thorough job of development as the top priority for ensuring the governance and revitalization of the country，” the report says. This is a very important statement.

　　The report says that research and development spending accounted for more than 2 percent of the GDP in 2014. In 2010， it was only 1.76 percent. Our input in the science and technology development has been increasing in the past few years. This 2 percent is a milestone achievement.

　　Under the current market economic system， enterprises are the major power in the development of science and technology， and they are also the major investors in this field.

　　According to the report， the government budget deficit for 2015 is projected to be 1.62 trillion yuan ($261.3 billion)， an increase of 270 billion yuan ($43.54 billion) over last year， which means that the deficit to GDP ratio will rise from last year’s 2.1 percent to 2.3 percent. Of this amount， the central government deficit will account for 1.12 trillion yuan ($180.6 billion)， an increase of 170 billion yuan ($27.42 billion) and local government deficit will account for 500 billion yuan ($80.6 billion)， an increase of 100 billion yuan ($16.13 billion). This deficit is at a lower level among large economies， and it leaves enough leeway for possible sharp decrease.

　　As for streamlining administration and delegating more powers to lower-level governments and to society in general， I have a suggestion： New enterprises don’t need to pay taxes for the first two years， and in the following three years， they only pay half taxes. This will not affect the revenue that much because new enterprises don’t pay too large an amount in the first few years.

　　China is the only country in the world that meets all the industry categories of the UN Industrial Classification. This advantage is incomparable. That is why Steve Jobs said it is “unimaginable” to move the factory of Apple back to the United States.

　　The stable development of the macro economy is another major advantage of China. Although some have voiced pessimism about China’s growth， the solid fact is that China’s economic growth has not shown huge ups and downs like in other countries.

　　The inflation rate in China is not high either. So， the financial situation of China is generally better than other large economies， and this has provided more possibilities for the Chinese Government’s macroeconomic regulation and control.

　　A longer industrial life cycle is another major advantage of China. Some prime industries， after being moved from the eastern part of the nation to the undeveloped west， still maintain vitality. The Chinese Government’s regional development policy will help to make better use of this advantage.

　　The continuous growth of China’s comprehensive economy has brought more value to the label of “Made in China.” This is what is needed for upgrading industries. Only when a country has the world’s most advanced technology can its products be accepted and purchased by most customers.

　　If in the past， China was not strong enough to build up such image， now China is becoming more and more qualified to do so.

　　“China is the largest developing country in the world； it is still in the primary stage of socialism， where it will remain for a long time to come. At this stage， development is of primary importance—it is both the basis for and the key to solving every problem we face. In order to defuse problems and risks， avoid falling into the ’middle-income trap’ and achieve modernization， China must rely on development， and development requires an appropriate growth rate，” the report says. I applaud this statement.

　　The author is an op-ed contributor to Beijing Review and a researcher with the Chinese Academy of International Trade and Economic Cooperation

　　Tasks for 2015

　　- Fixed Assets Investment

　　477.6 billion yuan budgeted by the Central Government

　　800 billion yuan in railway construction

　　8，000 km of railways to open

　　27 new water conservancy projects to start construction

　　More than 800 billion yuan in major water conservancy projects under construction

　　- Agriculture and Rural Development

　　Grain output above 550 million tons

　　13.3 million hectares of cropland for subsoil improvement

　　60 million rural residents to gain access to safe drinking water

　　200，000 km of rural roads to be built or upgraded

　　More than 10 million rural people to be out of poverty

　　- Urbanization

　　7.4 million units of government-subsidized housing to be built， including 5.8 million in rundown urban areas， a year-on-year increase of 1.1 million

　　3.66 million dilapidated rural houses to be renovated

　　- Social Security

　　A 10-percent increase in basic pension benefits for enterprise retirees

　　Monthly basic pension benefits for rural and non-working urban residents to be uniformly raised from 55 yuan to 70 yuan per person

　　- Medical Service

　　Annual government subsidy for basic medical insurance for rural and non-working urban residents to be increased from 320 yuan to 380 yuan

　　Annual subsidy for government expenditures on basic public health services to be elevated from 35 yuan to 40 yuan per capita

　　- Environmental Protection

　　3.1-percent cut in the intensity of carbon dioxide

　　2-percent reduction in both chemical oxygen demand and ammonia nitrogen emissions

　　3-percent drop in sulfur dioxide emissions

　　5-percent cut in nitrogen oxides

　　- Ecological Improvement

　　670，000 hectares of marginal farmland to be returned to forest

　　6 million hectares of land to be afforested

　　($1=6.12 yuan)

　　(Source： Report on the Work of the Government)

　　By Mei Xinyu

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