03/05/2015, 00.00
CHINA
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Li Keqiang calls 7 per cent growth the "new normal," pledges fight against pollution and corruption

by Wang Zhicheng
Speaking before the National People's Congress, the prime minister promised to create 10 million new jobs and undertake painful reforms to stabilise an economy too dependent on exports and government investments. China's economy suffers from excess capacity, little innovation, and a weak agriculture. The "war on corruption" and "zero tolerance" will continue, as will support for clean technology.

Beijing (AsiaNews) - Chinese Prime Minister Li Keqiang announced that China would target growth of about 7 per cent in 2015, the lowest in 25 years, assuring his audience that a lower GDP was a natural process - the "new normal - that would stabilise the economy. As part of this, the government would create at least 10 million new jobs, and continue to fight corruption and pollution.

In his opening address to the People's National Congress in Beijing's Great Hall of the People, Li unveiled his plans for painful reforms.

After nearly 30 years of hectic but anarchic and contradictory development, which enhanced the Chinese Communist Party's standing by bringing benefits to Chinese cities, the authorities now have to restructure the economy.

Higher domestic consumption and a larger services sector are expected to wean China's economy away from overreliance on government investments, cheap labour and exports of low-end products.

For Li, "The new year is a crucial year for deepening all-round reforms." Such reforms should prevent a bubble in the construction industry, reduce excess industrial capacity (and unsold inventory), and boost consumer spending (the third time in three months) via interest rates.

Li said that "China's economic growth model remains inefficient: our capacity for innovation is insufficient, overcapacity is a pronounced problem, and the foundation of agriculture is weak."

This means increasing the budget deficit to 1.62 trillion yuan, or about 2.3 per cent of gross domestic product, compared with 2.1 per cent last year.

Thus, China can start to rebuild rundown urban areas, further railway, highway and waterway projects in central and western regions, invest in clean-energy projects and work to modernise agriculture. This will entail the creation of more than 10 million new jobs this year.

At the same time, Li promised to raise government pension schemes for elderly people in urban areas from 55 to 70 yuan a month.

Pollution remains a major a deadly problem for China's cities and people. highly polluting coal supplies 70 per cent of China's energy needs.

In view of this, Li also renewed his 'declaration of war on pollution' through the use of non-fossil fuels and higher quality fuels. Last year, the share of non-fossil fuel in total energy mix reached 11.2 per cent.

Li said that the authorities would continue their zero tolerance policy vis-à-vis corruption in accordance with President Xi Jinping's campaign against so-called "tigers and flies' in government and party. Until now, the crackdown has hit 26 of China's biggest state-owned companies, as well as 30 generals, and some leading members of the Politburo.

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