China stays on growth-reform path

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Kevin Yao and Xiaoyi Shao Beijing

Premier Li Keqiang has sent the strongest signal yet that China’s days of chasing breakneck economic growth are over, promising to wage “war” on pollution and reduce the pace of investment to a decade low as it pursues more sustainable expansion.

Addressing the annual meeting of parliament that began yesterday, Li said China aimed to expand its economy by 7.5 percent this year, although growth would not get in the way of reforms.

“Reform is the top priority for the government,” Li told about 3 000 hand-picked delegates in his first parliamentary address. “We must have the mettle to fight on and break mental shackles to deepen reforms on all fronts.”

Idle factories would be shut, private investment encouraged, government red tape cut and work on a new environmental protection tax speeded up to create a greener economy powered by consumption rather than investment, Li said.

To aid the transformation, the government would target 17.5 percent growth in fixed-asset investment this year, the slowest in 12 years.

Li repeated the government’s standard rhetoric on financial reforms, saying authorities would widen the yuan’s trading band, relax its grip on the currency and insure deposits, but he did not give a time line.

On the environment, he did not mince his words. “Smog is affecting large parts of China,” Li said in an address that lasted a little over 100 minutes.

“Environmental pollution has become a major problem, which is nature’s red-light warning against the model of inefficient and blind development,” he said.

The battle against pollution would be waged using price reforms to boost non-fossil fuel power and cutting capacity in the steel and cement sectors, China’s largest air polluters. – Reuters


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