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June 27, 2017

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China promises steady 7.5-percent growth, cleaner air

BEIJING -- China is targeting growth of about 7.5 percent in 2014, Premier Li Keqiang said Wednesday, promising to "declare war" on pollution as the government pledges to transform the world's second-largest economy.

Li's speech to the annual session of the National People's Congress, which meets to approve policies decided by the ruling Communist party, highlighted the authorities' plans to shift the economy to a more sustainable model.

"We must keep economic development as the central task and maintain a proper growth rate," Li told the parliament, speaking before a backdrop of giant red flags in Beijing's Great Hall of the People.

"On the basis of careful comparison and repeatedly weighing various factors, as well as considering what is needed and what is possible, we set a growth target of around 7.5 percent."

China's three decades of rapid industrialization have transformed its economy and seen incomes soar, but have also brought severe environmental consequences including smog that regularly blankets its cities.

Li said pollution was a "red-light warning" against inefficiency, as he sought to address public concerns on issues ranging from poisoned waterways to food safety.

"We will declare war against pollution and fight it with the same determination we battled poverty," he said.

Authorities have repeatedly pledged action in recent months to improve the environment, but experts warn that implementation will be key.

In recent years air pollution indicators have been published more widely, but the country relies heavily on coal for energy and accounts for around half the world's consumption.

The government will shut down 50,000 small coal-fired furnaces this year, clean up coal-burning power plants and remove six million high-emission vehicles from the roads, Li said.

Li also pledged cuts to "outdated production capacity" in industries such as steel and cement and reforms to pricing for household utilities.

"We will definitely enjoy more peace, happiness and prosperity as well as greater development," he said.

But experts say implementation of such pledges is crucial, and Hong Kong-based Societe Generale economist Yao Wei described the tasks Li set out as a "mission impossible".

"The new government promises to speed up reform, manage debt risks, fight pollution, and yet maintain 7.5 percent economic growth all at the same time," she wrote, adding of the proclaimed anti-pollution measures: "None of these are exactly pro-growth."

Prosperity Key to Legitimacy

The world's second-largest economy grew 7.7 percent in 2013, the same as in 2012 — which was the slowest rate of growth since 1999.

Rising prosperity is a key part of the Communist Party's claim to legitimacy in China, and the government usually sets a conservative economic growth target that it regularly exceeds.

The figure is closely watched by analysts for insight into the leadership's thinking about the economy and how they expect it to perform, as well as what policy initiatives they intend to pursue.

Keeping the target unchanged from last year suggests the government wants to stress stability as it carries out promised economic reforms, analysts said.

"On one hand it serves as a signal to stabilize expectations, while on the other it shows policymakers have confidence in maintaining stable momentum in the overall economy," said Ma Xiaoping, Beijing-based economist for British bank HSBC.

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