BEIJING – Chinese Premier Li Keqiang delivered his annual address before China's parliament on Saturday, laying out the government's development agenda for the next five years and covering a broad variety of topics ranging from boosting the Internet industry and urban employment to cutting steel production and carbon emissions.
As a high-level blueprint, Li's work report did not go into policy details, but it did signal what China's leaders are prioritizing — and what they would rather play down — as they manage a sharp slowdown in the world's No. 2 economy and seek new sources of growth.
The main takeaways:
GROWTH AND URBANIZATION
Li, China's top economic official, unveiled a slightly lower GDP growth target of between 6.5 and 7 percent for 2016, down from 7 percent, as he reassured the world that Beijing can manage a smooth economic slowdown — and avoid freefall. A key factor will be keeping the urban unemployment rate below 4.5 percent and creating at least 10 million new urban jobs, Li said, giving the same targets as in 2015. But those numbers will get harder to meet as jobs in coastal cities continue to dry up and giant, struggling state companies cut jobs. "China will face more and tougher problems and challenges in its development this year," Li warned.
TECHNOLOGY AND INFRASTRUCTURE
As China looks to trim bloated "zombie companies" in the steel and coal sectors, it's hoping high-tech companies will pick up the slack in economic output. Li promised tax cuts for R&D and tech startup incubators and called for more crowdfunding platforms. Rather than low-end goods, China should have advanced factories producing high-end equipment, Li said. China will also continue with fiscal stimulus in the form of massive infrastructure investments: More than $120 billion will be plowed into building railways connecting 80 percent of large Chinese cities and more than twice that in upgrading highways. Major hydro- and nuclear power projects will also be launched.
Li highlighted China's pollution crisis for the second year in a row and promised a tougher response from the central government against companies that flout environmental protection laws. The country plans to take 3.8 million old or high-emission vehicles off the road while cutting emissions of pollutants like sulfur dioxide and ammonia nitrogen by around 2 to 3 percent. By 2020, carbon emissions per unit of GDP should fall 18 percent as China moves to energy sources like cleaner coal. Li targeted "good or excellent" air at least 80 percent of the year for major cities by 2020.
As state companies shrink, China is setting aside $15.3 billion for unemployment benefits and will provide 21 million training opportunities for migrant workers, Li said. The government will also direct universities to provide more applied skills training and encourage its 7.65 million college graduates in 2016 to start more businesses. In rural areas, a recent focus for the top leadership, the central government will raise funding for poverty alleviation by more than 40 percent.
There were looming issues facing China that were of interest to international investors and observers that Li did not touch on. In one of the biggest stories of the past year, China's stock market plummeted 40 percent last summer after a prolonged bull run fanned by the government, sparking public outrage and prompting an all-out government effort to prop up shares. Li made just one reference to the crash, acknowledging "a variety of risks and challenges in the financial sector" in 2015, but said no systemic or regional threats arose due to Beijing's proactive response. Regulators will crack down on financial fraud and illegal activities in the markets to prevent future "threats," he said.
Li also made no mention of China's currency policy, a subject of intense scrutiny after Beijing suddenly devalued the renminbi in mid-2015 to boost sagging exports. China's central bank has declared its desire to keep the yuan stable, but it has not quelled global concerns about the currency, which fell 5 percent versus the dollar last year.