Premier Li Keqiang: Proactive fiscal policy and prudent monetary policy will be continued
According to the online news released by the Chinese government, Premier Li Keqiang, today chaired a State Council executive meeting and analysed the Chinese economic situation in the first quarter of 2013, as well as making the deployment of the next phase of work. Previously, the National Bureau of Statistics had released data showing that in the first quarter of 2013 Chinese GDP grew by 7.7% compared to the same period of 2012, and the 7.7% quarter growth is slightly lower than the 7.9% growth in the fourth quarter of last year. China’s GDP growth rate in the past one year’s time has been running around 7% without breaking the ceiling of 8%.
The meeting held that the operation of the national economy in the first quarter of 2013 was still stable, the overall rate of economic growth, new jobs creation in urban areas as well as other key indicators were at reasonable level. At present, China is at an important stage of industrialization, urbanization, economic transformation and upgrading with great potential for development. Facing complex domestic and international environment, the government pledged to enhance the government capability in term of predictability, pragmatic and solid work.
The meeting stressed the need to maintain the continuity and stability of macroeconomic policies and continue to implement the proactive fiscal policy and prudent monetary policy, and enhance the policy relevance to achieve steady growth, inflation and risk control. At the same time, the meeting again emphasised the release of bonus of reform, and intensifying the restructuring, stimulating the vitality of the enterprise and the market while maintaining stability, increased employment and income, improved quality and efficiency, strengthened energy conservation, environmental protection, and strive to build upgraded version of China’s economy (中国经济升级版).
The meeting also deployed the focus of the government work in the next phase:
(A) To actively expand the effective domestic demand through improving consumption policies to enhance the consumption capability, fast development of the service industry and nurturing the new consumption in the information, medical, pension, culture industries. Another focus will be to maintain a reasonable scale of investment, strengthen the construction of urban roads, rail transportation, environmental protection infrastructure. Development of environment-friendly industries is also important. The government will promote scientific and technological innovation, and to accelerate the elimination of backward production capacity and expand the market capacity for the advanced environment-friendly industries.
(B) To enhance the agricultural foundation. The government will make policies to Increase effective supply and make sure that the agriculture funding will be paid out as soon as possible and in full payment.
(C) To ensure the improvement of people’s livelihood. The government will enact policies to promote employment of college graduates and other key groups by encouraging multi-channel for employment such as supporting the entrepreneurship. At the same time, the government will aim at improving the social security system and gradually eliminate people’s worries regarding pension, health care and so on.
(D) To deepen reform and opening. The government will assist to make cancellation and adjustment of administrative examination and approval procedures to stimulate private investment and social entrepreneurial activities.
(E) To effective guard the national economy against the risks of local government debt, and other risks.
Structural adjustment and upgrading will reduce excess capacity
National Bureau of Statistics spokesman Sheng Yun said yesterday that overcapacity is one of the problems faced the Chinese economy and will be solved step by step with the accelerated pace of structural adjustment and upgrading of industries.
State Council Information Office held a press conference on April 15, the National Bureau of Statistics spokesman of Comprehensive Statistics Division Sheng Laiyun introduced the economy performance in the first quarter of 2013 and answered the reporters’ questions.
Regarding the problem of excess production capacity, Sheng LaiYun said, “excess capacity is mainly contributed by the production capacity surplus in the traditional industries which is only one of the economic problems faced by us. Irrational industrial structure is a long-term problem. Though we attached great importance to the issue, but prominent problem of excess production capacity still exist because guiding mechanism had not been working well.”
Sheng Yun said, the past few years, governments at all levels attached great importance to this issue by speeding up structural upgrading, structural adjustment, in particular through accelerating the development of emerging industries. Chinese government issued related documents, such as the Report on the Work of the Government, the Central Economic Work Conference regarding how to solve the problem of overcapacity. Suggestions include removing some (outdated business), upgrading some (business) and transfer some (business to other areas) to create comparative advantage. “By these means, I believe that the problem of excess production capacity in China, with the accelerated pace of structural adjustment and upgrading will be solved step by step. ”
Focus of China’s new cabinet in the first month: pushing forward reform
According to the ChinaNews, today marks the end of the first month since the new Chinese government entered into office. With the targets of pushing reform, focusing on anti-corruption, and creating the “Upgraded China Economy”, the policy picture of the new government seems to gradually roll out to the public.
Focus on decentralization and transformation of government functions
“The core of reform is in action”, on the next day of the closing of the two sessions, Li Keqiang chaired the first executive meeting of the State Council, pledged to research to accelerate the institutional reform. He explicitly requested functions change as the key to the start of the work of the new State Council through the reduction of administrative examination and approval procedures.
After the initial reform, the number of departments of the State Council was reduced to 25 together with formation of a number of new functional departments.
Analysis said that the new government stresses on changing function of the government by taking a series of down-to-earth initiatives, accelerating the construction of service-oriented government to people’s satisfaction.
In a conference attended by the Chinese and foreign reporters on March 17, Li Keqiang pointed out that “touching the existing interests is often harder than touching the soul”, he described that “no matter how deep the water is, we have to cross over because we have no choice, it is about the fate of the country, the future of the nation”.
Accelerating the construction of clean government
At the first meeting of the new session of the State Council, Li Keqiang stressed again to build a clean government, and resolutely implement the State Council commitments to the public:
“Within the five years term of the current government, firstly, no new government office buildings and government hotels are allowed to be built; secondly, the number of personnel fed by financial support cannot be increased; thirdly, no increase of expenditure is allowed on public reception, government-funded oversea study (公费留学) or oversea investigation tour (公费出国考察) and public service car(公务车).”
Reference Link: http://www.chinanews.com/gn/2013/04-16/4732503.shtml
MIIT: a maximum fine of 30,000 for selling user information
According to the Beijing News, Ministry of Industry and Information Technology (MIIT) recently announced the “Telecommunications and Internet users’ personal information protection regulations (draft)” (hereinafter referred to as “Regulations”) stating that the telecommunication business operators, Internet service providers and their staff shall not disclose user information, and shall not sell the user information to others, and offenders is likely to face a fine of up to RMB 30,000 (USD 4,800), and severe cases will be investigated for criminal responsibility.
This reporter learned that, the users’ personal information under the provisions is including: user name, date of birth, ID number, address and other identifying information as well as the number of user services, account number, time, place and other log information.
“Regulations” provides that, without the user’s consent the telecommunications business operators, Internet service providers are not allowed to collect and/or use users’ personal information. Telecommunication business operators, Internet service providers collecting the personal information should clearly inform the users regarding the information collection purposes, methods and scope of usage of the information.
Reference Link: http://epaper.bjnews.com.cn/html/2013-04/11/content_425811.htm?div=-1
MOHRSS: No delayed retirement till 2015
According to the report from the Economic Observer (经济观察报), some specialists said that the China should take methods as soon as possible to increase financial input or allocate the state-owned assets, to make up for the pension gap. In respect of whether to implement a delayed retirement policy in the future and how to learn from foreign experience in this regard, the report urges gradual reform of retirement policy.
An expert from the Ministry of Human Resources and Social Security (MOHRSS) told the Economic Observer that, the delayed retirement policy is only in the research stage at present, further decisions will only be made upon the completion of the reform of the social security system. He said that it can be determined basically that Ministry of Human Resources and Social Security (MOHRSS) will not launch any delay retirement plan during the “12th Five-Year” (2011-2015).
According to the “China pension Development Report 2012” released by the Chinese Academy of Social Sciences Institute, the 2011 pension gap in China was higher than that in 2010, reaching 76.65 billion yuan (US 12.264 billion).
Reference Link: http://3g.qglt.com/n/fwraxk
9 major missions
Premier Li Keqiang yesterday chaired the first executive meeting of the new session of the State Council on 18th March 2013, the focus of the meeting is to pay close attention to the transformation of government functions by implementing the tasks which are specified as 9 major missions:
(1) To simplify or reduce a number of investment approval matters which is to be completed in time, and to release a revised project directory of government approved investment.
(2) To grant subsidies and other support to the local projects.
(3) Cancellation and decentralization of a number of production operations licensing procedures, approval procedures for a number of institutions.
(4) Except clearly defined by laws, administrative regulations or the State Council, current appraisal, evaluation and inspection activities will be cancelled.
(5) To reduce or to combine a number of special financial transfer payments, to grant a number of special transfer payments for local management projects.
(6) To enact a proposal to relax the conditions of industrial and commercial registration.
(7) To cancel a number of administrative and institutional fees and government funds.
(8) To enact a proposal of direct registration system for the society organizations and industry associations.
(9) To integrate housing, woodland, grassland and land registration duties and to integrate the duties of urban basic medical insurance, basic medical insurance for urban residents, the new rural cooperative medical insurance.
New “Rules of Work of the State Council” released
The General Office of the State Council released the “Rules of Work of the State Council” today. The rules is consistent with the new premier Li, Keqiang‘s pledge to build a clean government. The “Rule” requires the departments of the State Council to implement reform and standardize the work of the official reception, ban gifts sending or receiving as well as unnecessary dinning.
According to the detailed requirements of the “Rules”, the person in charge of the various departments of the State Council leaders need to personally check the important letters from people, and facilitate the problem solving. And departments of the State Council have to accept the supervision from the public and the news media, and seriously investigate and verify claimed situations in a timely manner in accordance with the laws.
In addition, issues that involves great public interest should be made known to the public through government websites, government communiques, press conferences, as well as newspapers, radio, television, networks, and other ways and such disclosure should be timely, comprehensive, accurate and detailed.
Passenger Departure Tax Refund
Passenger Departure Tax Refund policy is first introduced on January 1, 2013 in Hainan Province as the pilot of such policy trial in China. The departure tax rebate policy applies to foreigners or residents from Hong Kong, Macau and Taiwan with continuous residence in mainland China less than 183 days. The departure tax rebate at present is applicable to good value of which is no less than 800 yuan, and the tax rebate rate is 11% for all goods. Foreign travellers claiming the tax refund can choose cash rebate or bank transfer in RMB or the free flow foreign currency in China. The tax rebate items include: clothing, footwear, cosmetics, watches, jewelry, electronics, stationery, sports goods, medical equipment, furniture, etc., with a total of 21 major categories and 324 kinds of food in total while beverages, fruits, tobacco, wine, cars, motorcycles, etc. are not eligible for the tax rebates. But in other words, the full adoption of the Passenger Departure Tax Refund is still far away.
7 trillion yuan (USD 1.12 trillion) investment in infrastructure approved by National Development and Reform Commission
According to the People’s Daily, the General Administration of Customs in the State Council Information Office yesterday held a conference about the first quarter imports and exports. Spokesman Zheng Yue announced
that import and export value of China’s foreign trade grows by 13.4% in the first quarter of 2013, much higher than the foreign trade growth level of 6.2% in the full year of 2012. Zheng Yue Yeung said, in the first quarter of this year, China’s foreign trade growth rate is significantly higher than the level of last year and there are three reasons:
1. Better policy environment
“Since last year China introduced a number of measures to stabilize the development of foreign trade. In September 2012, the State Council issued the “Suggestions on the promotion of the steady growth of foreign trade”; the Ministry of Finance and the National Development and Reform Commission jointly issued the ” Cancellation and exemptions of administrative fees in relate to import and export”; the General Administration of Customs had also introduced a number of suggestions and policy guidance on the promotion of the steady growth of foreign trade. At the same time, the country has also been actively guiding the foreign investment to upgrade from the low-end manufacturing to the high-tech fields to further improve the quality of the utilization of foreign investment. With the policies and measures released bringing positive effects on the industries, China’s stable foreign trade growth is supported.”
2. Established positive trend in the development of the national economy
“The second reason is the basically established good trend in the development of the national economy.” Jumped Zheng said, “In the fourth quarter of last year, 7 trillion yuan (USD 1.12 trillion) investment in infrastructure was approved by National Development and Reform Commission, targeting at mass transit, highways, airports, etc. the construction of infrastructure. The banks’ long-term lending is also increased significantly. China’s economy has shown signs of stabilization and recovery trend in March of this year: China’s manufacturing purchasing managers index PMI was 50.9 in March this year, which is the sixth consecutive month being above 50. Better economic trend provides a good market environment for the growth of the import and export business.”
3. Enhanced confidence among the export enterprises
“The enhanced export confidence among the export enterprises is the third important factor. The comprehensive advantages of China’s exports persist because of the reduced pressure of labor costs. China’s foreign trade situation this year may be slightly better than last year.”
Chinese Assistant Finance Minister warned the emerging economies: “be careful about the imported inflation”
According to the news report from the Boaoforum.org, today (April 8), in a sub-forum of the Boao Forum for Asia under the theme of “global recovery and the common development of Asian”, Chinese Assistant Finance Minister Zheng Xiaosong alarmed to the emerging economies in Asia: “to be careful about the imported inflation”.
Zheng Xiaosong analysed that since last year the world’s major developed countries, especially the reserve currency issuing countries have implemented of a new round of quantitative easing monetary policy which has played a certain role in the stability of financial markets, but is worth noting that this round of quantitative easing monetary policy is not subject to scale and time constraints, and in the long-term it will bring in a lot of excess liquidity on the financial markets which will inevitably lead to disorder flow of the international cross-border capital. Thus it not only will affect the stability of financial markets in the region (Asia), result in commodity price fluctuations, but also make the Asian countries, particularly emerging market countries face more imported inflationary pressures, which also leads to asset bubbles .
Reference link: http://www.boaoforum.org/cgzxbd/7681.jhtml
Official launch of the RMB clearing bank services in Singapore
April 2, the Industrial and Commercial Bank of China announced the official launch of the RMB clearing bank services in Singapore. With the beginning of the RMB liquidation service, the commercial banks in Singapore as well as other countries and regions will be able to handle RMB business directly by opening an account in ICBC Singapore Branch, which thereby significantly enhances the use efficiency of RMB in the global exchange program and effectively broadens the RMB funds in overseas channels. Previously, the People’s Bank of China on February 8, 2013 duly authorised ICBC Singapore Branch to serve as the clearing bank of renminbi business in Singapore, which is the first time the central bank of China selected the RMB clearing bank in a foreign country, marking another solid step forward of the internationalisation of the RMB.
In recent years, with Singapore’s rapid development of renminbi business market, many international banks and local banks have begun to try to launch RMB savings and deposit products. RMB deposit balance as of the end of June 2012 in Singapore had reached 60 billion yuan, second only to mainland China and Hong Kong region, the amount of cross-border RMB processing is after Hong Kong, ranked second in the offshore regions. March 7, 2013, the People’s Bank of China and the Monetary Authority of Singapore renewed a bilateral currency swap agreements, the swap scale is expanded to 300 billion yuan / S $ 60 billion. In addition, Singapore enjoyed the position as the only international financial center in the ASEAN region, the geographical and cultural advantages are very obvious, the scope of its RMB business services can cover the entire ASEAN region. The start of the RMB clearing bank services in Singapore can promote the use of the yuan in trade between China and ASEAN members which has important significance.
Proactive fiscal policy in 2013
In 2013, in response to the complex and severe economic situation at home and abroad, the central authorities decided to continue to implement the proactive fiscal policy and maintain the continuity and stability of policy with the aim to promote the sustained and healthy economic development and social harmony and stability in China.
The main points of the proactive fiscal policy this year will include: First, an appropriate increase in the budget deficit and government debt, to maintain the necessary expenditure; The second is to improve the structural tax cuts combined with tax reform, and promote economic restructuring targeting at protecting and improving people’s livelihood. The fourth is to shift the economic development mode by improving the quality and efficiency of economic development.
Primer Wen delivered the annual report in his on the work of his cabinet in 2012 and also set the targets for year of 2013 at the annual full session of the National People’s Congress (NPC) (China’s top legislature) in March 2013. The key goals to be achieved in 2013 include:
To achieve the annual GDP growth rate of 7.5% (7.8% y-o-y growth rate was achieved in 2012);
To control the CPI growth as around 3.5%;
To create over 9 million new jobs in the urban areas;
To control the unemployment rate as below 4.6%;
To ensure the actual income growth rate of people as more than 7.5% which is in line with the GDP target.