A big fiscal push will be necessary if the economy is to fulfil the government’s growth target of “around 5.5%”
Save time by listening to our audio articles as you multitaskThe film features three animated characters: a woman in Sichuan province, who sells tasty noodles for 13 yuan ; a “handsome” southern entrepreneur who employs 200 people in a factory making electric toothbrushes; and a raspy farmer from the snowy north-east whose clever son uses a drone to spray the crops. All three were, the rap maintains, eager to discover what Mr Li’s report had in store for them.
China’s farmers in the north-east and elsewhere will draw comfort from the report’s emphasis on food security. That concern has been intensified by the pandemic, last year’s floods, which delayed the planting of wheat, and now the war between Russia and Ukraine, which otherwise passed unmentioned in the report. “The Chinese people must hold their rice bowls firmly in their own hands,” said Tang Renjian, the minister of agriculture.
Food is not the only thing China wants to keep a close grip on. The same emphasis on security extended to energy and industry. Mr Li promised to help leading firms play their role in “safeguarding the stability and security of industrial supply chains”. That includes encouraging home-grown production of semiconductors. Huawei, for example, has invested in dozens of firms in the chipmaking supply chain, according to theThe government is also keen to avoid a repeat of last year’s energy shortages.
Small businesses, whether they make noodles or toothbrushes, will also have found some solace in the report. Mr Li noted that the pandemic had “severely affected” firms in catering, hospitality, retail, tourism and passenger transport. He announced an unusually large cut in taxes and fees for smaller firms and manufacturing enterprises. Corporate income tax for smaller firms will be lowered to just 5% and value-added tax will be eased for many. In total, these cuts may amount to 2.
. That pace of growth would set the stage nicely for President Xi Jinping’s confirmation for a third term as party chief late in the year. It is, however, higher than many private-sector forecasts . An expansionary budget is also hard to square with Mr Li’s insistence on fiscal prudence. He said the budget deficit this year would narrow to only 2.8% ofThat number is, however, misleading.
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