Read in Chinese
Speakers:
Xiang Dong, deputy director of the State Council Research Office
Liu Rihong, director general of the First Department of General Research of the State Council Research Office
Song Li, director general of the International Department of the State Council Research Office
Chairperson:
Shou Xiaoli, deputy director general of the Press Bureau of the State Council Information Office (SCIO) and spokesperson of the SCIO
Date:
March 5, 2022
Shou Xiaoli:
Ladies and gentlemen, welcome to this briefing held by the State Council Information Office (SCIO). The fifth session of the 13th National People's Congress (NPC) opened this morning, and Premier Li Keqiang delivered the annual Report on the Work of the Government. To help the public better understand the report, we have invited Mr. Xiang Dong, deputy director of the State Council Research Office, to elaborate on the report and take your questions. We also have with us Mr. Liu Rihong, director general of the First Department of General Research of the State Council Research Office, and Mr. Song Li, director general of the International Department of the State Council Research Office.
First, we will give the floor to Mr. Xiang.
Xiang Dong:
Friends from the media, good afternoon.
This morning, Premier Li Keqiang delivered the Report on the Work of the Government to the fifth session of the 13th National People's Congress. Under the guidance of Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, fully implementing the guiding principles of the19th National Congress of the Communist Party of China (CPC), all plenary sessions of the 19th Party Central Committee and the Central Economic Work Conference last year, the report reviews the major achievements and major tasks in promoting China's economic and social development in the past year, and puts forward the main projected targets, policy orientation and major tasks for 2022.
I have been reading media reports on the premier's work report and the public's reaction to it. Many NPC deputies and members of the National Committee of the Chinese People's Political Consultative Conference (CPPCC) believe that the report is down to earth, displays foresight and strategic vision, and responds to the concerns of all sectors of society. Some say that they can feel much of the progress outlined in the report in their own lives. In the context of the ongoing pandemic and the complex and volatile global economic situation, the achievements in the past year have been particularly hard-won and made people proud. Some say that in the report, they found practical measures to address the key tasks of economic and social development and tackle the difficult issues that concern people, and that many packages of policies have also been introduced. They expressed stronger confidence in the future development of the country and greater hope for the new year. It can be said that the report fully implements the decisions and arrangements of the Party Central Committee and fully responds to social concerns. It is a pragmatic and inspiring report.
2022 is a very important year for the development of the Party and the country. The CPC will hold its 20th National Party Congress. Drafting the report was a key task, and the Party Central Committee and the State Council attached great importance to it. General Secretary Xi Jinping presided over meetings of the Standing Committee of the Political Bureau of the CPC Central Committee and the Political Bureau of the CPC Central Committee to discuss the drafting of the report, made important instructions on the drafting, and put forward specific requirements for further revisions and improvements, which provided fundamental guidelines for drafting and revising the report. The guiding principles for this year's work, policy orientation, and main goals and tasks proposed in the report were all drafted in accordance with the principles of the Central Economic Work Conference. Premier Li Keqiang presided over the drafting and revision of the report and chaired executive and plenary meetings of the State Council to discuss the draft. He also presided over several themed symposiums to directly hear opinions and suggestions from all parties. Li and other leading officials of the State Council also listened to opinions and suggestions through investigation and research in various places.
In accordance with the important instructions of General Secretary Xi Jinping on openly collecting suggestions and pooling wisdom, we have attached great importance to listening to and adopting the opinions of all sectors of society in drafting and revising the report. It can be said that the drafting is a process of gathering the wisdom and strength of the public, and also a process of meeting the expectations of society, and constantly refining and detailing the policy measures. In drafting the report, we solicited thousands of opinions and suggestions from multiple channels and took them under advisement:
First, Premier Li Keqiang presided over several symposiums to directly listen to opinions and suggestions. In late January, the premier presided over a symposium attended by experts and entrepreneurs, a symposium attended by representatives from the education, science and technology, culture, health, and sports sectors, a symposium attended by representatives from the central committees of non-Communist parties, the All-China Federation of Industry and Commerce, and non-party affiliated individuals. He conducted face-to-face exchanges and heard opinions and suggestions from people from all walks of life on a draft government work report.
Second, opinions from various regions and departments were extensively solicited. To collect opinions and suggestions, the draft report, discussed and revised at the plenary meeting of the State Council, was printed out and distributed in accordance with the procedures to all provinces, autonomous regions and municipalities, Party organizations, central government agencies, the military, people's organizations, some enterprises, and other entities. Thousands of opinions for revisions were collected, of which more than 300 important opinions were taken into consideration.
Third, media platforms were used to solicit opinions. For example, a campaign called "Share Your Ideas with the Premier" was launched for the eighth consecutive year to solicit suggestions from the public. The campaign was launched by www.gov.cn in cooperation with 22 online platforms, including people.com.cn and xinhuanet.com, as well as the websites of various provinces, autonomous regions and municipalities. People were invited to offer their opinions on 21 topics such as "employment and entrepreneurship," "enterprises and self-employed businesses" and "technological innovation." Nearly 1 million comments from netizens were received. The top five topics that received the largest amount of advice were: public affairs, social security and assistance, education, macroeconomics, and housing. The www.gov.cn carefully sorted through and selected more than 1,100 typical suggestions, and the report has taken some key advice.
In drafting the report, we have collected a large number of explicit comments and suggestions on almost every section and paragraph of the report. Regarding these opinions and suggestions, whether they came from local governments, departments, enterprises or ordinary citizens, the premier asked us to carefully sort through and summarize them and study them one by one, in a bid to better respond to the public's demands and gather wisdom from the whole of society.
This year's government work report is divided into three parts. The first part is a review and summary of last year's work and achievements. The second part expounds on the overall requirements, main projected targets and policy orientation for this year's economic and social development. The third part puts forward nine major tasks for achieving economic and social development in 2022. At the same time, it also touches on the topic of government building, the affairs of ethnic groups, religions, overseas Chinese, affairs related to Hong Kong, Macao and Taiwan, and national defense as well as diplomacy.
Next, I and my colleagues, Liu Rihong and Song Li, would like to discuss the drafting of the report with you.
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Shou Xiaoli:
Thank you, Mr. Xiang. The floor is now open for questions. Please identify your news outlet before raising your question.
CCTV:
This year's government work report pointed out in its beginning part that "last year was a milestone in the history of the Party and our country." The report also said, "Looking back on the past year, we can see that our achievements did not come easily." Could you specify what "a milestone" and "not easily" mean in this context? Thank you.
Xiang Dong:
Thanks for your question. The report pointed out that the year 2021 was a milestone in the history of the Party and the country. The CPC Central Committee with Comrade Xi Jinping at its core united and led the entire Party and the Chinese people of all ethnic groups to effectively manage many difficult and urgent matters and successfully hold many momentous and joyous events. We solemnly celebrated the centenary of the founding of the CPC, successfully convened the sixth plenary session of the 19th CPC Central Committee, and adopted the Party's third resolution on historical issues. We won the battle against poverty as scheduled, realized the first centenary goal of building our country into a moderately prosperous society in all respects as scheduled, and embarked on the journey of achieving the second centenary goal of building our country into a modern socialist country in an all-round way.
In the government work report, Premier Li Keqiang made a comprehensive summary of the achievements and work in economic and social development over the past year. I was impressed mainly by the following aspects.
In the aspect of economic recovery and development, China's GDP increased by 8.1%, exceeding 110 trillion yuan. That was about US$17.7 trillion as calculated at the yearly average exchange rate, ranking second globally and was estimated to account for more than 18% of the world economy. The per capita GDP exceeded US$12,000 and reached US$12,500, which was expected to surpass the global per capita level. The aim of maintaining stable growth is primarily to secure employment. Last year, 12.69 million new urban jobs were added, and the average surveyed urban unemployment rate was 5.1%. Consumer prices rose by 0.9%. It can be said that China's economy has achieved a rapid growth with a relatively low inflation rate and a relatively high employment rate, which is an optimized combination.
In terms of scientific and technological innovation, the Shenzhou-12 and Shenzhou-13 manned spaceships were launched in succession, the Chinese people for the first time entered their own space station, and China's Mars probe Tianwen-1 successfully landed on Mars. China's strategic capacity in science and technology has become stronger, and a number of national laboratories have been established. China's manufacturing industry has seen continued development, and the resilience of industrial and supply chains has been improved.
As for reform and opening-up, supply-side structural reforms were deeply advanced, and reforms in key areas were accelerated. Progress was made in reforms to streamline administration and delegate power, improve regulation, and upgrade services. A market-oriented, law-based, and internationalized business environment was formed at a faster speed. By the end of 2021, China had more than 150 million registered market entities, and the number has now reached 154 million, among which 100 million are self-employed businesses and households. Foreign trade and foreign investment also witnessed rapid growth, with both the volume of trade in goods and foreign exchange reserves ranking first globally. In 2021, China's economic growth was estimated to contribute around 25% to the world economic growth, continuing to be an important force leading the recovery of the world economy.
In ensuring and improving people's living standards, the growth of residents' income has basically kept pace with the economic growth, the income gap between urban and rural residents has continued to narrow, and the achievements made in poverty eradication have been consolidated and expanded. Basic old-age insurance, basic medical care, and social assistance have been better ensured, and the standards for the basic pension and preferential treatment of the retired people have continued to be improved. New steps have also been taken in the reform and development of education.
Regarding the COVID-19 prevention and control, we have made continued efforts in our long-term fight against the epidemic. By the end of last year, more than 85% of the total population had been fully vaccinated. By the end of this February, the percentage has risen to 87%. We have responded to cluster cases in some areas in a timely and effective manner to safeguard our people's lives and health.
Meanwhile, we have also made progress in coordinated development between regions and between urban and rural areas, in ecological and environmental protection, and in social governance, among other fields.
The challenge was unknown until we ourselves went through the process. Looking back on the past year, China faced complicated and grave situations and a number of risks and challenges rarely seen in many years. Reeling from the severe impact of epidemic outbreaks, China's economy was still in the process of recovery which is not solidly based. In addition, as the domestic and overseas situations evolved, a series of new questions and challenges arose beyond expectations. Challenges came one after another: industrial and supply chain circulation was not smooth, commodity prices rose sharply, sporadic COVID-19 cases broke out in many places, severe floods brought damages to some areas, and electricity and coal were once in short supply. These challenges made it increasingly difficult for us to maintain economic stability and make decisions about macro-control measures. Many of you have been through these together with us. I believe we all feel the same in many aspects. Against such a background, it was not easy for China to attain these development achievements. All these achievements were made thanks to the strong leadership of the CPC Central Committee with Comrade Xi Jinping at its core, the sound guidance of Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, and the concerted efforts of the Party and the Chinese people of all ethnic groups. All of these have fully proved that policies and plans made by the CPC Central Committee with Comrade Xi Jinping at its core are correct and fully demonstrated that China's economy has ample resilience, enormous potential, and risk resistance capacity.
Thank you.
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Beijing Youth Daily:
According to the government work report, the task of stabilizing employment is more formidable this year. At the same time, China targets a surveyed urban unemployment rate of no more than 5.5% for 2022, which is even lower than the rate of around 5.5% last year. How was this target set? What are our considerations? Will it be completed this year? In addition, I noticed that it is said that there are 200 million workers in flexible employment in China. What's your take on that? Thanks.
Xiang Dong:
Employment is a significant issue concerning people's livelihood, especially for a large country like us with a population of more than 1.4 billion. Last year, stabilizing employment was much affected as enterprise, especially micro, small and medium enterprises (MSMEs), ran into difficulties due to multiple problems such as high commodity prices, the COVID-19 pandemic and other natural disasters. Nevertheless, we kept macro policy targeted, and strengthened efforts to keep the operations of market entities stable, maintain stable employment, and ensure people's wellbeing. Departments at local levels also took measures actively to support people to start business or secure employment through multiple channels. With the joint efforts, 12.69 million urban jobs were added, and the average surveyed unemployment rate stood at 5.1%. We accomplished the target for the year, which was a hard-won achievement.
This year, the task of stabilizing employment is more formidable. There will be nearly 16 million new entrants into the workforce, including a record high of 10.76 million college graduates. On the other hand, MSMEs and self-employed individuals, which are the sources of employment for several hundred million people, still face multiple difficulties. The government work report set the target of maintaining a surveyed urban unemployment rate of no more than 5.5%, lower than the target of around 5.5% last year. This is because employment is key to people's wellbeing and social stability, and following the recovery and development of the economy, we must further prioritize employment-first efforts and ensure all parties fulfill their duties. Therefore, the government work report said that the employment-first policy should be pursued with intensified efforts to deliver the desired outcomes. And we will take complete consideration of the need to stabilize employment when formulating policies concerning tax and fee reductions, support of industries facing particular difficulties, and key groups, among others. With the intensified measures and policies, we are confident of achieving the target for the year. Of course, the target is for the whole year, and that of some individual months may be relatively high. We will step up our efforts to keep the unemployment rate as low as possible.
You mentioned flexible employment. Flexible employment is an important way to boost employment. As the mindset of workers on career choice has changed and enterprises have varied their ways of hiring people, especially with the rapid development of new industries and new forms of business, there is an increasing number of workers in flexible employment, which is now about 200 million. Flexible employment creates jobs for people, especially those in difficulty. At the same time, it demands more from the employment service and social security. Flexible employment is particularly important in ensuring the well-being of people during the COVID-19 pandemic. Therefore, we will improve our support measures for flexible employment and optimize its labor and social security policies to promote its healthy development, and encourage companies to create more jobs with stable income and sufficient guarantees and in different types as they recover and develop.
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CNBC:
I have several questions. My first question is about the consumption sector. According to the government work report, there will be different ways to promote consumption. What are the considerations behind that? And how will these measures be carried out? The government work report also mentioned risks from overseas. So what are the significant aspects and considerations for supporting foreign investment? Thanks.
Xiang Dong:
I will first answer your questions about consumption.
Last year, China's consumption sector recovered, with the retail sales of consumer goods and per capita consumption expenditure growing by 12.5% and 12.6%, respectively, both higher than 2020. Final consumption expenditure drove China's GDP growth by 5.3 percentage points during the past year. It contributed 65.4% of China's economic growth, playing a primary role among the three major growth drives.
At the same time, we should recognize that last year's consumption sector recovered from the low base in 2020. If we look at the average growth rate over the past two years, the growth rate of the consumption sector is still lower than the pre-pandemic level. Especially affected by the ongoing COVID-19 pandemic, consumption of consumer services remains in the doldrums, with the growth of revenues from the tourism and accommodation sector and box office revenue still lower than in pre-pandemic 2019.
China is a large consumption market with enormous potential. For example, the number of motor vehicles per thousand people is less than half of that in Japan and South Korea, and a quarter in the United States. Another example is that the per capita consumer spending on services only accounts for 44% of the total consumption expenditure, which is lower than that of other countries at the same development stage. Also, China's consumption sector upgrades rapidly in recent years, and people's demand for high-end consumption is substantial. However, the potential is not fully released due to the supply shortage.
This year's government work report said that China would promote sustained consumption recovery. And there are concrete measures to be put into place, which are as follows: First, we will boost the recovery in consumption of consumer services. This is the biggest weakness we need to strengthen to recover the consumption sector. And consumption of consumer services has the most significant potential. Second, we will keep major consumption stable. Last year, the sales of new energy vehicles rocketed to 3.82 million, up by 160%. This year, we will continue to support consumer spending on new energy vehicles. At the same time, we will promote spending on green and smart home appliances in rural areas as well as the replacement of old home appliances. Third, we will promote consumer spending at the community, township, and county levels. Efforts will include strengthening the building of community-level consumer services facilities in urban areas and county-level commercial systems and developing e-commerce and express delivery services in rural areas to promote and upgrade consumption by providing convenience and accessibility. In addition, we need to focus on improving the quality of products and services, to meet people's needs better.
Your question about the consumption sector is, in fact, a question about expanding domestic demand. Growing domestic demand includes efforts to promote the consumption sector and investment. The government work report also mentioned effective investment. China has enormous potential and space to expand effective investment. Investment from the central government budget will reach 640 billion yuan this year. Special-purpose bonds for local governments will total 3.65 trillion yuan. There is still carry-over from last year. The government spending is expanding compared to the previous year. We will focus on supporting the major projects in the 14th Five-Year Plan, infrastructure projects related to urban utility networks and others, and strengthening weaknesses in ensuring people's well-being. Private investment accounts for a large proportion of China's investment. And we will use government investment funds rationally and work to play its role in leading and driving effective investment.
Your question about foreign investment will go to Mr. Liu.
Liu Rihong:
Thank you for your question. Opening up is China's basic national policy, and the use of foreign capital makes a major part of China's opening up. You probably have seen the data released by the relevant authorities regarding China's utilization of foreign investment last year, which showed that its actual use of foreign capital exceeded 1 trillion yuan, or more than $170 billion, for the first time. Why has China been able to maintain such a growth rate in its use of foreign investment against the backdrop of the pandemic? From my point of view, the reasons are as follows:
First, China's effective pandemic prevention and control have created a favorable environment for enterprises to ensure normal production and operation. It's fair to say that Chinese economy has become a "stabilizer" and "safe haven" for the global economy over the past two years.
Second, China has complete industrial and supply chains, and the Chinese people are hard-working and talented. Therefore, foreign enterprises have become optimistic about the Chinese market, and are willing to achieve shared success and common development with such a huge market.
Regarding the policies on foreign investment in this year's government work report, I'd like to give you a brief introduction in the following aspects: First, it will ensure the implementation of national treatment for foreign-invested enterprises. In recent years, China has been downsizing its negative lists of market access for foreign investment, and the access to Chinese market has been improved. For example, items on the national negative list and the negative list for pilot free trade zones have been cut by nine and 10, respectively, over the past two years after the breakout of the pandemic. Such reduction is impressive. At present, foreign ownership caps on automobile manufacturing companies have been removed, and restrictions on foreign investment in the manufacturing sector in pilot free trade zones have been removed, achieving remarkable progress in opening up. After the negative lists become shorter, we will work to ensure that foreign investment can access sectors beyond the negative lists in a law-based and equal manner. Therefore, this year's report pointed out that we will fully observe the negative list for foreign investment and ensure national treatment for all foreign-invested enterprises, so as to ensure fair competition among all types of businesses. Second, besides the negative lists, we have a catalog of industries for foreign investment, which from my point of view, is a positive list. After years of practice, our negative lists are becoming shorter and shorter, while the positive lists are growing longer. What is a positive list? Foreign enterprises will obtain some preferential treatment in terms of tax and land use if they invest in the sectors or regions on the list. This was mentioned in this year's report, as it pointed out that we will encourage foreign-invested enterprises to move into a broader range of sectors. Third, we will build and improve the platforms for China's opening up. What are these platforms? They are pilot free trade zones, the Hainan Free Trade Port, economic development zones and integrated bonded areas. In addition, more comprehensive trials on the opening of the service sector are expected to be launched this year. China is a large country, so it has been an important experience for us to launch pilots first while pursuing opening up. Those aforementioned platforms have been launched to implement pilot standards and rules for the opening up. Over the past years, a lot of achievements have been made and enabled us to establish relevant systems, and thereby have been promoted nationwide.
Thanks to these policies, I believe, just as the report says: "The vast, open Chinese market is sure to provide even greater business opportunities for foreign enterprises in China."
Thank you.
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CNR：
The report pointed out that we will issue VAT and VAT credit refunds on a bigger scale this year. Could you please brief us on the background and details of the policy adoption? Why now instead of sometime earlier? Moreover, why do the VAT credit refunds not cover all the industries? What is the significance of the policy for the improvement of the VAT system in the future? Thank you.
Xiang Dong:
Thank you. These is a good question. I'd like to invite Mr. Song to answer it.
Song Li:
VAT credit refunding is an important tax-and-fee support policy adopted this year. Under the current VAT system, an enterprise will have VAT credits if its output VAT is less than the input VAT during a tax period. We have deepened reform since April 2019, establishing and improving the end-of-tax-period VAT credit refund system so as to refund part of the VAT credits.
Currently, China's VAT credit refunds mainly focus on the newly added part generated after April 2019. Among them, we will refund all the newly added VAT credits to advanced manufacturing enterprises, while for other industries, we will refund 60% of the newly added VAT credits that meet the standards.
The report pointed out that we will issue VAT credit refunds on a large scale this year, including the newly added and outstanding ones so as to significantly increase the amount of tax refunds. Given the downward economic pressure, the policy will help enterprises resume their development. Major policies lie in the following two aspects:
First, we will give priority to micro and small enterprises, refunding outstanding VAT credits to them in one lump sum by the end of June, while also fully refunding newly added credits. In order to ensure that the policy takes full effect, the central government will provide greater fiscal support for local governments to ease their burden. We will ensure that the tax credits are fully refunded in time.
Second, with a focus on supporting manufacturing, we will work to fully resolve problems in refunding VAT credits in manufacturing, research and technical services, environmental protection, electricity and gas, and transportation industries.
After the launch of VAT credit refunds on a large scale this year, we will continue to refund the outstanding VAT credits and refund the newly added credits in time, which is of great significance to improving the VAT system.
Thank you.
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21st Century Business Herald:
The COVID-19 pandemic has been going on for more than two years now. We have seen that some countries have begun to lift the lockdowns amid the still raging pandemic and gradually relax control measures. Some places have been fully open without any restrictions. So I want to know, what will China's pandemic prevention and control strategies and measures be in the next step? Thank you.
Xiang Dong:
Thank you for your question. I have noticed that people have paid great attention to this issue in several recent press conferences. In the face of the pandemic of the century, the Chinese government insists on putting people first and putting life first, insists on preventing imports from abroad and preventing rebounds from within, insists on scientific precision and dynamic zero-case policies, and quickly handled and resolved many clustered cases in local areas. The Chinese government has maintained its dominant position in global pandemic prevention and control, creating conditions for economic and social development. At the same time, it should be noted that there are still many uncertainties and variables in the current global pandemic development trend, which brings significant challenges to China's prevention and control. Next, we will continue to adhere to external defense against imported cases and internal defense against rebounds, scientifically and accurately handle clustered cases, protect people's lives and health, and minimize the impact on people's everyday work and life. We will focus our work on the following four areas:
The first is to strictly prevent the import of the pandemic. More than 40 sporadic cases and clustered outbreaks occurred in China in the past two years. After gene sequencing analysis and epidemiological investigation, they were all caused by overseas imports. Therefore, the prevention and control of port cities should be the top priority, and the common prevention and control efforts on "people, objects, and environment" should be strengthened. We must guard the national gate of pandemic prevention and control and resolutely prevent large-scale import and spread.
The second is the precise implementation of prevention and control measures. In response to the problems of prevention and control in some localities, such as one-policy-fits-all and taking excessive policy steps, all localities are required to establish a special working mechanism for reporting, verifying, and correcting relevant problems. In addition, all localities are required to strictly implement the "three don'ts." Don't break through the existing regulations on pandemic prevention and control to lock down cities and districts; don't interrupt public transportation unnecessarily or without approval; don't arbitrarily increase the service industry's pandemic prevention and control measures. We must firmly prevent the two trends of "relaxing prevention and control" and "excessive prevention and control."
The third is to continue to promote the vaccination work. As I mentioned just now, as of the end of last year, China's full-course vaccination rate exceeded 85%, and by the end of February this year, it had exceeded 87%. Therefore, it is necessary to promote sequential immunization and booster vaccination to further improve the effect of immunization.
The fourth is to strengthen scientific research breakthroughs on pandemic prevention and control. We will actively promote the research and prevention of COVID-19 variants, increase the development of vaccine adaptability and specific therapeutic drugs, and strive to find a sharp weapon to control the pandemic as soon as possible.
Thank you.
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The Poster News APP:
The Report on the Work of the Government stated that the main projected target for this year's development is a GDP growth of around 5.5%. Considering the current complex and severe domestic and overseas economic environment, are there any special considerations for such a projection? Thank you.
Xiang Dong:
Thank you for your question. After Premier Li Keqiang finished delivering the report, everyone has been concerned about the projected growth rate this year. China's economy's two-year average growth rate has dropped from the 6% growth rate in 2019, mainly due to factors such as the continuation of the pandemic. From a global perspective, major economies' two-year average economic growth rate is generally slower than that before the pandemic, and the rate of slowdown is greater than that of China.
Setting GDP growth target at around 5.5% this year, first of all, has considered the need to maintain stable employment, meet basic living needs, and guard against risks. Economic stability is the foundation. Employment and income will be difficult to stabilize if the economy is unstable, and some hidden risks will be revealed. Achieving a growth rate of about 5.5% this year, we will have the foundation to expand employment and increase income. The economy's operation will be able to be maintained in a reasonable range.
Second, it is also considered in keeping with the average growth rates of the last two years and the goals of the 14th Five-Year Plan. As you just said, China's economy has grown by an average of 5.1% in the past two years. In 2019, before the pandemic, China's economic growth target was projected to be 6%-6.5%, and the actual growth rate for that year was 6.1%. Although the 14th Five-Year Plan does not set specific economic growth expectations, it requires keeping within a reasonable range. Taking these factors into consideration, it is relatively scientific and reasonable to set the projected economic growth target for this year at around 5.5%, which is in line with China's potential growth level at the current stage and is conducive to guiding expectations, boosting confidence, and building consensus on development.
Third, as the report stated, it represents a medium-high growth rate given our large economic aggregate and demonstrates our ability to move proactively. For example, last year, China's GDP reached 114.4 trillion yuan. On this basis, when it achieves an increase of 5.5%, which is equivalent to an increase of 7.4% five years ago and an increase of 10.5% ten years ago; the corresponding economic increment exceeds 9 trillion yuan, which is close to the annual economic aggregate of the 11th and 12th largest economies in the world. But achieving this goal is not easy and will require arduous efforts. Therefore, to achieve the projected economic growth target of "about 5.5%," we should focus on the following aspects this year:
The first is to insist on ensuring stability a top priority and seeking progress while maintaining stability. We must put stable growth in a more prominent position. All localities and government bodies should earnestly shoulder the responsibility of stabilizing the macroeconomy and actively introduce policies conducive to economic stability. Of course, stable growth is not just about speed ignoring quality. It is about adhering to the new concept for development and promoting the steady improvement in quality and rational growth of the quantity.
The second is to intensify the implementation of macro policies. This year's fiscal, monetary, employment priority, and other policies are sizable. Fiscal expenditure exceeds 26 trillion yuan, and tax rebates and tax reductions are around 2.5 trillion yuan. In addition, monetary policy should strengthen support for the real economy, which can provide strong support for the smooth operation of the economy.
The third is to deepen reform, expand opening-up, and promote innovation. We will firmly implement the strategy of expanding domestic demand and strive to stimulate market vitality and enhance the endogenous driving force for development.
And there is an important premise here: it is still necessary to ensure pandemic prevention and control. We must coordinate pandemic prevention and control with economic and social development, ensure normalized pandemic prevention and control, protect people's lives and health, minimize the impact on production and life, and create conditions for maintaining normal production and living order. This is an essential prerequisite for consolidating economic recovery and development.
Overall, the economic fundamentals sustain long-term growth. The total number of market entities in China has exceeded 150 million and continues to grow quickly. Under the strong leadership of the CPC Central Committee with Comrade Xi Jinping at its core, we will work together, keep going and make pragmatic and persistent efforts to accomplish the targets and tasks for economic and social development this year, with the result of the hard work and vision of more than 1.4 billion Chinese people, a variety of instruments and space for macro policies and a wealth of invaluable experience on responding to significant challenges and withstanding major risks.
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Kyodo News Service:
I have three questions. First, have you considered the international volatility raised by the Ukraine crisis while drafting the government work report of this year? Second, the deficit-to-GDP ratio this year is projected at 2.8%. What's the consideration behind this? Third, this year's government work report has not mentioned the dynamic zero-COVID 19 policy. Does it mean that there are possibilities for the country to adjust its virus control strategy? Thank you.
Xiang Dong:
I want to answer your first question briefly. We have taken various considerations into account while drafting this year's report.
Second, I would like to offer some details about your question concerning the fiscal deficit.
The work report says the proactive fiscal policy will be more effective, targeted, and sustainable. The deficit-to-GDP ratio has been cut appropriately in the recent two years. We mainly take the following factors into account.
First, China's proactive fiscal policies will remain unchanged though the deficit-to-GDP ratio was lowered moderately. According to the work report, it is projected that fiscal revenue will continue to grow in 2022. In addition, we also have available to us the surplus profits of state-owned financial institutions and state monopoly business operations from recent years turned over in accordance with the law and funds transferred from the Central Budget Stabilization Fund. This will make it possible for government to increase expenditures by more than two trillion yuan over last year, putting significantly greater fiscal resources at our disposal. We will implement a new package of tax-and-fee policies to support enterprises, with tax refunds and cuts totaling about 2.5 trillion yuan. Furthermore, this year, special-purpose bonds for local governments will total 3.65 trillion yuan, and a portion of special bonds carried over from last year will be available for further use. In addition, investment from the central government budget will reach 640 billion yuan, an increase of 30 billion yuan over last year. As a result, we will see that the proactive fiscal policy is more effective.
Second, it is conducive to boosting fiscal sustainability. The government set the deficit-to-GDP ratio in 2020 at more than 3.6% to address the COVID-19 pandemic, which was an extraordinary measure for an unusual time. As economic performance recovers stably, we moderately cut the deficit-to-GDP ratio in time, which is constructive to enhancing fiscal sustainability. We have also considered the need to leave policy space to address risks that could arise in the future.
Third, in cutting the deficit-to-GDP ratio to within 3%, we have signaled that China's economy and finance perform prudently, which can boost market confidence.
As for your third question, please refer to my answer to a similar question just now. Thank you.
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The Paper:
In last year's government work report, the CPI was projected to increase by around 3%. However, the CPI rose by 0.9% in 2021. What factors slowed down the CPI increases of last year? Moreover, we noticed that the CPI is set to increase by 3% in this year's report. Will China continue to maintain a low growth this year? Will last year's "low base" impact achieving this year's expected goals? Thank you.
Xiang Dong:
Over the course of last year, the CPI rose moderately by 0.9% on average, creating a favorable environment for economic recovery and improvement of people's lives. Against the backdrop of sharply increasing international commodity prices and increasing global inflationary pressure, China's CPI has remained stable, mainly due to abundant market supply and a bumper harvest in agriculture. In particular, pork prices fall because the pig production has remained favorable. In addition, the CPC Central Committee and the State Council have strengthened market regulation, stepped up efforts to ensure the supply of energy and raw materials, and keep their prices stable, thus creating conditions for price stability.
At present, China's industrial and agricultural production situation is pretty good. The number of hogs and "breeding sows remains high. The supply of major industrial and agricultural products is guaranteed, all of which lays a foundation to keep CPI stable this year. On the other hand, energy prices on the international market have risen considerably in recent months, which puts upward pressure on domestic prices. Due to climate change and other factors, we can't rule out that some agricultural products like vegetables will rise for the current period on the Chinese market. In addition, consumer prices of last year were exerting a 0.9 percentage point of carryover effect on prices this year. In comparison, the carryover effect of prices in 2020 was only a minus 0.1 percentage point. It is predicted that a CPI increase rate year-on-year will expand in 2022. However, it will still rise mildly. The CPI is projected to rise by around 3% this year. We have taken complete account of various potential factors affecting prices and leaving some leeway. This is also in compliance with last year's projected target and will help stabilize market expectations.
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Bloomberg:
According to the work report, this year's fiscal plan focuses on using funds from state-owned enterprises and local government debt to boost consumption and spending. However, the expenditure on infrastructure was relative slow last year because of insufficient good infrastructure projects. How shall we ensure the effective spending of these funds and ensure the problem of last year be well addressed? And how can you keep these policies and measures consistent, and whether it can promote investment in fixed assets?
Xiang Dong:
Thank you. The questions you raised are mainly related to finance. Regarding the government's expenditure mentioned in the work report, there are two major expenditures this year: tax reductions and refunds. I covered the former one, and I'd like to invite Mr. Liu to elaborate briefly on the latter.
Liu Rihong:
As Mr. Xiang said, my colleague covered some of your questions. I would like to add some more details for your reference.
In terms of government expenditure, we will first increase overall spending. According to the report, government expenditure in 2022 is budgeted to increase by more than two trillion yuan over the previous year. You may be curious about the reasons for such an increase. One of the significant reasons is to facilitate tax refunds and cuts. Our practices in recent years prove that tax and fee cuts are crucial measures to innovate macro adjustment and the fairest, most inclusive, and most effective method to support market entities. Statistics show that since the 13th Five-Year Plan was launched, the volume of newly-issued tax and fee cuts has totaled 8.8 trillion yuan, effectively reducing the burden of enterprises. Although policies on tax and fee cuts continue to take effect, China's public finance has achieved sustainable and stable operation due to the growing vitality of market entities and the development of new tax-related market entities. From 2013 to 2021, new tax-related market entities have paid 4.76 trillion yuan in tax. This demonstrates the policy effect of tax and fee cuts.
One of the major reasons for expanding government expenditure this year is to increase transfer payments to local governments, help carry out tax and fee cuts, and ensure that policies concerning 2.5 trillion yuan of tax refunds and cuts can be well implemented.
Another reason is to help expand effective investment. In 2022, 3.65 trillion yuan of special bonds will be issued, similar to the previous year. In the meantime, 640 billion yuan will be allocated for investment in the central government budget, 30 billion yuan more than the previous year. Therefore, there is substantial growing space for China's effective investment. As for the investment in infrastructure you mentioned, indeed, the growth rate in this regard has been comparatively low in recent years, and we will ramp up investment this year. However, our efforts to increase investment are not made in an extensive manner as we did in the past. What we expand nowadays is an effective investment, applied to projects urgently needed for economic growth and people's livelihoods. For example, a bond issued this year will focus on supporting major engineering projects of the 14th Five-Year Plan and those concerning the weakness of society and people's livelihood. With the implementation of the funds, effective investment will be continuously leveraged, which will effectively support the stable operation of the Chinese economy.
Thank you.
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Shou Xiaoli:
Due to time constraints, we are open to two more questions.
Economic Daily:
Currently, China's economy faces new downward pressure, and the country's GDP in the fourth quarter of 2021 only expanded 4% year-on-year. We noted that the government work report proposed many policies and measures in this regard. What are the considerations behind this? Thank you.
Xiang Dong:
China's economy in 2022 faces the triple pressures of shrinking demand, disrupted supply, and weakening expectations, and we must overcome these difficulties. Building on an in-depth analysis of situations both at home and abroad, the government work report has made comprehensive arrangements for the tasks of the government in 2022, proposing a series of policies and measures which aim to continuously maintain sound economic and social development. Regarding your question, I personally think that we can analyze the measures in the following aspects.
First, we need to follow the general principle of prioritizing stability and seeking progress while ensuring stability. The term "stability" is one of the keywords of this year's report and has been mentioned 76 times. The report clearly stipulates that the work in 2022 should follow the aforementioned general principle and attach greater importance to stabilizing growth. All regions and sectors need to take responsibility for stabilizing the economy and proactively introducing policies that help ensure economic stability.
Second, we need to stick to the main policy direction, ensuring stability in the macroeconomy. The report proposed that the efficiency of proactive fiscal policies should be improved and that the fiscal spending will increase by over 2 trillion yuan over the previous year. The central government transfer payments to local governments will reach nearly 9.8 trillion yuan, 1.5 trillion yuan more than the previous year, up 18%, the most significant increase in recent years. A total of 3.65 trillion yuan of local government special bonds will be issued, and 640 billion yuan will be earmarked for investment in the central government budget. China will further strive to implement a prudent monetary policy to expand the scale of newly-issued loans. The policy that prioritizes employment will be further strengthened. China will spare no effort to ensure food and energy security. The report stressed that more efforts should be made to stabilize the production and ensure the supply of grain and other vital agricultural products, keep crop acreage stable and boost the yield of soybeans and other oil crops, in a bid to ensure the food supply for 1.4 billion Chinese people.
Third, we need to properly implement policies to ensure the stable growth of market entities and employment. The report put forward a package of highly effective and well-targeted, hardcore measures. For example, China implemented a new set of combined taxation policies. The total volume of tax refunds and cuts is expected to total around 2.5 trillion yuan, including 1.5 trillion yuan of value-added tax credit refunds. For businesses that didn't lay off employees or only had a few layoffs, refunding unemployment insurance will be continuously implemented. The ratio of funds refunded to micro, small and medium-sized enterprises will significantly improve. More support will be given to catering, hospitality, retail sales, tourism, passenger transportation, and other industries and businesses facing difficulties.
Fourth, we will work to complete the new tasks of expanding domestic demand and improving the quality of economic development. For example, the report rolled out measures of raising the extra tax deduction coverage for small and medium-sized sci-tech enterprises from 75% to 100%. It also calls for granting tax breaks to enterprises that invest in basic research and improving policies on accelerated depreciation of equipment and tools and preferential corporate income tax for new and high-tech enterprises. Furthermore, to speed up the recovery of consumption and investment, the report introduced effective measures of supporting the purchase of new-energy vehicles, accelerating the upgrading of urban pipelines, including those for gas supply, and keeping energy consumption of major national projects under separate management. Meanwhile, according to the report, the government will fully implement all major regional development strategies and coordinate regional development, improve the quality of new urbanization, improve the environment and promote green and low-carbon development.
Fifth, we will implement new initiatives to deepen reform and expand opening-up. The report introduced a series of new measures to build a high-standard market system, advance reforms of state-owned enterprises and the fiscal, taxation, and financial reforms, and deepen reforms to streamline administration and delegate power, improve regulation, and upgrade services. This year, we will face tremendous pressure to ensure stable foreign trade and foreign investment. Despite all the changes in the international landscape, we will open wider to the world and take multiple measures to stabilize the overall performance of foreign trade and foreign investment.
Sixth, we will take new measures to ensure and improve people's wellbeing. Policies and measures in this regard have been a highlight of each year's government work report. This year's report has also rolled out a raft of pragmatic measures. For example, the government will allocate educational resources according to the size of the residential population, and see that school-age children can enroll in nearby schools; steadily enhance services for the prevention and treatment of illnesses including cardiovascular and cerebrovascular diseases and cancer, and better ensure the supply of medicines for rare diseases; appropriately raise the basic pensions and pension standard for urban and rural residents, which will benefit nearly 300 million people; and make care expenses for children under three part of the special additional deductions for individual income tax to ease the burden of giving birth and raising a family.
Seventh, we will meet the new requirements for the improvement of government. Facing new developments and tasks, the government must adopt a new approach. The report requires that governments at all levels and all government employee perform their duties, shoulder their responsibilities, make concerted efforts to promote development and ensure public wellbeing and accomplish new achievements.
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Shou Xiaoli:
The last question, please.
Red Star News:
Major economies globally, including the U.S. the EU, have entered the interest rate rise cycle. Will this affect China's monetary policy? The report says a considerable drop will be seen in the overall financing costs of businesses. What measures will be taken to this end? Thank you.
Xiang Dong:
You have paid attention to the monetary policy. Therefore, Mr. Song will answer the questions.
Song Li:
Historically, most policy adjustments in developed economies have produced spillover effects, affecting the global economy and increasing economic and financial volatility in developing countries, especially emerging market economies. Therefore, China needs to pay close attention to these adjustments as an open economy. However, compared with the last interest rate rise cycle of developed economies, China's ability to deal with external shocks has been significantly improved:
First, China's economy has grown in size, with stronger resilience, broad prospects, and plenty of room to maneuver.
Second, there is much room for policy adjustment. We have been firm in choosing not to adopt a deluge of strong stimulus policies. With ample monetary policy instruments and policy space, we have a strong ability to deal with external shocks effectively.
Third, the RMB exchange rate remains generally stable and floats more freely. So, it can better function as an automatic stabilizer.
Fourth, China's financial system has become more prudent; mutual openness in the financial sector has been enhanced; two-way cross-border capital flows have become more active; RMB assets have become more attractive, and the vitality and resilience of the capital market are increasing.
In the next stage, we will continue implementing a prudent monetary policy and maintaining reasonably adequate liquidity. We will give full play to the role of monetary policy in terms of both amount and structure to provide stronger support for the real economy. Regarding the amount, we will increase new loans, ensure the increases in money supply and aggregate financing are generally in step with economic growth in nominal terms, and further improve the transmission mechanism of monetary policy. Regarding the structure, we will channel more funds to key areas and weak links and extend the coverage of inclusive financing. In addition, we will encourage financial institutions to lower real loan interest rates and cut fees, increase inclusive loans to micro and small businesses, including credit loan, make it easier for those businesses to access financing, and reduce overall financing costs to help them solve financing difficulties.
Thank you.
Shou Xiaoli:
Thank you, Mr. Xiang. Thank you to all the speakers and friends from the media. Today's press briefing is at this moment concluded. Goodbye.
Translated and edited by Zhang Rui, Liu Sitong, Ma Yujia, Li Huiru, Zhu Bochen, Zhang Liying, Wang Yanfang, Chen Xia, Gong Yingchun, He Shan, Zhou Jing, Wang Qian, Wang Yiming, Yuan Fang, Cui Can, Jay Birbeck, David Ball and Tom Arnstein. In case of any discrepancy between the English and Chinese texts, the Chinese version is deemed to prevail.
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