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Download this week’s newsletter as a PDF here: CPW No. 7 (March 3-9)
Dear friends and colleagues,
I am traveling for the next few weeks, so the newsletter will most likely continue to be abbreviated. Old issues are always available at www.chinapoliticsweekly.com. Sign up or unsubscribe by sending an email to firstname.lastname@example.org.
On Wednesday, Li Keqiang, Finance Minister Lou Jiwei and NDRC Chairman Xu Shaoshi delivered the Government Work Report, the Central and Local Budgets and the National Economic and Social Development Plan, respectively.
I have not had time to read through the work reports yet, but a quick glance shows that “reform” remains the motivating force of the Xi-Li administration. The budget report is particularly illustrative; there is a new dedicated subsection on reform, and the word “reform” was mentioned 61 times in this year’s report, versus 26 times in 2013.
The budget report states that one priority for 2014 is to rein in preferential tax rates and other subsidies doled out by local governments. This will raise costs for business as local governments offer fewer incentives, but could be a net gain for MNCs insofar as it forces local and state-owned companies to compete on a more level playing field.
SOE reform was listed as its second reform priority in the NDRC’s report this year. The report did not offer anything new regarding how reforms will take place, but the fact that SOE reform was listed as such a high and explicit priority means we should see acceleration on this front in the coming months. On a related note, there is an excellent article this week on how the NDRC is adjusting to life in the new reform era.
In addition to the work reports, several top officials have given press conferences this week; the transcripts of these are good reading as they offer further detail into the direction of policy.
Of particular interest to business would be the press conference of Lou Jiwei. Already famous for having said last year that the government could tolerate growth of 6.5%, Lou once again tried to dampen expectations by saying that the government’s growth target of “around 7.5%” included figures under 7.5%.
Lou also stated that rationalizing revenues and expenditures of local and central government is not a priority for this year, and that work would instead be focused on reforming the budgeting and taxation systems. This year the government will move ahead with an environmental tax and a real estate tax, and will continue to research resource and consumption taxes.
Meet the delegates
Most of the time at the NPC is dedicated to meeting in groups to discuss the various work reports. PBSC members and other top officials have sat in with various different regional delegations over the week. I haven’t had time to read through their statements, but Caixin has usefully collected what the PBSC members were reported to have said at their various meetings.