Li announces sweeping package, saying change has brought the greatest benefits

Premier Li Keqiang emphasized reform as he delivered the Government Work Report at the opening of the annual legislative session in Beijing on Wednesday. He promised to cut red tape, make China a magnet for foreign investment, and steer "the giant ship of China's economy" on a smooth course.

Li announced at the National People's Congress (NPC) that the country's economic growth target for 2014 will be "about 7.5 percent", unchanged from the goal set for last year, when the economy grew by 7.7 percent.

The 7.5 percent target came as no shock to China watchers, though some expressed that a lower percentage would be in-line with expectations as well.

"This is stronger than our forecast of 7.4 percent," said Sophii Weng, economist at Standard Chartered, but should be "positive for market sentiment". Weng said that while some reformers want a lower target range, the ultimate decision signifies that Beijing cannot reform without a certain level of growth.

In his 100-minute speech delivered in front of a delegation of about 3,000, Li mentioned the word "reform" 77 times, stressing that it is a top priority for the government. "We must rely fully on the people and break mental shackles and vested interests to deepen reforms on all fronts," he said at the NPC held at the Great Hall of the People.

Li said the government plans this year to either scrap or delegate to lower-level authorities another 200 items requiring administrative approval. This follows 416 that were canceled or delegated to lower tiers of government last year.

Private investment will be approved for some projects in state-dominated sectors such as banking, oil, electricity, railways, telecommunications, resources development and public utilities.

The sweeping reform package also includes measures for China to enter a new phase of opening-up.

"Opening-up and reform have been launched as integral parts of the same initiative, as they are mutually reinforcing," Li said. "We will foster a new open-economy system and advance a new round of opening-up to embrace the international market."

The country will open up more service sectors to foreign capital, encourage imports and level the playing field for Chinese and foreign companies to compete on fair terms, ensuring that China remains a top choice for foreign investment, Li said.

"We will open China's inland and border areas wider to the outside world and turn these broad areas into hot spots for opening-up," he said.

Li said that to shift growth to a more sustainable model, China will make consumer spending the main engine driving growth and view investment as being key to maintaining stable growth, which economist Nicholas Borst said is possible with the 2014 target of 7.5 percent GDP growth.

"Personally I would have been a little more heartened if they had accepted something lower," said Borst, a research associate at the Peterson Institute for International Economics. However, he said that he doesn't think rebalancing towards consumption-based growth is achievable at 8 or 9 percent, yet "it is achievable at 6 or 7 percent."

"I think the main dilemma going forward is this battle between growth target and then the goal of reducing excessive credit growth," Borst added.

Patrick Chovanec, managing director of Silvercrest Asset Management Group, said that for the long-term, it might be in China's favor not to have annual growth targets at all.

"Even compared to what many investment banks and others - who are largely bullish on the Chinese economy - say is possible," 7.5 percent is high, he said. "The question is not just whether it's possible - the question is whether it's desirable."

Chi Fulin, head of think tank China Institute for Reform and Development, said the reform policies and opening-up measures highlighted in Li's report will be a boon to foreign investors.

"The premier's emphasis on a level playing field, further opening tertiary industry and breaking the monopoly in State-dominated areas is good news for domestic and foreign business communities," Chi told China Daily. He said the developments in China will help speed global economic recovery.

Contact the writers at zhaohuanxin@chinadaily.com.cn and amyhe@chinadailyusa.com

Chen Jia and Hu Yuanyuan contributed to this story.

In Li Keqiang's words

"Some of these problems have arisen in the course of development, and others have occurred because we have not done our work well enough. The government must first examine itself to identify the causes of these problems and work out ways to resolve them."

"The people are the foundation of a nation, and a nation can enjoy peace only when its foundation is strong. The fundamental goal of a government's work is to ensure that everyone lives a good life."

"We will introduce a system to list all items over which government review and approval are required and release the list to the public. Items not on the list will not be subject to government review and approval."

"The seas are our valuable national territory. We will ... build China into a maritime power."

(China Daily USA 03/06/2014 page1)