Chinese economy facing major challenges, warns top planner

Beijing: China's economy, currently on a slowdown mode, is facing challenges in investment and trade and may have to make "arduous efforts" to attain 6.5 percent to seven percent growth target for this year, China's top economic planner warned today ahead of the G20 summit.

It is estimated that pressure will still remain in economic development in the second half of 2016 in the world's second largest economy, Xu Shaoshi, chairman of the National Development and Reform Commission, the planning body of the country, told lawmakers here.

In his report on the state of the economy to the National People's Congress (NPC) Standing Committee, Xu said it was expected that targets for poverty reduction, energy consumption, environmental protection and shanty town renovation would be met.

"Great difficulties remain in meeting goals for investment and trade," Xu said, elaborating on a national economic and social development report.

"Currently, the foundations for stable economic development are not solid enough and downward pressure remains large," state-run Xinhua news agency reported.

His comments came ahead of the G20 summit being hosted by China in Hangzhou city early next month where issues relating to halting the slowdown of the global economy and boosting international trade were expected to be high on the agenda.

China's economy mostly based on exports and manufacturing suffered as exports fell due to global economic slowdown.

The Chinese economy itself slipped to 6.9 percent last year and Xu indicated that the official target of 6.5 to seven percent may be difficult.

Xu, however, expressed confidence that the country could meet major annual targets in economic growth, employment, commodity prices and residents' income.

Internationally, the global economy has not recovered as expected and trade protectionism has gained ground, Xu told lawmakers, adding that geopolitical risks and the increasingly complicated security situation in China's periphery will disturb economic stability.

On the domestic front, difficulties remain large in the stable growth of demands, and regional polarisation has evolved, with potential risks in sectors such as finance and employment calling for great attention, Xu said.

He also cited farmers' incomes, the increasing number of environmental incidents, severe production safety situation and the arduous tasks of disaster prevention, reduction and relief as difficulties the country must address. 

In his report, Finance Minister Lou Jiwei said China will further reduce tax burdens for enterprises and closely follow the implementation of the replacement of business tax with value-added tax (VAT).

China plans to formulate a pilot policy on commercial pension insurance with individual tax preferences offered to applicants, Lou said.

Also, China is mulling an increased export rebate rate for some mechanical and electrical products and improving the policy on individual income tax for equity incentives, Lou said.

The central government will promote public- private-partnerships (PPP) and accelerate the PPP legislation procedures, he added.

China has also promised to review government investment, promoting the use of funds to support startups in emerging industries, Lou said.