A special fiscal operation flourishes as China takes extreme growth targets. Li Keqiang in his annual speech to the National People’s Congress draws people’s attention with his emphasis on sectoral securities. Food, energy, and industry are the big sectors Mr. Li is going to execute.
Mr. Li promised that he will protect the firms by safeguarding the stability and security of industrial supply. He attempts to support home grown production specifically on semiconductors. Huawei has successfully invested in dozens of firms in chipmaking supply chain. The Wall Street Journal noted that America has barred Huawei from buying made in America equipment.
Furthermore, small businesses in catering, hospitality, retail, tourism, and passenger transport suffered the most during the pandemic. In facing the situation Mr. Li will also prioritize them. He surprisingly cuts taxes by 5%. This shortage might cost China as much as 2.5trn yuan, or 2% of China’s expected GDP. According to Mr. Li, this cost is worth taking to improve market confidence.
Last year, the government intended to shorten the use of energy as a part of its ESG five-year plan. But the government now seems to avoid energy consumption. Again, China’s decarbonization target will be longer. Apparently, coal production is rising, the government calls this as establishing the new before prohibiting the old.
This ambitious growth takes China into a five-year 102 mega projects involving 2.600 small projects. He Lifeng, head of China’s planning agency, the country will spend all necessary infrastructure. 9.8trn yuan is ready for the local government, it means 18% more budget support than last year. President Xi Jinping expects to reach at least 5.5% growth target.
