BEIJING: Despite a slowdown compared with previous years, China’s gross domestic product (GDP) growth target of around 5.5% points to the nation’s proactive pursuit of economic progress on a high base and necessitates robust support from macroeconomic policies, Premier Li Keqiang (pic) says.

       Meeting such an annual GDP growth rate target means the country will add nominal output of about nine trillion yuan (US$1.42 trillion or RM5.95 trillion) this year, much larger than the number a decade ago when an even higher growth rate was achieved, Li said.

       He was speaking at a news conference in Beijing after the closing of the fifth session of the 13th National People’s Congress.

       “Slower growth on the surface actually now carries more weight,” Li said, adding that the output increment represented by China’s growth target this year is equivalent to the aggregate output of a medium-sized economy.

       Achieving this year’s growth target is not easy given emerging downward pressures and rising uncertainties, necessitating macroeconomic policy support such as expanded fiscal spending to support tax cuts and refunds, Li said.

       While the Government Work Report said this year’s tax refunds and cuts are expected to reach 2.5 trillion yuan (RM1.66 trillion) among which value-added tax credit refunds will total 1.5 trillion yuan (RM992.42bil), Li said the country is prepared to further scale up tax refunds if the measure pays off.

       Experts said Li’s remarks signalled that China’s fiscal and monetary policies may moderately ease to meet the challenges of achieving its GDP growth target, though massive stimulus will still be ruled out.

       While the property sector continues to suffer from weakness, and geopolitical tensions have inflated commodity prices and could exert pressure on China’s trade surplus, it is necessary for macroeconomic policies to more forcefully and effectively buffer the headwinds, said Zhu Haibin, J. P. Morgan’s chief China economist.

       Zhu said there remains room for China’s central bank to cut policy interest rates by 10 basis points and the reserve requirement ratio by 50 basis points in the coming months, while tax refunds and cuts will alleviate the cashflow pressure, especially on manufacturers and smaller businesses.

       The tax refunds have significantly boosted restaurant chain Hefu-Noodle’s confidence in its development, as the measure will provide cash straight to the company and help offset the negative impact of sporadic Covid-19 outbreaks, it said.

       To ensure that local authorities are financially able to put tax cuts and other supportive policies into place, transfer payments from central to local governments are expected to rise 18% year-on-year to nearly 9.8 trillion yuan (RM6.5 trillion) this year, the largest increase since 2012, said Xiang Dong, deputy head of the Research Office of the State Council.

       Besides buffering short-term challenges, this year’s policies are also forward-looking and sustainable as they have taken into account long-term development goals, such as tackling climate change, the income gap, debt and other issues, the premier said.

       For instance, this year’s rise in tax cuts and refunds may increase future tax revenue by safeguarding the development of businesses, Li said.

       “Like building a deeper pool to farm more fish, (our tax cuts) have helped to nurture business growth and create more sources of tax revenue.”

       Ma Haitao, vice-president of the Central University of Finance and Economics, said this year’s fiscal policy has struck a balance between the short-term need for growth stabilisation and the longer-term goal of risk prevention. — China Daily/ANN