China sets robust growth target to shore up cooling economy

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Many criticized the government's efforts in late 2017 and early 2018 as overly harsh, causing authorities to reverse their tone in the second half of a year ago with announcements of stimulus plans. The shift to a band from the previous practice of using a point figure gives policy makers room for maneuver and compares with last year's "about" 6.5 percent goal.

China's benchmark, the Shanghai Composite Index, gained about 0.9%; Japan's Nikkei fell 0.4%; and the Hang Seng in Hong Kong was flat.

To help shore up the economy, Li said China's fiscal policy will become "more forceful", with the government pencilling in cuts of almost 2 trillion yuan (US$298.31 billion) in taxes and fees for companies.

The more modest growth target paired with further targeted stimulus measures typifies the government's attempt to steady the economy after a bruising 2018 and marks a shift from last year's edition, when the emphasis was on reining in financial risks and trimming budget outlays.

In an apparent nod to the United States, with which China has been talking to strike a trade deal, Li emphasized that Beijing will proceed with its "reform and opening-up" policy, created to develop a market economy under the ruling Communist Party.

Premier Li Keqiang told the National People's Congress that the government is cutting taxes, boosting infrastructure investment and stepping up lending in a bid to shore up the country's slowing economy.

Overall, the government aims for a 2019 budget deficit of 2.8 percent of GDP, up from a 2.6 percent target a year ago.

But with the economy losing steam, Value-Added Tax and social security fees will be cut, in a bid to stave off job losses and the related risk of unrest.

China has lowered reserve requirements for commercial lenders five times in the past year to spur loans to small and private companies - vital for growth and jobs.

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A military officer and other delegates leave after a preliminary meeting ahead of National People's Congress (NPC), China's annual session of parliament, at the Great Hall of the People in Beijing, China March 4, 2019.

Hobbled by a surging national debt and a months-long standoff with the U.S., Beijing has announced lower growth targets and a major tax cut as economic planners aim for a gradual deceleration of China's economy this year.

To support growth, Li said China would closely monitor employment at exporting companies heavily exposed to the US market and cut the value-added tax (VAT) for the manufacturing sector to 13 percent from 16 percent.

The country's economic growth has recently slowed, in large part because of the trade war with the US.

Those external factors, Li said, have led the central government to decide on a somewhat softer and lower growth target for the country.

The employment rate is one alternative indicator to GDP growth that economic planners have put added emphasis on in recent months due to its importance for maintaining social stability.

His comments come against the backdrop of a trade dispute with the US.

US Secretary of State Mike Pompeo said he thought both nations were "on the cusp" of a deal to end their trade war.

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