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Thursday, March 5, 2015, 18:10

Strong stimulus ruled out, rate reform soon

By Agencies
Strong stimulus ruled out, rate reform soon

Xu Shaoshi, head of China's National Development and Reform Commission, gives a press conference for the third session of China's 12th National People's Congress (NPC) on the economic situation and macro-economic control in Beijing, China, March 5, 2015. (Photo / Xinhua)

BEIJING - China's top economic planner said Thursday that China will not introduce strong stimulus measures to prop up the economy.

Xu Shaoshi, minister in charge of the National Development and Reform Commission, made the comments hours after Chinese Premier Li Keqiang announced that China's economic growth will be lowered to around 7 percent in 2015.

Xu, however, underlined the importance of investment, which he believes continues playing a key role in promoting Chinese economy.

Talking about the economic situation and macro-economic control at the conference at the two sessions, Xu said the ministry will deepen reform of government review and approval and press ahead with reforming companies and fiscal and tax systems. The ministry will also ensure better financial services for the real economy and deepen reform of investment and financing system, price reform and the reform of rural and land system.

China will extensively implement the strategy of opening up, the report said, adding that the ministry will raise the efficiency and quality of China's outward investment, as well as increase multilateral, bilateral, and regional economic cooperation.

According to the report, the NDRC will accelerate the transformation of agricultural development and promote transformation and upgrading of the industrial structure through innovation. "We project spending on R&D as a percentage of GDP will come to 2.2 percent in 2015," Xu said, adding that the NDRC will boost the scale and strength of strategic emerging industries and make the service sector better able to support economic growth.

Rate liberalization

At the same time, China will make a major breakthrough in interest rate liberalisation this year, but it will not be necessary for the country to widen its currency trading band in 2015, Chen Yulu, an advisor to the country's central bank - the People's Bank of China (PBOC) told Reuters on Thursday.

Monetary policy for the year will be shaped by economic data during the first two quarters of the year, Chen said. The performance of economies including Japan and European countries will also help dictate China's monetary policy in 2015, he added.

The central bank will maintain a neutral monetary policy to ensure the country's economy grows at between 6 percent and 7 percent in 2015, he said. Earlier on Thursday, Premier Li Keqiang told the annual meeting of the country's parliament that China will aim for economic growth of about 7 percent in 2015.

China's central bank was not worried about capital outflows, but would remain alert for indications of capital flight, Chen said.

Speedier approval

The Chinese government also promised to process investment applications in much shorter time by reforming its approval system.

Currently a company needs stamps from more than 30 government departments before an investment project is approved the process is non-simultaneous.

By the end of this year, the number of such steps will reduce to two or three, said Xu. The remaining formalities will be simultaneously processed on government websites. The NDRC is negotiating with other departments to push this through.

Most foreign investment projects no longer need approval but mere registration. Only about 5 percent of foreign investments is currently subject to government approval, Xu said.

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