Business / Economy

If China's economy were a car

(Xinhua) Updated: 2016-03-07 10:57

BEIJING - If the Chinese economy were a car, how fast would it run in 2016, and toward which direction?

Saturday's government work report, delivered by Premier Li Keqiang at the opening of the annual parliamentary session, came as a map or a GPS system for the big car, giving directions and helping the car stay on the right track.

Speed range

The car has been running at a high speed for 30-plus years. Now the car is slowing down as the road gets bumpy.

Obstacles such as shrinking corporate profits, declining producer prices, lower tax revenues and higher financial risks are on the road. Driving fast over these bumps is dangerous and would do real damage to the car.

The report told the car to slow down and set a "range" for its speed in 2016, with maximum economic growth of 7 percent and a minimum of 6.5 percent.

As long as it goes no slower than 6.5 percent, it will arrive on time at the next stop -- a place called Well-off Society. China is aiming to get there by 2020.

The maximum speed limit of 7 percent is the economy's estimated potential.

Car repair

After more than 30 years on the road, some parts on the car are worn and need to be fixed or replaced. This means that right now, what the car needs is not more fuel, but a service and repairs.

The Chinese economy is plagued by excess industrial capacity, high housing inventory and high leveraging, so more stimulus is unnecessary, but supply-side reform is top priority.

Saturday's report listed six main tasks of supply-side reform this year, including streamlining administration, releasing the country's potential for starting businesses and making innovations, cutting overcapacity, improving supply of goods and services, pushing for state company reforms and energizing the non-public sector.

New fuel

The car used to be powered by a traditional fuel of "investment and exports." It burns a lot of energy and creates pollution, leading to smog.

Now on a new road, the old engine needs replacing. A new engine will be fueled by "innovation." It comes from emerging industries and new businesses.

According to the report, the government will continue to encourage people to pool their ideas and talents through business startups and innovation in 2016.

The country will support a sharing economy and see that resources are used more efficiently and more people can take part and benefit.

Toll station

The good news is that more toll stations along the way will be removed, as the government promises more streamlined administration and lower taxes.

According to the report, China will continue to reduce burdens on enterprises. Tax and fee reduction will amount to 500 billion yuan ($76.8 billion) this year.

The car will offer lifts to people along the way, just as the Chinese economy brings dividends to other countries with the Belt and Road Initiative, international production capacity cooperation, a huge domestic market and a fast-growing middle class.

En route to its destination, the car may slow occasionally, but it will not reverse, as China will not go back on the reform process.

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