Economy focus of China Parliament meet

Delegates leave the Great Hall of the People after attending a session ahead of China’s National People’s Congress in Beijing on Friday. — AP

China commences its once-a-year parliamentary session this weekend to map out plans for dealing with a wobbling economy and worries the ruling Communist Party is losing its credibility as a competent manager.

Overhanging this year’s sitting are concerns about the social impact of deep structural reforms in the world’s second-largest economy, gyrating financial markets and deteriorating global trade.

In the week leading up to parliament, the government flagged major job losses in the key production industries of coal and steel as policymakers seek to eliminate inefficiencies and overcapacity in state-owned enterprises through consolidation and layoffs.

“Cutting capacity in some traditional sectors could create pressure on employment, but employment problems should be manageable as our services sector still grows at a fast pace,” said Wen Bin, chief economist at Minsheng Bank in Beijing. China aims to lay off 5-6 million state workers over the next two to three years, two reliable sources said, Beijing’s boldest retrenchment programme in almost two decades. China’s leadership, eager to maintain stability and ensure redundancies do not lead to unrest, will spend nearly 150 billion yuan ($23 billion) to cover layoffs in just the coal and steel sectors in the next 2-3 years. “The biggest concern is in the property market,” Wen said, noting there will a push to develop a “differentiated policy” to help revive stagnant markets in smaller cities while venting the steam in major centers like Shanghai and Shenzhen.

China will also raise its defence spending by seven to eight per cent this year, a top official said on Friday, following years of double-digit increases as Beijing asserts its territorial claims in the South China Sea.

“China’s military budget will continue to grow this year but the margin will be lower than last year’s and the previous years,” said Fu Ying, spokesperson for the National People's Congress (NPC), the Communist-controlled Parliament.