It's official. China faces a "tough struggle" in the year ahead as its already slowing economy is buffeted by a trade war with the United States and a flagging global economy. Premier Li Keqiang told the Chinese Parliament at the opening of its annual session this week that the country faces a graver and more complicated environment along with risks and challenges. He gave a lower growth forecast of 6 to 6.5 per cent for the year compared with last year's "around 6.5 per cent". But stock markets were mostly up despite the gloomy outlook because of the measures announced by Mr Li to boost the economy. They were a mix of short-term shot-in-the-arm remedies and longer-term deepening of reforms. Observers see them as tailored measures and a mature response befitting a maturing country. The question is whether policymakers will stay the course should things worsen and if they will go through with the reforms, long on the cards but not realised.
China won some kudos for not going for a sweeping interest rate cut, opting instead for the targeted easing of credit to small and medium-sized enterprises (SMEs) and private firms which are vital to growth and job creation. SMEs make up more than 90 per cent of Chinese companies and provide more than 80 per cent of jobs. China aims to create more than 11 million urban jobs this year and keep urban unemployment at 4.5 per cent. Other boosts to businesses include deeper-than-expected tax and fee cuts amounting to 2 trillion yuan and lowering of the value-added tax.