China's national legislature starts annual session

Chinese Premier Li Keqiang addresses delegates during the opening session of the National People's Congress at the Great Hall of the People in Beijing

Meanwhile, the inflation in China will increase up to 3 percent in 2018, a report presented on Monday by the National Development and Reform Commission to the National People's Congress said.

Chinese leaders have set this year's official economic growth target at "around 6.5 percent", which is down slightly from 2017 but would be among the world's strongest if achieved.

Zhang Dejiang, chairman of the Standing Committee of the 12th National People's Congress (NPC), presides over the 116th meeting of the chairman and vice-chairpersons of the 12th NPC Standing Committee at the Great Hall of the People in Beijing, capital of China, March 4, 2018.

The premier said Beijing will speed up state-led development of integrated circuits, mobile communications, aircraft engines, electric cars and other technology.

PBOC Deputy Governor Yi Gang told Bloomberg News the yuan is stable and decided by the market, in response to a question on whether a possible trade war between China and the US will put depreciation pressures on the currency.

The report also warned Taiwan that China "will never tolerate any separatist schemes" amid tensions between the mainland and the self-ruled island.

Reinforcing views that Beijing's attention remains firmly fixed on credit risks and better quality growth, when Li unveiled the GDP target he omitted previous wording saying growth could be "higher if possible". Economists expect growth momentum to weaken this year as the government reins in corporate debt, leading to higher borrowing costs, while a war on pollution and a cooling property market will slow heavy industries and real estate investment. Li said China has successfully managed economic downward pressure and avoided an economic "hard landing".

The Chinese economy outperformed its annual growth target by expanding 6.9 percent last year, picking up for the first time in seven years.

China also set its consumer inflation goal at "around 3 percent", in line with past year, as widely expected. "The budget deficit is expected to amount to 2.6 percent of GDP, or 2.38 trillion yuans [$380 billion] remaining at the same level as in 2017", the draft budget revealed.

While the central bank has been gingerly raising money market rates to discourage riskier lending practices, it has also kept markets well supplied with funds when there are worries of a deeper cash squeeze, and bank lending hit a fresh record past year.

China suspects Tsai wants to push for formal independence, which would cross a red line for Communist Party leaders in Beijing, though Tsai has said she wants to maintain the status quo and is committed to ensuring peace.

Nevertheless, the Chinese government aims to keep the yuan exchange rate stable with consumer price index to reach expected 3 percent in 2018. It is also China's first big political event after it became clear that President Xi Jinping intends to stay in power beyond his second five-year term, with the party proposing the constitution be changed to remove the limit.



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