The fifth session of the 12th National People's Congress opens at the Great Hall of the People in Beijing, capital of China, March 5, 2017. (Xinhua/Yang Zongyou)
China will advance key reforms in the financial sector, fiscal and tax systems, and streamline government functions to boost the internal forces driving development, according to the 2017 government work report.[Special coverage]
In the financial sector, systemic risks are "under control" but the government should be alert to the buildup of risks related to non-performing assets, bond defaults, shadow banking, and Internet finance, reads the report to be delivered by Premier Li Keqiang at the National People's Congress.
To defuse the risks, the government plans to prompt financial institutions to focus on their main business, strengthen their ability to serve the real economy, and stop them being distracted from their intended purpose.
"The fundamentals of the Chinese economy remain sound, the capital adequacy ratio and provision coverage of commercial banks remain high... We have the confidence, the ability, and the means to forestall systemic risks," says the report released on Sunday.
On streamlining government functions, a pilot program to grant market access on the basis of a negative list will be expanded, discretionary powers of the government will be reduced to give the market "more freedom to take its course."
The government also pledges to abolish the requirement for permits for a number of production and service activities, merge different forms of certification required of businesses, and expand trials to separate operating permits and business licenses.
On fiscal reforms, the government will continue a pilot program to replace business tax with VAT across the board, simplify the structure of VAT rates, and turn the four tax brackets into three.
"We will create a simple, transparent, and fairer tax environment and further ease the tax burden of our firms," the report says.
To energize the non-public sector, the report says all industries and sectors that are open to overseas investment should be open to Chinese private capital; and all unjustified activities that impede fair market competition should be stopped.
"All industries and sectors for which entry is not explicitly prohibited by laws or regulations should be open to different types of market entities," it reads.