SCIO briefing on 2016 Govt Work Report

Hu Kaihong:

Thanks to Mr. Huang. Now let's move on to questions. Please introduce the agencies you represent before raising your questions.

China National Radio:

I have two questions. The first question is: compared to the government work reports issued in the previous years, what are new in this year’s report and what are removed? The second question is about the real estate market. Are there any concrete regulations in the report covering the housing property market? As the prices of the real estate market have been polarizing between first-tier cities and second-, third-, and even fourth-tier ones, does the report include any specific arrangements in this regard?

Huang Shouhong:

The government work report, as a report on overall governance, should be comprehensive by covering all aspects of economic, social, cultural and other development. Considering the continuity of economic and social development, some contents remain unchanged in government work reports of different years. But this does not mean government work reports won’t be updated with situational changes over time. Economic development, despite its continuity, will always produce new situations and emerging problems, which should be reflected and responded to in a government work report. You can make a comparison of the report this year with earlier ones to find the changes and draw a conclusion.

From a broader perspective, as I have mentioned just now, new development concepts and the supply-side structural reform have been highlighted throughout the entire report this year. Last year saw the emergence of a number of new situations and problems, so new contents, terms and policies are required to deal with the new development concepts and the supply-side structural reform. For example, amid the implementation of the supply-side structural reform, the fiscal deficit to GDP ratio has been increased to three percent. Why? As an important measure of the supply-side structural reform, it will result in tax reductions and cuts in administrative commissions in a bid to bolster the development of the real economy. This year’s report also puts forward a slew of measures to solve overcapacity. The report, for another example, has dedicated special parts to expounding the implementation of the strategy of innovation-driven development, and the promotion of entrepreneurship and job creation. Therefore, there are both changed and unchanged contents in the government work report: the major contents and the basic framework have been little altered, but changes have been made to the concrete measures and policies so as to address different situations in a new year.

Regarding the real estate market, a matter of great public concern, Premier Li Keqiang articulated in his report that the government will promote the building of affordable housing in urban areas and ensure the steady and sound development of the housing market. Among related measures is the improvement of loan and tax policies to support people’s reasonable housing consumption in order to satisfy rigid market demand as well as the demand for improving living conditions. He also emphasized in his report that differentiated policies should be introduced by different cities in light of local conditions to reduce housing inventories. The opposing performances of the real estate markets in the country, signaled by the price surge in first-tier cities, the minor growth in some second-tier cities, and the falling prices in other second- and third-tier cities, must be tackled in light of local situations. The restrictive policies for house purchase in the first-tier cities of Beijing, Shanghai and Guangzhou have never been cancelled. Actually, it is in third- and fourth-tier cities that high vacancy rates have appeared. An important way to solve the problem is to speed up the development of the new-type urbanization and the reform of the household registration system so that more farmers living and working in urban areas can settle down in cities and be given support to purchase and rent houses. It is an important way of ours to follow the win-win model of developing the new-type urbanization and cutting property inventories at the same time.

The State Council issued an Opinion on Advancing the New-type Urbanization not long ago, aiming to open, in an orderly manner, permanent residence permits in cites except in mega ones. The document also encourages and supports farmers living or working in cities to improve their housing conditions. In view of China’s long-term development, the urbanization process should be continued. The urbanization rate last year reached 56.1 percent and under the 13th Five-Year Plan, the rate will climb to 60 percent by 2020, which means tens of millions of rural population will migrate to cities each year. Generally speaking, when all farmers moving to cities are able to buy a house there, the housing inventories, I believe, can be hugely reduced. Thank you.