Chinese Premier Li Keqiang delivers a government work report at the opening meeting of the third session of the 13th National People's Congress at the Great Hall of the People in Beijing, capital of China, May 22, 2020. (SHEN HONG / XINHUA)

The combination of opening up and economic measures announced by Premier Li Keqiang in the Government Work Report is a clear indication China wants to remain open for business with the rest of the world, according to analysts.

The American China Chamber of Commerce conducted a survey of all the US companies in China today and found only 20 percent intended to leave the rest intend to stay

“China intends to promote WTO reform and promote multilateral trade especially in the Asia Pacific region,” said Professor Ying Zhu from the University of South Australia. 

“Close ties with Asia are important for China especially as the US withdraws from the region and becomes more isolated,” he said.

Professor Jane Golley, director of the Australian Centre on China in the World, Australian National University in Canberra, said Beijing’s pledge to ‘‘resolutely uphold’’ the multilateral trading system and participate actively in World Trade Organization reform contrasts starkly with the rhetoric coming out of Washington, which is increasingly protectionist and dismissive of global institutions.

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China intends to be actively involved in reforming the WTO and with multilateral trade agreements such as the Regional Comprehensive Economic Partnership, said Professor Ying Zhu of the Australian Centre for Asian Business, University of South Australia.

“It is clear from the Government Work Report that China will push ahead rebuilding its economy,” Zhu said. 

China believes in free trade and while others may be withdrawing, China intends to stand by its commitments to free trade, he said.

He noted there is a big push by Washington to have American companies relocate (from China) back to the US. Some are already doing this, but the vast majority intend to stay.

The American China Chamber of Commerce conducted a survey of all the US companies in China today and found only 20 percent intended to leave the rest intend to stay. They want to invest more and do not want to see major disruptions to the supply chain.

“China wants the foreign investment and intends to make it easier for foreign investors to invest in China. Look at Teslar. It built a factor in China within six months and has started to build cars,” he said. 

It’s not only in manufacturing China wants to see more foreign investment but in the financial sector as well.  “In doing so it will put more money into the financial system, increase loans to small- and medium-sized enterprises, open the country to more foreign investment and expand the Belt and Road Initiative in Asia to encourage closer cross border trade,” he said.

The government intends to cut its negative list (red tape) which hinders foreign investment and intends to make it easier for foreign companies to invest in China. 

Zhu said China’s focus going forward is economic recovery and increased economic engagement especially within the Asia Pacific region. To do this China is prepared to put a lot of money into the economy.

“On the monetary side, reference to lower interest rates and a higher inflation target point to a much laxer monetary policy ahead,” Alicia Garcia-Herrero, senior research fellow at European think-tank Bruegel. “On the fiscal side, the much bigger stimulus can be distilled from the announced quota increase for local government bonds from 2.6 trillion yuan ($365 billion) last year to 3.75 trillion yuan.”

A total of one trillion yuan in Special Treasury Bonds were also announced in addition to a nearly 40 percent increase in additional financing for local governments, said Garcia-Herrero, noting the last time the Chinese government resorted to these type of off-balance sheet bonds was 2007.

Moreover, "China is shifting its macroeconomic focus from growth to people’s livelihood,” said Nawazish Mirza, associate professor of finance at La Rochelle Business School in France.  “This is why the employment and pension reforms are very central in combating poverty.” 

The urban unemployment rate of around 6 percent has constrained private spending. Similarly, rising poverty is a key concern in the rural suburbs.  

“The target of incremental 9 million urban jobs, the introduction of minimum old age benefits for rural residents together and the increase in the area of high standard cropland are notable moves to equilibrate the living standards across rural and urban areas,” Mirza said. 

With regards to the city-specific policies, the gradual deleveraging of real estate is likely to support a robust housing demand and accessible housing. The vow to support real estate as a public good will be instrumental in limiting the speculative transactions. 

And China’s aim toward self-sufficiency in food remains its greatest asset. The significant increase in farmlands for crop production and hog farming ensures that basic necessities are adequately provided to the people, according to Mirza. 

“The natural environment is also an important determinant of physical, intellectual and social wellbeing of people. A scientific effort to curb air pollution will benefit the ecosystem and improve the people's quality of life," Mirza said.

Noting China did not set its GDP target for 2020, Alicia Garcia-Herrero at European think-tank Bruegel said:  “This seems to indicate that flexibility has become more crucial, even more (important) than guiding expectations.”

Despite no specific growth target, Garcia-Herrero, also the chief economist for Asia Pacific at French investment bank Natixis, noted that “a big stimulus” was announced by Chinese Premier Li in this year’s Government Work Report. 

“The magic of it all is that the target for the fiscal deficit remains low for the sharp increase in bond issuance,” said Garcia-Herrero. China's deficit-to-GDP ratio this year is projected at more than 3.6 percent, which was 0.8 percentage points higher than that of last year, according to the 2020 Government Work Report.

“China will not go back to the same rate of growth as it is experiencing a structural deceleration but it may still be one of the fastest economies to recover globally,” said Garcia-Herrero. 

China is implementing phase one of the China-US economic and trade agreement and importing more goods from the US especially agriculture. “By fulfilling the agreement China can say to the US ‘we deliver on our agreements’,” Professor Zhu said.

Countries that have signed up to the Belt and Road Initiative will find themselves in the best position to attract what is likely to be diminishing amounts of Chinese capital, while the United States stands to gain the most on trade as China seeks to implement the phase-one deal, said Professor Golley.

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“This creates a real challenge for Australia (and presumably other US allies as well), because our interests align with much of what China is committing to – apart from the trade deal that will see the US benefit at the expense of our own exports. 

“Acknowledging those common interests with China would be helpful in re-setting the strained relationship with our largest trading partner, but that won’t go down well in Washington,” she said.