The Second Session of the Thirteenth National People’s Congress opened at 9 a.m. on 5 May in the Great Hall of the People to hear Premier Li Keqiang’s report on the work of the government, to examine the State Council’s report on the implementation of the national economic and social development plan in 2018 and the draft national economic and social development plan in 2019, and to examine the State Council’s report on the implementation of the central and local budgets in 2018 and the Report on the draft local budget.

In his report on the work of the government, Premier Li Keqiang defined the tasks of the government in 2019.

Premier Li Keqiang pointed out that this year’s economic and social development is heavy, challenging and demanding. We should highlight the key points, grasp the key points and do a solid job in all aspects. Continue to innovate and improve macro-control to ensure that the economy operates within a reasonable range. We should adhere to the ideas and methods of market-oriented reform to solve the development problems, give full play to the counter-cyclical regulation role of macro-policies, enrich and flexibly use fiscal, monetary and employment policy tools, enhance the forward-looking, targeted and effective regulation, and create conditions for the smooth operation of the economy.

Implement larger tax cuts. Inclusive tax reduction and structural tax reduction are combined, with emphasis on reducing the tax burden of manufacturing and small and micro enterprises. Deepening the reform of value-added tax, reducing the current 16% tax rate of manufacturing industry and other industries to 13%, reducing the current 10% tax rate of transportation industry and construction industry to 9%, ensuring that the tax burden of major industries is significantly reduced; keeping the tax rate of 6% in the first class unchanged, but by adopting supporting measures such as increasing tax credits for production and living services, ensuring that the tax burden of all industries is reduced only and not increased, we will continue to move forward. The tax rate should be divided into three categories and the tax system should be simplified. We will carry out the policy of preferential tax reduction for small and micro Enterprises promulgated at the beginning of this year. This tax reduction, focusing on “releasing water to fish farming”, enhancing development potential and considering financial sustainability, is a major measure to lighten the burden of enterprises and stimulate market vitality, an important reform to improve the tax system and optimize the pattern of income distribution, and a major choice for macro-policy to support stable growth, ensure employment and adjust the structure.

Obviously reduce the burden of corporate social security payment. The proportion of basic endowment insurance contributions for urban workers will be reduced to 16% in all regions. To stabilize the current mode of collection and payment, local governments should not increase the actual payment burden of small and micro enterprises in the course of the reform of collection system, nor should they pay the historical arrears centrally on their own. We will continue to implement the policy of phased reduction of unemployment and industrial injury insurance premiums. This year, we must make sure that enterprises, especially small and micro enterprises, have a substantial reduction in the burden of social security contributions.  We will accelerate the overall reform of the old-age insurance at the provincial level, continue to increase the central allocation ratio of the basic old-age insurance fund for employees of enterprises and transfer part of the state-owned capital to enrich the social security fund. We should not only alleviate the burden of enterprises’payment, but also ensure that the social security benefits of employees remain unchanged, pensions grow reasonably and are distributed in full and on time, so as to make the social security fund sustainable and benefit both enterprises and workers.

Ensure that tax cuts and fee reductions are in place. Tax reduction and fee reduction directly hit the pain and difficulty of the current market participants, which is a fair and efficient policy. Over the year, the burden of corporate tax and social security contributions has been reduced by nearly 2 trillion yuan. This will put great pressure on all levels of finance. In order to support enterprises to reduce their burdens, governments at all levels should live a tight life and try their best to raise funds. The central government should open up sources and reduce expenditure, increase profits handed over by specific state-owned financial institutions and central enterprises, reduce general expenditure by more than 5%, and reduce the “three public” funds by about 3%, and recover all long-term deposited funds. Local governments should also take the initiative to tap potential, vigorously optimize the expenditure structure, and activate various types of funds and assets through multiple channels. We must make sure that market participants, especially small and micro enterprises, have a clear sense of tax reduction and fee reduction, and resolutely fulfil their commitments to enterprises and society. We must also accomplish this major task well if there are more difficulties.

Efforts should be made to alleviate the problem of difficult and expensive financing for enterprises. Reform and improve the mechanism of money and credit delivery, timely use of deposit reserve ratio, interest rate and other quantitative and price means, guide financial institutions to expand credit delivery, reduce the cost of loans, accurately and effectively support the real economy, can not let funds idle or empty. We will intensify the targeted reduction of small and medium-sized banks and release all the funds for private and micro-enterprise loans. We will support large commercial banks to replenish capital through multiple channels, enhance their ability to provide credit, and encourage more medium- and long-term loans and credit loans for manufacturing industries. This year, loans to small and micro enterprises of large state-owned commercial banks will increase by more than 30%. Clean up and standardize bank and intermediary service charges. Improve the internal assessment mechanism of financial institutions, encourage and strengthen inclusive financial services, effectively improve the financing tension of small and medium-sized enterprises, comprehensive financing costs must be significantly reduced.

Effectively play the role of local government bonds. This year, local government special bonds will be arranged at 2.15 trillion yuan, an increase of 800 billion yuan over last year, to provide financial support for key projects and create conditions for better prevention and resolution of local government debt risks. Reasonably expand the scope of special bonds. Continue to issue a certain number of local government replacement bonds to reduce the burden of local interest. We should encourage the adoption of market-oriented approaches to properly solve the problem of matured debt of financing platforms, instead of conducting “half-pull” projects.