China’s Leaders Meet, and See ‘Critical Battles’ on Economy and Pollution

BEIJING — China faced “critical battles” in defusing economic risks and reining in pollution, the country’s premier, Li Keqiang, said Monday in an annual state-of-the-nation report to lawmakers that has been overshadowed by a plan for President Xi Jinping to abandon term limits on his power.

Xi was among the Communist Party leaders who listened on the podium as Li laid out the government’s goals for 2018 in his report to the legislature, the National People’s Congress. Almost 3,000 hand-picked delegates attending the congress in the Great Hall of the People also received an explanation of proposed constitutional amendments that included ending a limit of two five-year terms on the presidency.

Here are highlights from the opening day of the congress’ annual meeting, which this year will last for more than two weeks.

Just a week ago, the Chinese Communist Party abruptly revealed a proposed constitutional change that would lift the term limit on the presidency. That change would clear the way for Xi to stay in power as president and Communist Party leader well into the next decade, perhaps even longer. There is no term limit for party leaders.

But constitutional amendments must be approved by at least two-thirds of the members of the National People’s Congress. An explanation of the constitutional changes given to delegates said many officials, delegates to the congress and members of the public had called for abolishing Xi’s presidential term limit. The change, it said, would bolster Xi’s authority and “strengthen and improve the national leadership system.” Additionally, Xi’s trademark ideological slogan, “Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era,” will be added to the preamble of the constitution, together with a nod to the main ideas of Xi’s predecessor, Hu Jintao.

Xi Jinping Thought was already enshrined in the Communist Party’s constitution, or charter, at a party congress last October, when Xi began his second five-year term as party leader. Including the doctrine in the separate state constitution is icing on the political cake for Xi.

The change would entrench its “guiding status in national and political life,” said the explanation of the constitutional changes given to delegates.

China’s economy would grow by 6.5 percent this year, Li said, confirming widely held forecasts of the official target. The government says China’s economy grew by 6.9 percent last year, and the growth goal for this year is also robust by global standards.

Part of that economic activity will be driven by the country’s continued strong spending on infrastructure. The government set aside $115 billion for spending on railways, and more for highway and waterway projects, continuing China’s heavy investment in transport networks.

Yet Li also promised to tame the debt that has increasingly worried economists as well as leaders in Beijing. But the premier’s report and a companion report from the Ministry of Finance contained few details about how China would manage rising levels of domestic debt.

“We will see that internal risk controls are tightened in financial institutions,” Li said. “We will forestall and defuse local government debts.”

Hints that China would address its domestic debt issues were mostly implicit rather than explicit. The government forecast that it would run a budget deficit equal to 2.6 percent of economic output this year, down from 3 percent last year. And for the first time in many years, the government did not set a target for growth in the broadly measured domestic money supply.

Li also promised more spending on advanced technology, noting that innovation was an increasingly important driver of China’s economic growth. “In high-speed rail, e-commerce, mobile payments, and the sharing economy, China is leading the world,” he said.

China’s spending on its military will grow by 8.1 percent this year, taking the official budget for the People’s Liberation Army to 1.11 trillion yuan (about $175 billion), budget papers released for the congress showed. Last year, China’s military budget rose by about 7 percent.

Xi has reorganized the military to give more power and resources to the navy and air force, and also expanded a string of military installations in the South China Sea that could be used to ward off any challenges to Chinese control of disputed islands and rocks there.

“We will continue to reform national defense and the armed forces, and build strong and solid modernized border, coastal and air defense,” Li said in his work report.

The pace of growth in China’s outlays on its armed forces has slowed from the regular double-digit annual increases that prevailed for two decades, but the size of the People’s Liberation Army forces already overshadows regional rivals like Japan.

Many foreign experts estimate that China’s real military spending is much higher than the official budgets. Even so, China’s military budget is still much smaller than the Pentagon, which will receive more than $700 billion in the 2018 fiscal year.

Li said the Chinese government would build on its success over the last couple of years in reducing the smog that has long choked cities, especially in the industrial north. “We will consolidate the gains made in the fight to defend our blue skies,” Li said.

Pollution in Beijing and in 27 other nearby cities in north China dropped sharply over the winter, and was on average one-third lower in the last three months of 2017 compared with the same period in 2016, according to Greenpeace. In Beijing pollution plummeted by 54 percent.

But pollution remains a stubborn problem in other areas of China, and has even risen in some cities. Further complicating matters, the government’s aggressive drive to stamp out coal burning for stoves and heaters overreached over the winter and left many residents shivering because natural gas installations had fallen behind.

China’s coal use rose slightly last year, increasing by 0.4 percent compared with use in 2016, government statistics released last week showed. Li said that the government would shut more steel plants and small coal-fired power plants, continuing a reduction program that Li said had included assistance for 1.1 million displaced workers.