China will make pre-emptive policy changes to spur growth, says Premier

BEIJING: China, which expanded at its slowest pace in 25 years last year, will make pre-emptive policy changes to support growth and ward off financial risk, Premier Li Keqiang said in remarks published on Friday. The government would make sure it achieved its main economic development targets this year, state radio quoted Li as telling a regular cabinet meeting. Li said the government would closely watch the economic situation at home and abroad. The government has set a growth target of 6.5 percent to 7 percent for 2016. The world's second-largest economy expanded 6.9 percent in 2015, its slowest pace in a quarter of a century. The government would "make good use of fiscal and monetary policy tools to strengthen preemptive and timely fine-tuning, prepare policy reserves and effectively guard against various risks", Li said. It would allocate fiscal funds and launch major investment projects quickly this year and make sure planned policy and reform measures were implemented. China's central bank won't resort to excessive stimulus to bolster growth but would keep a flexible stance in the event of an economic shock - domestic or global, Governor Zhou Xiaochuan said earlier. Li also said that China would expand tax reforms to replace a business tax with a valued-added tax in the construction, property and financial services sectors, effective from May 1. The VAT reform, which was launched in 2012 as a trial programme, has been applied to railway transport, postal services, telecommunications and some service sectors. The tax reforms will cut firms' tax burdens by more than 500 billion yuan (£53.2 billion) this year.