During the Two Sessions the top Chinese leaders held discussions with provincial delegations, emphasizing the need to have the reform program rolled out across the whole country. President Xi Jinping addressed delegates from Heilongjiang, displaying particular concern with those parts of China which are being particularly hit by the tendency towards deindustrialization and assuring them that the reform program will pay special attention to their circumstances. It has been suggested that services to the increasingly popular winter tourism, as well as the aviation industry and biochemical engineering could all be promising drivers of growth for the northeastern region.

But the overall direction was clear - China plans a period of "supply-side" reforms, including reduction of taxes on business, aimed at greater production of consumer goods, stimulating innovation and entrepreneurship on the one side and consumption on the other. Spare capacity in the industrial and construction sectors can be utilized further afield in the complex of projects around the overarching "Belt and Road" initiative.

Urbanization is another modern tendency which the government supports but wishes to exercise proper control over. It appears likely that 60 percent of China's population will be living in cities by 2020; this accords with government planning forecasts. It will require a strong commitment to the increased provision of urban services, to enable now urban residents to play a full part in city life, including as consumers. Plans are under way to boost local government revenues by devolving certain tax receipts to local authorities, but that is a tricky business which will require considerable thought, necessary though it is.

Some observers were somewhat surprised to see a relatively modest rise in planned defence spending - previous years have seen figures considerably higher than this year's proposed 7.6 percent. This should not, however, be seen as China drawing in her horns. China's commitment to military modernization and to maintaining her professed security requirements in the region remains unchanged. The necessary capacity to underpin China's established position in the seas around East Asia, and to proceed with the expansion of a blue-water naval capability, will not be restricted. At the same time, China is signalling that growth in military spending will not be pursued purely for the sake of sabre-rattling and muscle-flexing: China's security needs are portrayed as limited but unnegotiable.

Thus China's leadership has announced that a potentially difficult economic year will be addressed with proactive pragmatism; and, above all, that the central government will not relax its watchful grip on the direction of the economy, either at the macro or the micro level.

The writer is a columnist with China.org.cn. For more information please visit:

http://www.ccgp-fushun.com/opinion/timcollard.htm

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