China investors catch option fever, prompting regulator warnings

China investors catch option fever, prompting regulator warnings

Tax and fees cuts, stabilisation of employment and more social services – these were some of the quick fixes pledged by Chinese Premier Li Keqiang in his annual work report, to address uncertainties in economic outlook and international relations. And in a rare move, not one delegate opposed the report when the National People’s Congress voted on it on Friday, Trend reports referring to South China Morning Post.

In the ballot on Li’s report, 2,945 delegates voted in favour and three abstained.

Although the NPC, China’s highest legislative body, is often described by observers as a rubber-stamp chamber and has never vetoed a work report, the number of opposing votes is often seen as an indicator of the level of endorsement and popularity for a government leader or a top government agency.

Even the number of abstentions is seen as a subtle indicator of disapproval by carefully selected delegates to the elite assembly.

For example, 378 delegates voted against Li’s first report as premier in 2014. Three years later, when he finished his first term as premier, 180 voted against his report. A small number of opposition votes was considered acceptable to the Communist Party.

The atmosphere at last year’s NPC was especially tense, as delegates cast their votes on whether to amend the constitution to remove the two-term limit for the president – allowing Xi Jinping to remain in the role, although as the party’s secretary general he would have been able to stay in power with or without the title.

On that occasion, careful consensus-building was carried out among delegates before they cast their votes on removing the term limit at the close of last year’s legislative meetings, or “two sessions”. Only two voted against, while three abstained – among the lowest such numbers in Communist Party history.

It is unknown whether any consensus-building was carried out regarding how delegates should vote this year. But the atmosphere this year was more relaxed and some delegates have taken the opportunity to voice mild dissent on government policies such as “Made in China 2025” (MIC2025) and the “Belt and Road Initiative”.

Unlike predecessors such as Zhu Rongji or even Wen Jiabao, Li is more an executor of Xi’s policies, and all of the limelight is usually given to Xi’s speeches and activities. Li himself as a leader does not have obvious support from the NPC delegates. His report represents overall government policies laid down by Xi.

When asked why there was not a single opposing vote on Li’s report, Hu Keming, deputy director of the NPC’s constitution and legal committee, smiled and said: “The reasons? You know well.”

Li did not mention MIC2025 in the report, which observers said was designed to avoid further provoking the West while China and the United States were negotiating a potential deal to end the trade war.

He placed special emphasis on measures to help the economy through difficult times ahead. Unveiling his report at the opening of the two sessions on March 5, Li had said the government was preparing for tough battles, foreseeing “graver and more complex” risks and challenges, both “predictable and unpredictable”.

Li’s most eye-catching pledge was to cut the value-added tax (VAT) rate for manufacturers by 3 percentage points to 13 per cent, a significant reduction.

The VAT rate for construction and transport companies was also cut, by 1 percentage point to 9 per cent, and reductions in various other fees were announced to ease the burden on the business sector.
The government set a lower economic growth target, in a range of 6.0 to 6.5 per cent, and a higher deficit-to-GDP ratio of 2.8 per cent for 2019, from 2.6 per cent in 2018.
Li also pledged to help private companies – addressing a key concern for businesspeople – and to stabilise jobs, improve social services, and step up environmental protection and rural development.

Also presented to the NPC on Friday were the work reports from the supreme court and the top prosecutor. In the ballots on those, 156 and 71 delegates respectively voted against, while 67 and 71 abstained.

Five to 10 years ago it was common for up to 600 of the nearly 3,000 NPC delegates to vote against the two reports to show their disapproval of China’s rampant corruption. Since then, the number of opposing votes has dropped, falling below 200 last year.

But there remained some unhappiness among delegates about the performance of the Supreme People’s Court.

Li Jie, an NPC delegate and chairman of Yichang Renfu Pharmaceutical Industry in Hubei, said some delegates were disappointed that the high-profile scandal in which the supreme court reportedly

lost court documents relating to a mining dispute in Shaanxi province, which provoked a national outcry, was not mentioned in the court’s annual report.

“Even though the supreme court has done a lot of work, it has not mentioned issues people are concerned about in the report,” he said. “For example, some court documents were lost – it disappoints people because it should be the symbol of justice and fairness.”

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