14:10 GMT +318 November 2019
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    China Increases Annual Defense Budget, Remains Second Biggest Economy in World

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    A budget report presented on Monday by the National Development and Reform Commission to the National People's Congress in China revealed the intention of authorities to increase military spending in 2018. Despite growing inflation and a remaining multi-billion yuan deficit, Beijing is still likely to play a key economic role in Asia and beyond.

    Beijing aims to expand its economy by 6.5 percent this year, Chinese State Council Premier Li Keqiang Li Keqiang said on Monday. According to media reports, China will follow its budget target at the same rate as last year's GDP as authorities strive to hedge financial risks to keep the world's second-largest economy steady.

    Meanwhile, the inflation in China will increase up to 3 percent in 2018, a report presented on Monday by the National Development and Reform Commission to the National People's Congress said. "The consumer price index is expected to amount to 3 percent in 2018," the report said, stressing that the urban unemployment in the country will likely remain at the level of 4.5-percent.

    In 2017, the Chinese inflation amounted to 1.6 percent.

    In addition, the Chinese budget deficit will likely be about $380 billion or 2.6 percent of GDP. "The budget deficit is expected to amount to 2.6 percent of GDP, or 2.38 trillion yuans [$380 billion] remaining at the same level as in 2017," the draft budget revealed.

    Nevertheless, the Chinese government aims to keep the yuan exchange rate stable with consumer price index to reach expected 3 percent in 2018.

    Meanwhile, Chinese State Council Premier Li Keqiang said at the parliament's opening session that China would "advance all aspects of military training and war preparedness, and firmly and resolvedly safeguard national sovereignty, security and development interests."

    Earlier in the day, Xinhua news agency reported that the Chinese military budget would grow by 8.1 percent up to 1.11 trillion yuan [$175 billion] in 2018.

    The Chinese military budget remains the second biggest in the world after the US one.

    Last year, experts of the Centre for Economics and Business Research (CEBR) claimed that in 2032, mainland China would likely overtake the US as the world’s largest economy in dollar terms. CEBR's analysts pointed out that the alleged continuing rise of the high-tech manufacturing and the financial services sectors in Asia could make the urban areas of the region increasingly prominent economically.

    Meanwhile, the National Development and Reform Commission to the National People's Congress said on Monday that China would invest some $85 billion to develop its economy, which is 6 percent more than in 2017.

    "In 2018, the state investments will continue to play a key role, the country's budget will allocate 537.6 billion yuans [$85 billion], which is 30 billion yuans more than in the previous year," the report said.

    The report pointed out that the state support would focus on the agricultural sector, development of rural communities, improvement of life conditions in remote areas, development of innovations, environmental protection and ensuring social security. The Chinese authorities are also going to issue norms and rules that will regulate distribution of the state investments.

    Moreover, China particularly aims to open its industrial sector for foreign investments and expand access to a number of other sectors including healthcare and education, State Council Premier Li Keqiang said.

    "The industrial sector will be fully opened while the access to such spheres as telecommunications, healthcare, education and green car manufacturing will be expanded," Li said.

    The Chinese authorities also intend to unlock gradually the national market of bank cards' clearing as well as securities and funds management.

    "Foreign investors will be able to get tax deferral while procedures of creating enterprises with foreign investments will be simplified," Li said

    In addition, the official pointed out that China would also accelerate reforms of the country's financial sector.

    "We will reform and modernize the system of providing financial services… focus on solving problems of small and micro business, which are facing difficulties with gaining access to financing," Li added.

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