Chinese Premier Li Keqiang pledged to tackle the problem of “zombie enterprises” as part of the 13th 5-year plan being approved by the National People’s Congress at its annual meeting in Beijing last weekend.

China approaches its development and growth using 5-year plans - a legacy throwback to the days of Mao - but, with the country’s economy growing at its slowest pace for 25 years, the challenges facing policymakers are profound and varied. “Mr. Li acknowledged that his country would face more and tougher problems but he reaffirmed his belief in the economy’s resilience.

One of the challenges is the need to reform inefficient state-owned enterprises that, in many cases, remain operational to pay worker’s salaries in the hope of staving off civil unrest in the country’s huge workforce. Nevertheless, some 1.8 million workers are expected to be laid off by the country’s steel and coal industries, according to a government official last week.

“The ongoing process of rebalancing the economy from manufacturing and exports to consumption and services is proving painful for China and that hasn’t been made easier by slowing growth at home and in its key export markets or by the volatility we’ve seen in its stock markets,” said Lead Capital Partners’ Asian markets strategist, Solomon Greenhaus.

Mr. Li also forecast that China’s economic growth would proceed within a range between 6.5% - 7%, a downgrade from the “around 7%” estimated for 2015 and a departure from the definitive number the authorities have traditionally provided.

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