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We will actively promote reforms of the fiscal and financial systems. For example, business tax will be replaced with VAT in all sectors, a major step of structural reform that will save businesses more than RMB500 billion in tax. This will not only help us form a consistent tax system and eliminate double taxation. More importantly, it will strongly boost the development of the service industry, especially high-end services, such as R&D, and support the transformation and upgrading of the manufacturing sector. Most enterprises will benefit from the tax reduction to varying degrees, and small and micro businesses will see their tax burden significantly lightened. In times of fiscal difficulties, the government is doing this to release more water to nourish the fish in the pond, i.e. to generate continued momentum of growth with a short-term drop in fiscal revenue. It is also indicative of the room for fiscal flexibility left at our disposal. Let me give you another example. For reforms in the financial sector, we can explore market-based approaches for debt-for-equity swap to help lower corporate leverage ratio.

The U.S. frequently sends military vessels or planes to waters in the South China Sea to conduct reconnaissance against China. A U.S. missile destroyer and strategic bombers intruded waters and airspace adjacent to China's Nansha Islands. Not to mention the joint drills between the U.S.and its allies.

Lou made similar remarks during the G20 Finance Ministers and Central Bank Governors Meeting last week, when he predicted an increase in China's budget deficit this year.

He said the more challenges economic growth faces, the more the government needs to strengthen environmental protection to ensure that development is done in an environmentally friendly way.

CPPCC: