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Speech by H.E. Li Keqiang

Hong Kong and Macao should continue in the right development direction, consolidate consensus for development, display their unique advantages and functions, and promote the "one country, two systems" practise along the correct path, the top legislator said.

The launch of China's 13th five-year plan and the ushering of "Golden Era" of China-UK relations as well as economic structural reforms and sustainable development pursued by both governments provide rare opportunities for bilateral economic and trade cooperation, he said.

China will support scientists in new fields of research with a natural sciences plan. A key R&D plan will focus on basic research fields that address future needs, including quantum communication, life sciences, stem cells and environmental protection, Wan told a press conference on Wednesday.

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.