Provincial changes

Following the new leadership's avowed determination over reform, many provincial and municipal governments lowered this year's GDP growth targets and are focusing more on the implementation of economic restructuring. Local governments were recently busy holding their "two sessions" meetings, the most important annual event in China's political calendar at both the local and central levels, centered around lawmakers meeting at provincial people's congresses and political advisers gathering at sessions of the Chinese People's Political Consultative Conference.

Bayinchaolu, governor of Northeast China's Jilin province, predicted this year's economic growth at around 8 percent after a growth of 8.3 percent last year.

"This year marks the first year for China to fully advance the comprehensive reforms," he said. "We will focus on an innovative and green development to build an open economy while improving economic quality and efficiency," the governor said.

The province will launch a three-year program to develop its services sectors later this year, supported by key projects in modern logistics, cultural tourism and healthcare.

In the Inner Mongolia autonomous region, China's leading mineral and coal hub, the economic growth target was unchanged this year following a 9 percent growth in 2013.

"We should take advantage of the country's efforts to deal with air pollution and solve the problem of industry overcapacity and improve the development level of our industry through renovation," said Governor Bataar last week, during the region's annual people's congress. "We will encourage reshuffling our current leading industries and make coal production stable."

He said deep processing of coal products will be greatly developed. Coal-to-liquid projects with a capacity of 4.5 million metric tons, coal-to-chemicals with 2.2 million metric tons, and coal-to-gas with 20 billion metric meters will be constructed in 2014 to nurture a new and increasing economic increasing central focus.

Ma Jian, a political adviser, said during the annual political consultative conference that Inner Mongolia has great advantages in developing the cloud computing industry due to its low electricity prices, cool weather and geographic affinity to not only Beijing and Tianjin but international markets such as Russia and Mongolia.

"The development of cloud computing will upgrade traditional industries in Inner Mongolia," Ma said. "It will gather information and data related to energy, chemistry, and agriculture and animal husbandry produce processing. As a region with a wide area, public services will also find it easier relying on this platform."

In Shanxi, one of China's major coal bases, Governor Li Xiaopeng said the province will also maintain a 9 percent economic growth, unchanged from last year, but will emphasize compulsory targets of reducing energy and water costs as well as emissions of pollutants.

The governor said Shanxi will boost sustainable development of the coal industry while upgrading industries troubled with overcapacity, such as iron and steel, coking and cement, with deep processing and technological innovations.

Li also vowed to encourage emerging industries and service sectors, including heavy machinery, new materials, modern medicine, quality and quarantine inspection and testing services.

"In the areas in which growth is being linked with more energy, changes on the environment front could be more acute. Because China is gradually imposing environment taxes, those provinces may have to explore other avenues as opposed to relying on their reserves of coal," said Xu, the representative from The Economist.

The key challenge for China's successful economic restructuring is whether leaders have the commitment to confront the trade-off between economic growth and reform. Meaningful reform must entail deleveraging or a slower growth rate. Should China encounter another external shock, it would be critically important not to repeat such policy mistakes as the stimulus package in 2008, he added.

Liu Mingtai, Liu Xiao and Ding Luyang in Jilin and Wang Kaihao in Hohhot contributed to the story.