Economy faces myriad of 'challenges, conflicts'

Premier Li Keqiang stressed on Tuesday that China must deepen reforms and maintain stable and sound economic growth as the economy grapples with "conflicts and challenges".[Special coverage]

Li made the remarks at a panel discussion with economic and agricultural advisers at the ongoing annual session of the National Committee of the Chinese People's Political Consultative Conference, the country's top political advisory body.

"The current (economic) situation remains complicated," Li said.

The country's economy grew by 7.7 percent in 2013, beating the official target of 7.5 percent. But a shaky start this year, as evidenced by soft manufacturing data in January, has placed a spotlight on how the government will pace its economic overhauls while guaranteeing solid growth amid the world's fragile recovery.

"The government must bear a big picture in mind, draw on the wisdom of all parties, make prearranged plans and maintain stable economic growth," Li said during the meeting.

China enacted various reforms last year despite increasing downward pressure on the economy, said Li, who added that more reforms must be established to inject dividends into the economy.

Li also called for a restructuring of the economy and a transformation of the growth model. He said he wanted to see further streamlining to administrations and the construction of a fair environment for development.

"Restructuring the economy and upgrading the growth model can improve the quality of economic growth and efficiency," he said.

Li said China will vigorously develop a mixed-ownership economy ─ in which the economy is directed by both the State and private ownership ─ and will deepen fiscal and taxation reforms.

China will also expedite projects in the Shanghai Pilot Free Trade Zone to boost development and reforms, he said. He said the Shanghai FTZ must accelerate its pace of innovative projects and implement new policies and initiatives to further boost reforms.

Li also called for technological innovations to modernize agriculture and ensure food safety in the country. He said land reform and innovations can help boost agricultural development, which is crucial for the Chinese economy and for farmers' livelihoods.

But as legislators meet for the annual two sessions, Chinese analysts have said what worries them most is the massive debt held by local governments.

The debt total is snowballing, analysts said, and there is still a high possibility of a large-scale default in the loans industry because of issues and instability in the country's widespread shadow banking.

The central government set its economic growth target for 2014 at about 7.5 percent in December, but it is also working to resolve complications created when the US Federal Reserve phased out its third-round quantitative easing policies late last year.

Ma Jun, chief economist at the Greater China Deutsche Bank, said some predictions on the Chinese economy have been too pessimistic because its fundamentals are much more healthy compared with other emerging markets.

"China's political situation is stable and the Chinese leadership is committed to structural reforms," he said. "China is solving its financial risks by taking a series of reform measures."

CPPCC members who were present at the meeting said their interaction with Li can promote mutual understanding between the government and its senior advisers. All seven members of the Standing Committee of the Communist Party of China's Central Committee attended CPPCC meetings on Tuesday.