Premier promises support for growth

China will stabilize market confidence by assuring supportive measures for economic growth and push forward structural reforms, said Premier Li Keqiang. He made the remarks at a meeting with senior officials from five provincial and municipal governments during a visit to Liaoning province, Northeast China, this week. [Photo / Xinhua]

Li says China has 'ability, confidence, conditions' to maintain momentum

Premier Li Keqiang said the central government will "take seriously" the increasing pressure on economic growth and introduce "effective policies" to target the problems that local officials have complained about.

He said China has the ability, the confidence and the conditions to keep the economy moving along "within a reasonable range". He made the comment during a meeting with senior officials from five provincial-level governments during a fact-finding trip to Liaoning province.

Li didn't say whether the central government will launch a new financial stimulus package to buoy economic growth. Economists have estimated that first-quarter GDP growth probably fell to its slowest pace in almost five years.

In the Chinese context, what "a reasonable range" means is a rise in GDP of around 7 percent, with inflation no higher than 3.5 percent.

China's economic situation is still "generally stable", with positive changes in some areas, the premier said, adding that the country still has "great resilience for development and large room for maneuver".

China also gained experience in coping with a slowdown in economic growth last year, and it's modified its policies to deal with possible fluctuations in 2014.

Li's remarks were intended to adddress global investors' concerns about China's fast-cooling economy, as shown in economic data for the first two months. He said the government will launch relevant and forceful measures according to "what we have planned in our government work report." Reform, which inspires innovation, still has a key role in economic growth, Li said.

"Both the State Council and local governments will further cut red tape and announce administrative approval procedures that have been kept by the government for the sake of clarity and to facilitate public supervision," he said.

Li also told the meeting that the government should speed up important investment, especially in railways, highways and water-conservation projects, disburse budgetary expenditures in a timely manner, support the construction of subsidized housing, boost exports and imports and reduce corporate financing costs through "various" monetary policy instruments.

China's opening-up policy, Li said, will be maintained and revised to adapt to new world conditions. The government will look into "strategic measures" that can revive exports and streamline the procedures of customs clearance, he said.

"The overall performance in the economy so far this year is relatively stable and we have seen some positive changes, but we cannot ignore the difficulties and risks, and [the fact] that growth faces more downward pressure," Li said.

During the first two months, growth in major economic indicators, including industrial output, fixed-asset investment and retail sales all dropped to their lowest point in years.

Global investment banks have started to lower their GDP growth rate forecasts for this year and warned investors about potential slowdown risks in the world's second-largest economy, sparking talk about possible stimulus measures.

A report from Nomura Securities Co Ltd said that the GDP growth rate may slow to 7.3 percent in the first quarter from 7.7 percent in the fourth quarter last year.

"Without a pick-up in policy easing, growth will likely drop below 7 percent in the second or the third quarter." Nomura said it expected looser monetary and fiscal policies starting in April. It said that the central bank may start to cut the required reserve ratio in the second quarter.

Zhu Haibin, chief economist in China at JPMorgan Chase & Co, said that fiscal policy and structural reforms should come ahead of monetary policy easing to address near-term growth concerns. "A valid concern is that monetary easing could lead to unintended consequences such as a rebound in housing prices or further increase in leverage".