Economy developing on reform, not stimulus: premier
China is on track to achieving its targets this year and the economy has bright prospects, Premier Li Keqiang said on Thursday, denying that the country will suffer a hard landing.
China's economy is stabilizing as it grows at a slower pace, although difficulties remain, but overall opportunities outweigh challenges, Li said at the opening ceremony of the annual summer meeting of the World Economic Forum in Dalian on Thursday.
The country is capable of achieving its major targets this year and laying a strong foundation for sustainable growth, Li said at the forum, known as Summer Davos.
Official data showed Thursday that China's inflation rate rose 2 percent from the same period last year to a one-year high, driven by soaring food prices. Meanwhile, the producer price index (PPI) fell 5.9 percent in August from a year earlier, a decline of 42 consecutive months, adding to deflationary pressure, Thursday's data showed.
He said it was not easy for the country's economy to grow by 7 percent in the first half of the year amid a slowing world economy. But he added what is encouraging is that China's economic restructuring is improving, with the services sector accounting for half of the GDP and consumption contributing 60 percent to the growth.
"I did have doubts about the outlook for China's economy given what we've read in the newspapers. But after I met people at the forum who provided facts about the Chinese economy and some reassurance from the premier, some of my concerns about the growth of the Chinese economy were eased," Henrik Ekelund, president and CEO of Swiss-based BTS Group, told the Global Times on Thursday on the sidelines of the forum.
China has to shift from an investment-led to a consumption-led economy, because you can't build bridges and houses forever, you have to shift to consumption, Ekelund said.
The past month saw volatility in China's stock markets as well as the devaluation of the yuan, which triggered concerns that China's economy has slowed more than indicated.
To allay those concerns, Li said the country created 7.18 million new urban jobs in the first half of the year, or 72 percent of this year's 10 million target.
"As I said repeatedly that as long as there is sufficient employment, a steady rise in income as well as improving environment, a slightly higher or slower growth is acceptable," Li said.
However, the premier also said that China's economy faces difficulties and downward pressure.
Li also said the Chinese economy has seen increasing reforms, and the government has not staged massive stimulus. He added that the Chinese economy will not suffer a "hard landing."
"China still has many instruments in its innovative macro-economic adjustment policies at its disposal, and will continue to roll out targeted measures to counter downward pressure," Li said.
China's economy has a better future and such optimism is not unrealistic. We have the foundation, conditions and economic drivers, Li added, noting that mass entrepreneurship and innovation enhances our confidence in overcoming difficulties.
"China's new normal of economic growth just provides opportunities for innovation," Chen Zhangliang, vice president of the China Association for Science and Technology, told the Global Times on the sidelines of the forum.
The country is changing fast, with science and technology developing at a stunning rate. Once China achieves a certain level of innovation, foreign investors will be attracted, Chen said.
