Li con­fi­dent of re­al­iz­ing growth tar­get

China Daily (Canada) - - FRONT PAGE - By XIN ZHIMING in Bei­jing xinzhim­ing@chi­nadaily.com.cn

China is set to achieve its an­nual eco­nomic growth tar­get while push­ing for­ward sup­ply- side re­form, Premier Li Ke­qiang said on Wed­nes­day.

The coun­try has pol­icy tools in place to an­chor the econ­omy if “it slides below the ap­pro­pri­ate range”, he told a news con­fer­ence.

Li said there is still am­ple room for in­vest­ment to boost the econ­omy — in the un­der­de­vel­oped cen­tral and western re­gions, for ex­am­ple.

New growth en­gines will be cul­ti­vated to make up for the weak­en­ing role of tra­di­tional sec­tors in con­tribut­ing to eco­nomic growth, he said.

“We will de­velop ‘the new econ­omy’ — that is, we will foster new growth en­gines to help pro­mote eco­nomic re­struc­tur­ing.”

Th­ese new en­gines in­clude not only emerg­ing in­dus­tries such as the In­ter­net, the In­ter­net of Things, cloud com­put­ing and e-com­merce, but also state-of-the-art man­u­fac­tur­ing, such as in­tel­li­gent man­u­fac­tur­ing and cus­tom­ized pro­duc­tion, the premier said.

Tra­di­tional growth en­gines tend to weaken as an econ­omy ma­tures, which has hap­pened in many coun­tries, es­pe­cially de­vel­oped ones. This calls for new emerg­ing in­dus­tries, to­gether with tra­di­tional sec­tors, to pro­mote eco­nomic growth, he said.

China has seen an eco­nomic slow­down in the first two months of the year as growth in both in­dus­trial pro­duc­tion and retail sales dipped.

Un­cer­tain­ties in global mar­kets, such as weak de­mand and fi­nan­cial mar­ket volatil­ity caused by in­ter­est rate de­ci­sions taken by the US Fed­eral Re­serve this year, have also added pres­sure on China.

“The Chi­nese econ­omy still has a lot of po­ten­tial (for growth),” Li said. “There will be no hard-land­ing as long as the re­forms con­tinue.”

China has de­cided to launch sup­ply-side re­form — an ini­tia­tive to lower bar­ri­ers to pro­duc­tion through such mea­sures as tax cuts and shed­ding over­ca­pac­ity — to stim­u­late eco­nomic vi­tal­ity.

The coun­try will not fal­ter in car­ry­ing out its re­form agenda while en­sur­ing that growth is not se­ri­ously af­fected, Li said. “One thing is for sure — we are de­ter­mined to push ahead with our re­form agenda.”

He said the au­thor­i­ties will also step up fi­nan­cial su­per­vi­sion through bet­ter co­or­di­na­tion be­tween de­part­ments to ward off risks pre­sented by the many in­no­va­tive fi­nan­cial prod­ucts on the mar­ket and the in­ter­con­nec­tion of dif­fer­ent fi­nan­cial sec­tors.

“We need to re­form and im­prove our fi­nan­cial reg­u­la­tory sys­tem, and we will strengthen co­or­di­na­tion (among dif­fer­ent reg­u­la­tory bod­ies),” he said.

China has re­duced in­ter­est rates and banks’ re­serve re­quire­ment ra­tio to in­crease liq­uid­ity and lower the costs of pro­duc­tion to boost the econ­omy af­ter GDP grew by 6.9 per­cent last year, the slow­est pace since 1990.

Li said th­ese de­ci­sions were taken to lower the fi­nanc­ing costs of en­ter­prises, and were not mon­e­tary eas­ing.

Liang Haim­ing, a se­nior econ­o­mist at Pan­goal, a think tank in Bei­jing, said: “China’s mon­e­tary pol­icy is gen­er­ally ad­justed flex­i­bly in line with the de­vel­op­ment of the econ­omy.

“Such flex­i­bil­ity can en­sure am­ple cap­i­tal for sup­port­ing the econ­omy, in­creas­ing jobs and pro­mot­ing peo­ple’s well-be­ing.

“Its mon­e­tary stance will not be ul­tra-loose.”

China has set a GDP growth tar­get of 6.5 to 7 per­cent for this year.

It plans to raise the deficit to GDP ra­tio to 3 per­cent this year, com­pared with 2.4 per­cent last year.

Wang Tao, chief China econ­o­mist at UBS, said in a re­search re­port that the coun­try is ex­pected to in­crease in­vest­ment in in­fra­struc­ture, ser­vices and strate­gic new in­dus­tries while push­ing struc­tural re­forms, such as low­er­ing re­stric­tions on mar­ket en­trance, to sup­port sta­ble growth this year.

Thanks to China’s im­prov­ing eco­nomic ac­tiv­ity, in­vest­ment and in­dus­trial pro­duc­tion may re­bound in the short term, she said.

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