Li: Proac­tive steps, pru­dent mon­e­tary pol­icy still needed

China Daily (Hong Kong) - - FRONT PAGE - By HU YONGQI huy­ongqi@chi­

Pre­mier Li Ke­qiang called for keep­ing macroe­co­nomic poli­cies, mar­ket ex­pec­ta­tions and the fi­nan­cial sec­tor sta­ble in or­der to prop­erly pre­vent risks, dur­ing a meet­ing with en­trepreneurs and economists.

The pre­mier said dur­ing the meet­ing on Thurs­day that the Chi­nese econ­omy will still face dif­fi­cul­ties in the fu­ture in a deeply chang­ing world, even though the first half of the year saw steady eco­nomic growth.

There­fore, he urged con­tin­u­a­tion of proac­tive fis­cal pol­icy and pru­dent mon­e­tary pol­icy, with tar­geted and well­timed reg­u­la­tion by the gov­ern­ment that is aimed at hedg­ing against un­cer­tain­ties in the in­ter­na­tional com­mu­nity.

Shen Liantao, chief con­sul­tant of the China Bank­ing Reg­u­la­tory Com­mis­sion, said the in­ter­na­tional com­mu­nity is fac­ing pres­sure from risks of high in­fla­tion and low growth rate amid geopo­lit­i­cal un­cer­tain­ties, such as US Pres­i­dent Don­ald Trump’s “Amer­ica First” push.

The US Fed­eral Re­serve has raised in­ter­est rates, arous­ing risks of cap­i­tal out­flows from emerg­ing economies such as China. Since the be­gin­ning of the year, the world’s sec­ond­largest econ­omy has been delever­ag­ing its econ­omy, which has put the fi­nan­cial sec­tor un­der stricter su­per­vi­sion to en­sure fi­nan­cial safety.

Shen said cor­po­rate lever­age should be at­tached with greater at­ten­tion, and he sug- gested the delever­ag­ing cam­paign should elim­i­nate “zom­bie” com­pa­nies and clearly non­per­form­ing as­sets in­curred dur­ing in­dus­trial trans­for­ma­tion.

Jia Kang, a well-known econ­o­mist, showed his op­ti­mism about the past six months by say­ing that the sec­ond quar­ter’s GDP growth is es­ti­mated at higher than 6.8 per­cent, and he was con­fi­dent the year’s tar­get of eco­nomic growth will be achieved.

The econ­omy is sta­bi­liz­ing and show­ing pos­i­tive fac­tors since the Pro­ducer Price In­dex showed an in­crease in Septem­ber after 54 months of de­crease, Jia said. Ex­ports went up by 19.8 per­cent from Jan­uary to May com­pared with the same pe­riod last year, re­vers­ing roles to con­trib­ute to the eco­nomic growth after months of de­crease, he said.

In re­sponse, Pre­mier Li said em­ploy­ment will be made a top of pri­or­ity to pro­vide key groups with job op­por­tu­ni­ties, while the real econ­omy will be strength­ened by low­er­ing taxes and fees charged to en­ter­prises.

Mean­while, ag­gre­gate de­mand will be ap­pro­pri­ately ex­panded while ef­fec­tive in­vest­ment, es­pe­cially pri­vate in­vest­ments, should be boosted to en­hance the driv­ing force that do­mes­tic con­sump­tion has pro­vided, Li said.

The pre­mier also urged ac­cel­er­a­tion of in­dus­trial up­grad­ing and trans­for­ma­tion while the coun­try car­ries out the strat­egy of in­no­va­tion-driven de­vel­op­ment, and he called for op­ti­miz­ing the busi­ness en­vi­ron­ment to spur mar­ket vi­tal­ity.

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