China econ­omy im­prov­ing, debt risks un­der con­trol

Kuwait Times - - BUSINESS -

China’s econ­omy per­formed bet­ter than ex­pected in the third quar­ter and the coun­try’s debt risks are un­der con­trol, Premier Li Ke­qiang said yes­ter­day.

“China’s econ­omy in the third quar­ter not only ex­tended growth mo­men­tum in the first half but showed many pos­i­tive changes,” Li said in the speech in Ma­cau that was broad­cast live on state tele­vi­sion. Key in­di­ca­tors such as fac­tory out­put, com­pany prof­its and in­vest­ment have re­bounded, he said, ahead of China’s re­lease of third-quar­ter gross do­mes­tic prod­uct (GDP) data on Oct. 19.

More than 10 mil­lion new ur­ban jobs were cre­ated in the first nine months, with the survey-based job­less rate fall­ing be­low 5 per­cent in Septem­ber, he said, while ac­knowl­edg­ing that the econ­omy still faces down­ward pres­sure.

China will be able to achieve its main eco­nomic tar­gets this year and main­tain medium- to high-speed growth, he said.

The govern­ment is aim­ing for an­nual eco­nomic growth of 6.5-7 per­cent in 2016, com­pared with 6.9 per­cent in 2015, the slow­est ex­pan­sion in a quar­ter of a cen­tury. De­spite a rocky start to the year and stub­bornly weak ex­ports, China’s econ­omy grew 6.7 per­cent in the first half, buoyed by higher govern­ment in­fra­struc­ture spend­ing and a hous­ing mar­ket frenzy which is be­gin­ning to raise fears of over­heat­ing. HSBC ex­pects a sim­i­lar rate of ex­pan­sion in third quar­ter.

Li said the govern­ment will take ef­fec­tive mea­sures to en­sure the sta­ble and healthy devel­op­ment of the prop­erty mar­ket, and will en­cour­age cities to set their own real es­tate poli­cies de­pend­ing on lo­cal con­di­tions. More than a dozen cities and dis­tricts have tight­ened re­stric­tions on prop­erty pur­chases in re­cent weeks to cool red-hot prices.

Li also said China’s debt risks are un­der con­trol, but added the govern­ment will take steps to re­duce high debt levels of non-fi­nan­cial firms to help ward off fi­nan­cial risks. Non-per­form­ing loans are ris­ing but the bank­ing sec­tor will be cush­ioned by am­ple liq­uid­ity and suf­fi­cient bad-loan pro­vi­sions, he said.

S&P Global said yes­ter­day that ris­ing debt levels will worsen the credit pro­files of China’s top 200 com­pa­nies this year, re­quir­ing the coun­try’s banks to raise as much as $1.7 tril­lion in cap­i­tal by 2020 to cover a likely surge in bad loans. — Reuters

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