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Chinese economy faces big downward pressures: Premier Li Keqiang

Beijing: China's economy is facing considerable pressure due to the slowdown but the government has a host of policies to halt the slide, Premier Li Keqiang today said as he tried to allay fears about

PTI [ Updated: March 15, 2015 17:11 IST ]
chinese economy faces big downward pressures premier li
chinese economy faces big downward pressures premier li keqiang

Beijing: China's economy is facing considerable pressure due to the slowdown but the government has a host of policies to halt the slide, Premier Li Keqiang today said as he tried to allay fears about flagging growth in the world's second largest economy.

Addressing a press conference at the end of the 10-day meeting annual of the legislature, the National People's Congress (NPC), Li said the new GDP target of around 7 per cent set for this year is not easy to meet.

"This year we set the anticipated GDP target approximately 7 per cent. It is true that we have adjusted downward our GDP target but it will by no means easy for us to meet this target," he said.

The NPC is often referred as the "rubber stamp parliament" for its routine endorsement bills proposed by the ruling Communist Party of China (CPC).

China registered 7.4 per cent growth last year, slowest in 24 years. A recent IMF forecast said China's growth rate would further decline to 6.8 this year and 6.3 next year, for the first time behind that of India's.

Li said because China's economic aggregate is expanding and its size now is valued at about $10 trillion which is equivalent to the total economy of a medium sized country.

"I recognise that there is considerable downward pressure on China's economic growth and we still face multiple challenges. This requires that the government must strike a proper balance between maintaining steady growth and making structural adjustments," he said.

Referring to the concerns and worries about slow growth in China, he said, "We must ensure Chinese economy operate within a proper range".

"If our growth speed comes close to lower limit of the proper range of economic operation and affects the employment situation and people's livelihood incomes, we are prepared to step up targeted macro-economic regulation to boost the current market confidence while at the same time maintain continuity about our microeconomic policies to anchor long term market expectation," he said.

"The good news is that in the past couple of years we did not resort to massive stimulus measures for economic growth. That has made it possible for us to have fairly ample room to pursue economic regulation and we still have host of policy instruments at our disposal," he said.

The parliament session also showcased the country's massive anti-graft campaign which consolidated power base of President Xi Jinping both in the party and powerful military.

In his press conference, which was telecast live, Li skirted issues like Tibet -- which witnessed unrest in the form of self-immolations, calling for return of the Dalai Lama -- and Xinjiang which is facing major crackdown in view of increasing militancy fomented by the separatist East Turkistan Islamic Movement (ETIM).

Li also said China is not in a deflation state and is not exporting deflation to other parts of the world.

"I don't think there is a deflation in China," Li said. China imported more volumes of crude oil and iron ore last year, with smaller total value, due to the tumbling commercial commodity prices, he said.

The world's second-largest economy is facing more pain because of the economic slowdown as it tries to rebalance its economy to produce more sustainable growth, said Li, who appeared to have been overshadowed by growing power base of Xi, who has emerged as the most powerful leader in recent years consolidating his base in the party, the government and the military.

About the reforms, Li said "the pain is still there and the pain is becoming even more intense. Shedding government powers will touch on vested interests."

"The reform by reducing the power held in the hands of the government has helped tackle the downward pressure. This is not nail clipping," he said.

"This is like taking knife to one's own flesh," he said. Likening the required policies to halt the slowdown to Chinese chess game he said his government needs to get the key moves right.

"When it comes to Chinese economy we must meet both ends of maintaining steady growth and making structural adjustments," he said.

Officials say that China is sticking to the combination of a proactive fiscal policy and prudent monetary policy to balance steady growth and ongoing economic restructuring.

China has cut the benchmark interest rates twice and dropped the reserve requirement ratio for banks over the past four months.

Some analysts believe more easing moves may be rolled out if necessary.

To shore up growth, the Chinese government also plans to raise the fiscal deficit target for 2015 to 1.62 trillion yuan. That would be 2.3 per cent of GDP, up from 2.1 per cent in 2014.

Li, who is at number two only next to Xi has a bigger rank than his predecessor Wen Jiabao, who was positioned third but enjoyed a bigger profile among public.

While Xi appeared increasingly powerful, concerns among the CPC ranks about likely impact of the slowdown on the over six and half decade one party rule.

Amid the criticism that the massive anti-corruption drive made inroads into the government functioning slowing down the decision making authority, Li put the onus of delivery on the officials.

"The administration must meet our people's needs and deliver them real benefits," he said adding that government officials must be held responsible for their inaction, incompetence or indolence.

Li said some government officials have made the administrative procedures easier for the public and no longer pulled a long face toward the people, but at the same time they were not willing to solve people's problems.

"They are inactive and must be held accountable seriously," he said adding that the government's campaign yielded good results and won people's support.

China needs to run its own affairs well and maintain its development at a reasonable speed.

"I believe that in itself is China's huge contribution to the world," Li said.

"I think what China is working with other countries in pursuing common progress," the premier said.

He also spoke about China's relations with Japan and the US.

Sino-Japanese relations are now facing both "a test and an opportunity" at the important moment of this year which marks the 70th anniversary of the victory of the World Anti-Fascist War, he said.

The year also marked the 70th anniversary of the victory of the Chinese People's War of Resistance Against Japanese Aggression, he said.

If Japanese leaders could face the history squarely with a consistent view, there would be new opportunities to improve the bilateral ties and favorable conditions would be created to enhance the trade between the two sides, he said.

The China-US relations will get a boost with proposed visit of Xi to Washington later this year, he said.

"We have proposed that China and the United States work together to build a new model of major-country relationship featuring mutual respect, win-win cooperation, no-conflict and no-confrontation," he said.

China-US business ties will get even closer and enhance the overall bilateral relations more steadily, he said.

There are differences between China and the United States, but it is more important that the two countries have extensive shared interests, Li said.

"When differences are properly handled, the two sides can have more extra energy to further expand the convergence of interests," he said.

On the tensions at Myanmar-China border, Li said China has both responsibility and ability to safeguard the stability of its border areas with Myanmar,.

His remarks came two days after Beijing lodged representations to Myanmar on the deadly bombing in a Chinese city bordering the conflict-hit country.

A bomb reportedly dropped by a Myanmar warplane on Friday killed four Chinese people and injured nine others in Lincang of Yunnan province.

 

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