Beijing has levers and skills to keep economy stable, Li Keqiang says
The central government has the confidence and ability to take effective austerity measures to avoid wild swings in economic development, Vice-Premier Li Keqiang said yesterday, in his first public speech in the new post.
'Under the circumstances of a complex world economy, China's fast and stable economic development is particularly important,' he said at a forum held in Beijing over the weekend.
Mr Li, who is tipped to succeed Premier Wen Jiabao when he retires in 2013, said the government would keep macroeconomic controls at a reasonable level in accordance with 'new situations and new problems'.
The mainland made curbing inflation its top priority this year after inflation hit a near 12-year high of 8.7 per cent last month. However, with the unfolding global economic uncertainties induced by the United States subprime crisis, leaders have become more alert to offshore risks that could trigger an economic slowdown as the mainland became more integrated with the global economy.
Despite difficulties such as the slowing US economy and a falling US dollar, Mr Li said the mainland itself was a huge market that provided a buffer against external pressures.
At the same forum, Zhang Ping, the newly elected director of the National Reform and Development Commission, pledged to boost domestic consumption as a key driver of economic growth.
Ha Jiming, chief economist of China International Capital Corp, said the comments showed Beijing's determination to maintain economic stability.
'In the past several months, we heard a lot about tackling inflation, but now the top leaders are saying to find an appropriate balance between curbing inflation and economic development,' Mr Ha said.
The twin concerns of high interest rates and slowing global economic growth have triggered stock market falls as investors factor in reduced earnings for mainland companies.
Meanwhile, worries over tighter monetary policy have hit property prices, with declines seen in cities such as Shanghai and Guangzhou.
In the past six weeks, the Shanghai Composite Index has fallen 803.11 points or 17.46 per cent. Last month, home prices in Guangzhou dropped 0.1 per cent and Shenzhen 0.9 per cent.
Reflecting these concerns, National Statistics Bureau director Xie Fuzhan said over the weekend that the government would aim to stabilise the stock market and property sector.
His comment came as investors continued their calls for the government take measures to halt the stock market slump.
Investors are pinning their hopes on a cut in stamp duty after more new equity funds won regulatory approval.
Late last year, amid the peak of the market, the securities regulator suspended approvals of new funds to reduce capital inflows into the market. The suspension was in place for five months until last month.
However, Mr Ha said that the benefits of the stamp duty reduction would be short-lived if history was any guide, as investors would use the opportunity to sell out of the stock market.
In a complex world economy, China's fast and stable economic development
is important
Li Keqiang, vice-premier
