China’s premier admits nation faces tough economic road ahead
Uncertainties at global level pose challenges at home, Li Keqiang tells State Council but ‘solutions always outnumber difficulties’
Chinese Premier Li Keqiang admitted the nation faced a daunting task in keeping up economic growth, citing uncertainties at the global level.
Chairing a State Council meeting on Friday, Li noted international institutions continued to lower their forecasts.
“We must closely monitor the situation and make preparations for our solutions as early as possible,” the premier was quoted by China Central Television as saying. “The government has to ensure the measures will become effective.”
Li also said the government must pay close attention to related public concerns and stabilise market expectations. The mainland’s stock markets shed trillions of US dollars in capitalisation over the summer, and continued to take a battering into the new year. The yuan dropped 1.5 per cent in the first week of January.
Separately, the central bank announced it would extend a trial scheme giving companies greater freedom in raising cross-border yuan or foreign currency financing, which would help reduce the cost of doing business. The scheme now operating in Shanghai’s free-trade zone would be applied to the new economic areas in Guangdong and Fujian provinces, as well as Tianjin, it said.
Borrowing from offshore banks and institutions allows companies to save on interest payments through lower lending rates abroad.
The mainland economy expanded 6.9 per cent in 2015, the slowest pace in 25 years amid weaker external demand and declining business activity at home.
The weaker yuan and sluggish domestic stock market exacerbated bearish sentiment about the world’s second-largest economy, which has been plagued by debt woes at the local government level and overcapacity in certain heavy industries.
Li’s remarks were a fresh sign that the leadership anticipated difficulties ahead despite efforts to shift the economy away from a reliance on massive asset investment and high export volumes to a “new normal” buoyed by consumer spending.
The premier urged ministers to foster a new growth engine and said the government would meticulously assess potential risks ahead.
He pledged to stabilise export growth, stop profit decline in the manufacturing sector and deepen reforms of major state-owned companies through fiscal and monetary policies.
“Solutions always outnumber difficulties,” he said. “[We will] deploy substantial measures that deliver results.”
The State Council has drawn up drafts of the government report for the 13th five-year plan, which Li would present at the annual session of the National People’s Congress in March.
Li said the cabinet would seek opinions on the drafts from local governments and other agencies.
The cabinet led by Li has been focusing on bolstering small and medium-sized businesses, encouraging them to move their products and services up the value chain.
