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Li Keqiang addresses the World Economic Forum in Tianjin. He failed to offer any new initiatives on the economy, leaving many participants disappointed. Photo: Xinhua

Li Keqiang leaves world business leaders disappointed at Tianjin economic forum

Premier fails to outline new initiatives to speed up economic growth in keynote address at Tianjin forum, despite clear signs of slowdown

Li Keqiang

Premier Li Keqiang failed to offer global business leaders any fresh solutions to the Chinese economy's slowing growth in his opening remarks at the World Economic Forum in Tianjin yesterday.

Li said the economy remained resilient despite clear signs of a slowdown in the past two months. And he disappointed his international audience by failing to offer any new ideas for dealing with a deepening property market slowdown or tackling funding bottlenecks for businesses.

Many participants left the conference room halfway through the opening ceremony, something rarely seen when a top government leader representing the world's second-largest economy speaks at a high-profile forum.

"This time Li failed to talk about detailed policy steps. Instead, he focused more on explaining reform measures that have already been decided," said Liu Shengjun, executive deputy director of the China Europe International Business School at the Lujiazui Institute of International Finance.

Hong Kong's Hang Seng Index fell 1.93 per cent yesterday, its biggest single-day drop since February, mainly on concerns that US interest rates might rise sooner than expected.

Market observers said the slide was also triggered by Li's comment on Tuesday during his meeting with global entrepreneurs, when he ruled out a drastic easing of credit supply despite M2 money supply growth falling to a five-month low last month.

Liu said he disagreed with the premier's reliance on the jobless rate to judge the health of the economy, warning that keeping the status quo might store up trouble for the future.

In his opening remarks, Li again stressed that employment was a policy priority, with stability achieved so far. He said the jobless rate had remained at about 5 per cent in 31 of the large and medium-sized cities in the first eight months of the year. More than 9.7 million new urban jobs were created between January and August, close to the annual target of 10 million.

However, Liu said: "The real risks are in the real economy. They come from the property sector, from the shadow banking system."

People's Bank of China research bureau chief economist Ma Jun told the Tianjin forum that investment in the property sector, a major source of downside risk for the economy, was likely to weaken further, although he said China should post "overall stable economic growth" this year.

Zhang Xiaoqiang, former deputy minister at the National Development and Reform Commission, said China's economic growth rate would slow to 7 per cent in the longer term as the government chases higher-quality growth. Gross domestic product grew 7.4 per cent year on year in the first half.

In his speech, the premier also stressed the need to boost innovation, accelerate the launch of a deposit-insurance system, and deepen financial and capital market reforms, without detailing any fresh initiatives.

 

This article appeared in the South China Morning Post print edition as: Li leaves world business leaders disappointed
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