Premier Li Keqiang has ruled out using quantitative easing as a policy to help stimulate growth in the world's second-largest economy, instead pledging reform and more entrepreneurship. During his speech to the World Economic Forum yesterday in Dalian , Liaoning province, Li said quantitative easing alone could not solve structural problems in economic growth and it would lead to negative and spillover effects. WATCH: China's Li Keqiang seeks to quell market fears It was not the first time he had dismissed the possibility of strong stimulus, but his remarks, in the wake of the release of headline inflation figures, dashed hopes for an immediate move to reinvigorate the economy and signalled the leadership would stick to the long road to address imbalances. Stock markets in the United States and across Asia rose on Wednesday on expectations that China might announce a new round of stimulus measures but the gains were wiped out yesterday. Hong Kong's Hang Seng Index fell 2.57 per cent, reversing a 4.1 per cent gain on Wednesday. The Shanghai Composite Index closed down 1.39 per cent following the previous day's 2.44 per cent rise. "There are still many tools in China's macro-economic policy toolbox, just like playing Go," Li said, referring to the ancient Chinese game. The government was taking necessary and precise measures "aimed at narrowing short-term economic volatility and preventing it from spreading and exacerbating". "Once there are signs the economy has slipped beyond the proper range, we will have sufficient ability to address risks. China won't see a hard landing in its economy," he said. Earlier, the National Bureau of Statistics released a mixed price data report that showed the consumer price index rose 2 per cent last month, year on year, beating market expectations. The negative real interest rate - when inflation is greater than the nominal interest rate - will continue. Bureau data also showed the producer price index fell at its fastest monthly clip in six years, at 5.9 per cent, indicating lingering pressure of overcapacity and insufficient demand. Higher or lower economic growth was acceptable as long as employment and residential income remained strong and environmental protection efforts improved, Li said. The government had refrained from flooding the system with money but instead relied on reforms to offset slower economic growth, he said, adding measures had already started to take effect. Fu Bingtao, an economist at the Agricultural Bank of China, said the government was less worried about short-term indicators and more concerned the broader situation was within its expectations. "It doesn't matter whether GDP slows to 6.8 per cent or 6.5 per cent. The key is at which level the economy would stabilise. We care about long-term performance, such as the progress of structural changes and whether risks can be controlled," Fu said. The government's target for 2015 growth is 7 per cent. Lin Boqiang, dean of the China Institute for Studies in Energy Policy, said on the forum sidelines that the biggest challenge was to ensure economic reforms continued to move forward, although the speed of progress might slow as the government needed to stabilise growth. The ability of local governments to help bolster the economy would remain limited as they were heavily encumbered by debt, Lin said. They were expecting Beijing to step up infrastructure spending in the short term to breathe life into the economy and help enterprises maintain profits. Li also said the government would open the domestic currency market to overseas monetary authorities, allowing them to buy or sell through the interbank mechanism. Beijing would also establish a cross-border yuan payment system by year's end. "The arrangement indicates Beijing's resolution to respect market forces to decide the yuan's exchange rate and attract more foreign agencies to participate in the yuan's central parity formation," Fu said. Huang Yiping, a member of the monetary policy committee of China's central bank, said there was no need to be too concerned about the yuan's value. It was more important to ensure the renminbi targeted a basket of currencies instead of returning to the US dollar peg.