China’s policy toolbox well equipped to weather economic challenges, says Premier Li Keqiang in wake of Brexit
Beijing hopes to see a stable EU and Britain
China has policies prepared to help it weather bigger economic challenges ahead, Premier Li Keqiang said on Monday as he expressed hope for a stable Europe in the wake of Britain’s decision to leave the EU.
“Our policy toolbox is prepared to counter bigger challenges,” Li said, speaking during the World Economic Forum in Tianjin.
The so-called “Brexit” from the European Union had affected global financial markets and added uncertainties to the global economy, the premier said as he called for joint efforts to create a stable global environment and pledged to maintain ties with European countries.
“Europe is China’s important cooperative partner, and China will continue to devote itself to maintain and develop ties between China and Europe, between China and Britain,” Li said.
“We hope to see a united and stable European Union and a stable and prosperous Britain.”
The premier’s remarks were the latest comment from top Chinese officials after Britain voted in a referendum last week to leave the EU.
Leaders the world over have issued warnings about Brexit’s impact on financial markets after the results of the vote were finalised last Friday.
On Sunday, Finance Minister Lou Jiwei said Britain’s decision and the negotiations that would ensue as the country exits the EU would impact the world for years to come.
Lou also said the market had overreacted and needed to calm down. On Monday morning, the yuan depreciated to a five-year low.
Still, Li said China would be able to keep the renminbi exchange rate at a reasonable, balanced level.
The premier ruled out the possibility of long-term depreciation and vowed to implement a manageable floating exchange rate regime.
China’s economy remained stable in the second quarter despite falling exports, Li said. Gross domestic product rose 6.7 per cent in the first three months of the year.
“We hope that the market will remain calm and cool-headed in the face of short-term fluctuation in economic performance,” Li said.
“This is because China’s economy is set to realise stable growth as expected. Our policy choices will ensure economic growth at the medium and high speed.”
Overcapacity was a global challenge, the premier said, but China would act to eliminate such excess capacity.
There was much room for the central government to implement a proactive fiscal policy, he said, noting that the government debt ratio was now still relatively low at 16 per cent.
China had not used “strong stimulus” but would maintain stable policies with its prudent monetary and proactive fiscal stances, he added.