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China can control risks, hit 2017 growth target - premier
June 27, 2017 / 3:24 AM / 4 months ago

China can control risks, hit 2017 growth target - premier

People walk past a logo at the World Economic Forum in Dalian, Liaoning province, China, June 27, 2017. Picture taken June 27, 2017. CNS/Yu Haiyang via REUTERS

DALIAN, China (Reuters) - China is capable of achieving its full-year growth target and controlling systemic risks despite challenges, Premier Li Keqiang said on Tuesday, adding that maintaining medium to high-speed long-term growth will not be easy.

Beijing targets economic growth of around 6.5 percent in 2017, compared with the 6.7 percent pace delivered in 2016 - the slowest in 26 years.

In a speech at the World Economic Forum (WEF) in the northeastern city of Dalian, Li said the Chinese economy remains steady in the second quarter, as domestic demand has become a key pillar for the world’s second-largest economy.

“China’s economy in the second-quarter maintained the first-quarter’s steady and improving momentum. We are fully capable of achieving the main economic targets for the full year,” Li said.

“Currently, China also faces many difficulties and challenges, but we are fully prepared,” he said.

China’s economy, which grew a robust 6.9 percent in the first quarter, generally remained on solid footing in May, but tighter monetary policy, a cooling housing market and slowing investment reinforced views that it will gradually lose momentum in coming months.

FINANCIAL RISKS

Beijing has been taking steps to identify and resolve financial risks, which remain generally under control, Li said.

Among those risks is high levels of debt, which recently prompted Moody’s to cut its sovereign credit rating on China. Li said that the capital adequacy ratios and provisions for bad loans at Chinese banks were at relatively high levels.

“There are indeed some risks in the financial sector, but we are able to uphold the bottom line of no systemic risks,” he said.

“We are fully capable of preventing various risks and making sure economic operations will be within a reasonable range.”

Chinese Premier Li Keqiang delivers an opening speech at the World Economic Forum in Dalian, Liaoning province, China June 27, 2017. CNS/Liu Zhen via REUTERS

Li also said Beijing will facilitate foreign investment by relaxing restrictions on how much overseas firms can own of China ventures and making it easier for them to register new companies locally.

China will give foreign investors greater market access to services and industrial sectors as well as treat foreign and domestic firms equally, the premier said - pledges that the government has made before.

He added that China will encourage foreign firms to reinvest their profits in the country but will not restrict the cross-border movement of their earnings.

Slideshow (2 Images)

DRIVING DEMAND

China is trying to bolster consumer-driven growth while curbing excess and outdated capacity in industries such as steel and coal, cuts that Li said will continue.

Li stressed the importance of job creation, and noted that while new technologies such as artificial intelligence and robotics could cause job losses, those are offset by growth sectors such as e-commerce, mobile payments and bike-sharing.

Employment has remained stable, Li said, with the survey-based jobless rate at around 4.9 percent in May – the lowest in many years.

China wants to maintain medium- to high-speed economic growth over the long term, as “no development is the biggest risk for China”, Li said, noting that the economy’s sheer size made it harder to rack up high growth rates.

“It will not be easy for China to sustain a medium- to high-speed growth rate over the long term,” he said.

Global markets continue to fret about the outlook for China as policymakers have tightened financial conditions and cracked down on wanton growth in debt to defuse bubble risks.

Authorities have also taken steps to stabilize the yuan currency and reassure investors that Beijing remains committed to reforms of the capital markets, even as it puts up curbs to stem the outflow of funds.

Reporting by Kevin Yao and Tony Munroe; Writing by Yawen Chen; Editing by Shri Navaratnam and Richard Borsuk

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