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Economic growth ‘in proper range’
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PREMIER Li Keqiang reassured the world yesterday that China’s economic growth is in the “proper range” and the country has no plans to allow its currency to decline further.
Speaking at a meeting of the World economic Forum in the northeastern city of Dalian, Li said China will stick to plans for market-opening reforms despite recent “fluctuations” in economic performance.
“The underlying trend of the economy is still moving in a positive direction,” the premier said.
“The government took measures to stabilize the market and prevent risks from spreading, we have forced out the possibility of any systemic risks,” Li said.
A run of soft economic data combined with China’s surprise devaluation of the yuan and wild swings in Chinese stock prices rattled markets around the world.
“There has been overall stability in China’s economic performance in spite of a certain amount of moderation,” Li said. “There’s an overall positive trend in spite of difficulties we face.”
He said the government would “fine tune” its policies to provide more support.
Pointing to data showing more than 7 million urban jobs were created in the first half of the year, he said “all this shows the Chinese economy has been running within the proper range.”
Li announced no new initiatives but touched on a wide range of issues that are sensitive for foreign investors in a clear attempt to assure them business conditions would remain stable.
The nation’s economy has cooled steadily over the past two years as the government tries to steer it to more self-sustaining growth based on domestic consumption instead of exports and investment. But foreign concerns about a possible “hard landing” spiked after trade and factory activity fell in July and August.
Li said current growth, forecast by the government at about 7 percent for the full year, is acceptable so long as it generates enough jobs.
He said China has no further plans to allow its yuan to decline in value following the August 11 devaluation.
Chinese authorities said the change was aimed at making the yuan’s state-set exchange rate more market-oriented.
Li said “continuous depreciation” would hurt Chinese exporters by causing foreign customers to postpone orders. He said exporters told him they want stable exchange rates. “We don’t wish to boost our exports by devaluing the Chinese currency,” he said. “Still less do we want to see a ‘currency war.’ As the Chinese economy has become so closely integrated with the global economy, such a currency war would bring more harm than any possible gains to China.”
Li also tried to reassure investors that recent economic turmoil would not disrupt progress in carrying out pledges to open more of the state-dominated economy to private and foreign companies.
“The direction is for China to open wider to receive more foreign direct investment and to open more areas to foreign investors,” he said.
China plans to let its currency trade freely, he added, though he gave no time frame. A growing amount of Chinese trade is settled in yuan but the government still determines the exchange rate and restricts the flow of money in and out of the mainland.
“It needs to be a process determined by the market,” the premier said. “will take some time, in keeping with the actual situation of China’s economic conditions. But we will press ahead with steps to achieve full convertibility under the current and capital accounts.”
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