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China prepared to use stimulus to counter 'knife' of reform, says premier
Premier Li Keqiang compares Chinese structural reforms to "taking a knife to one’s own flesh", but says growth in world's second largest economy will remain strong
Li Keqiang told reporters in his annual press conference that China would face "considerable downward pressure" on growth this year Photo: EPA
By Szu Ping Chan
1:18PM GMT 15 Mar 2015
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China will use its arsenal of policy tools to ensure world's second largest economy stays on track to meet its 7pc growth target this year, the country's premier has said.
Li Keqiang told reporters in his annual press conference that China would face "considerable downward pressure" on growth this year, but that policymakers were determined to press on with their programme of structural reform.
"The government must strike a proper balance between maintaining steady growth and making structural adjustments," he said. “This is not nail clipping. This is like taking a knife to one’s own flesh."
Mr Li announced this month that the government had reduced China's growth target to "approximately seven percent", from 7.5pc in 2014. Referring to the concerns and worries about slow growth, he said: "We still have a host of policy instruments at our disposal.
Li Keqiang speaks at his annual news conference in Beijing, China (Photo: Getty)
"If our growth speed [starts to affect] the employment situation and people's incomes, we are prepared to step up targeted measures to boost market confidence while at the same time maintain continuity about our policies to anchor long term expectations.
"The good news is that in the past couple of years we did not resort to massive stimulus measures for economic growth. That has made it possible for us to have fairly ample room to pursue reforms."
China grew by 7.4pc in 2014 - which represents the slowest pace in nearly a quarter of a century. The International Monetary Fund believes China will grow by 6.8pc this year, and 6.3pc in 2016.
However, Mr Li said China had the capacity to weather any systemic or regional financial risks as banks had high capital buffers and a low level of non-performing loans. Official estimates show NPLs remain close to zero in China. However, analysis by Fathom Consulting last year showed the true number was closer to 20pc.
Premier Li Keqiang compares Chinese structural reforms to "taking a knife to one’s own flesh", but says growth in world's second largest economy will remain strong
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Li Keqiang told reporters in his annual press conference that China would face "considerable downward pressure" on growth this year Photo: EPA By Szu Ping Chan
1:18PM GMT 15 Mar 2015
Follow
Comment China will use its arsenal of policy tools to ensure world's second largest economy stays on track to meet its 7pc growth target this year, the country's premier has said.
Li Keqiang told reporters in his annual press conference that China would face "considerable downward pressure" on growth this year, but that policymakers were determined to press on with their programme of structural reform.
"The government must strike a proper balance between maintaining steady growth and making structural adjustments," he said. “This is not nail clipping. This is like taking a knife to one’s own flesh."
Mr Li announced this month that the government had reduced China's growth target to "approximately seven percent", from 7.5pc in 2014. Referring to the concerns and worries about slow growth, he said: "We still have a host of policy instruments at our disposal.
Li Keqiang speaks at his annual news conference in Beijing, China (Photo: Getty)
"If our growth speed [starts to affect] the employment situation and people's incomes, we are prepared to step up targeted measures to boost market confidence while at the same time maintain continuity about our policies to anchor long term expectations.
"The good news is that in the past couple of years we did not resort to massive stimulus measures for economic growth. That has made it possible for us to have fairly ample room to pursue reforms."
China grew by 7.4pc in 2014 - which represents the slowest pace in nearly a quarter of a century. The International Monetary Fund believes China will grow by 6.8pc this year, and 6.3pc in 2016.
However, Mr Li said China had the capacity to weather any systemic or regional financial risks as banks had high capital buffers and a low level of non-performing loans. Official estimates show NPLs remain close to zero in China. However, analysis by Fathom Consulting last year showed the true number was closer to 20pc.