China is prepared to take action to stimulate the economy and boost market
confidence, Premier Li Keqiang said in Beijing yesterday.
李克强昨日在北京表示，中国准备好采取措施刺激经济，提振市场信心。 Mr Li gave his assurance while warning that China
would struggle to meet its annual growth target of “around 7 per cent” this
The premier’s pledge will be welcomed as evidence of willingness to support
growth amid signs the country’s slowdown is worsening.
The government has already lowered its target for gross domestic product from
last year’s goal of “around 7.5 per cent” after a 7.4 per cent expansion in 2014
— the slowest rate since 1990.
“It is true we have adjusted down somewhat our GDP target, but it will by no
means be easy for us to reach this target.” Mr Li told reporters in the Great
Hall of the People after the annual parliamentary session. “China’s economy has
already exceeded $10tn so a 7 per cent increase is equivalent to the entire
economy of a medium-sized country.”
As well as a slowdown in headline growth, many investors and government
officials worry about the worsening slump in the crucial property sector and the
huge accumulation of debt in recent years. China’s overall debt load reached 282
per cent of GDP by the middle of last year, a higher proportion than either the
US or Germany, according to estimates from McKinsey consultants.
Even more worrying is the speed at which it has grown, as total debt has
quadrupled in seven years to about $28tn, from $7tn in 2007.
Mr Li said the government had a “host of policy instruments” at its disposal and
would not hesitate to use them if the slowdown caused widespread unemployment or
Government officials have been saying recently that a “new normal” of slower
growth is desirable as they seek to wean the economy off its dependence on
debt-financed investment and try to clean up the environment — provided job
creation targets are met.
“Under this ‘new normal’ state, we need to ensure that China’s economy operates
within a proper range,” Mr Li told yesterday’s press conference. “If our growth
speed comes close to the lower limit of its proper range and affects the
employment and increase of people’s incomes, we are prepared to step up targeted
macroeconomic regulation to boost market confidence.”
The premier did not specify what the economy’s “lower limit” was, and did not
elaborate on what shape any targeted measures might take.