Growth focused on the long-term

Premier Li Keqiang took to the stage of the World Economic Forum in Tianjin last week to reassure investors anxious about China's economic growth outlook after signs of slowing industrial production and investment growth.

The premier said his keynote speech at the event, often called the summer Davos, in the northern port city that Beijing was focused on long-term expansion and was not worried about the possibility of a “hard landing” for the world’s second largest economy.

“We focused more on structural readjustment and other long-term problems, and refrained from being distracted by the slight short-term fluctuations of individual indicators.”

China’s August export growth slowed from July, although they still grew at a solid 9.4 per cent year-on-year.

Weak domestic demand and a continued decline in import prices led to a 2.4 per cent decline in August imports from a year earlier.

Data showing lower electricity consumption, freight volume and other indicators in July and August were “inevitable and within our expectation” as the international situation remained volatile, said Li, and the world should not focus on the short-term performance of the Chinese economy. “Rather one should look at the overall trend, the bigger picture and the total score.”

Chinese GDP was up 7.4 per cent in the first six months of the year, compared with an annual growth target of around 7.5 per cent for the full year.

“Judging by the principle of range-based macro-control, we believe the actual economic growth rate is within the proper range even if it is slightly higher or lower than the 7.5 per cent target,” Li said.

These comments about “a proper range” he has made before, and his message has tended to be that maintaining stable growth was key to ensuring employment growth.

“The measures we have taken are good both for now and for longer-term interests, and will therefore enable us to prevent major fluctuations and make a ‘hard landing’ even less possible.”

He reiterated the leadership's commitment to pushing ahead interest-rate and exchange-rate liberalisation, and said China would accelerate the development of a deposit-insurance system.

Li said he wants millions of Chinese to start small businesses, adding that the government has cut taxes by 250 billion yuan (€31.5bn).

The premier promising to open China more to outside investment and encourage innovation.

“We will keep our policies on foreign capital stable and improve and standardise the business environment to attract more foreign businesses and investment, and draw upon and adopt the advanced technologies, mature managerial expertise and fine cultural achievements of other countries.”