Chinese President Xi Jinping (習近平) said the nation needs to adapt to a “new normal” in the pace of economic growth and remain “cool-minded” amid a growth slowdown.
China’s growth fundamentals have not changed and the country is still in a “significant period of strategic opportunity,” Xi said, according to a Xinhua news agency report on the central government Web site late on Saturday.
At the same time, the government must prevent risks and take “timely countermeasures to reduce potential negative effects,” he said.
China’s policymakers are trying to keep economic expansion from slipping below Chinese Premier Li Keqiang’s (李克強) target for this year of about 7.5 percent, while reining in a credit boom that a central bank official said threatens to undermine the financial system.
Beijing has so far limited its support to tax breaks and speeding up infrastructure and social housing investment, with Li saying previously that the focus remains on the quality of growth and on changing the structure of the economy.
The government will continue to balance the relationship between economic expansion, reform, restructuring, improving people’s well-being and preventing risks to ensure sound economic growth and social stability, Xi said during an inspection tour to the central province of Henan on Friday and Saturday, Xinhua said.
“We must boost our confidence, adapt to the new normal condition based on the characteristics of China’s economic growth in the current phase and stay cool-minded,” he said.
China’s benchmark Shanghai Composite Index of stocks has dropped 5 percent this year on concern that growth is slowing. A measure of industrial companies in the CSI 300 gauge has slumped 12 percent, and fell as much as 1 percent on May 9 to the lowest level since November 2008.
GDP increased 7.4 percent in the first quarter, the least since 2012, and is forecast to expand 7.3 percent this year, the weakest pace since 1990, based on the median estimate in a Bloomberg survey last month.
Li said last month the government will not adopt “short-term and strong stimulus policies in response to temporary fluctuations in the economy.”
People’s Bank of China Governor Zhou Xiaochuan (周小川) reiterated that stance on Saturday at a conference in Beijing, according to a report of his comments posted on the sina.com Web site.
Zhou told a closed-door session of the forum that the central bank is always fine-tuning its policies and some of that is invisible to the market, the report said.
Zhou was responding to a question about whether a cut in banks’ reserve requirement ratio is imminent, it said.
Meanwhile, government efforts to curb dangers posed by a surge in shadow banking risk exacerbating the economic slowdown. Any crackdown on interbank borrowing and wealth management products would withdraw liquidity that has funded speculative investment, leading to bankruptcies and defaults.
Bank Deputy Governor Liu Shiyu (劉士餘) said on Saturday that shadow banking threatens to undermine the financial system and called for tougher rules to control an industry that has driven up borrowing costs and done little to support the economy and productivity.
Shadow finance has created a “gambling” mindset, as money lured by higher returns is channeled into short-term investments, Liu said at a conference in Beijing.