Sat, Mar 16, 2019 - Page 10 News List

China ready to help economy: premier

‘DOWNWARD PRESSURE’:Li Keqiang reiterated that the government should not flood the economy with new stimulus measures as was done in the past


Chinese Premier Li Keqiang speaks during a news conference at the Great Hall of the People in Beijing yesterday.

Photo: Bloomberg

China would not let the world’s second-largest economy “slip out of a reasonable range,” Chinese Premier Li Keqiang (李克強) said yesterday, as he pledged support in the face of “new downward pressure.”

Leaders are ready to cut interest rates and further open up the vast economy, he said, after data showed industrial output softened during the first two months of the year to a multi-year low, while the crucial unemployment rate rose.

The figures were the latest in a string of indicators pointing to an extended slowdown, with Beijing feeling the effects of a painful trade dispute with the US.

“The Chinese economy has indeed encountered new downward pressure, while the global economy is slowing down,” Li said at the end of the annual session of the Chinese National People’s Congress.

He renewed his call not to flood the economy with new stimulus measures as in past downturns and instead advocated doubling down on market economics to “hold off downward pressure.”

“Government reform should be to better allow the market to play a decisive role in allocating resources, that is, focus on the market and not give the market orders,” he said.

The Chinese stock market closed higher, with the Shanghai Composite Index up 1 percent at 3,021.75, while the blue-chip CSI300 index was up 1.3 percent. The smaller Shenzhen Composite Index ended up 1.4 percent and the ChiNext Composite Index start-up board was higher by 0.8 percent.

Last week, Li laid out a lower growth target of 6 to 6.5 percent this year, from 6.6 percent growth last year, which was already the slowest pace for almost three decades.

Policymakers huddled in Beijing have talked up plans to support the economy, announcing billions of US dollars in tax cuts, fee reductions and financing support for small businesses.

The plan to cut value-added tax for manufacturers — which would help the struggling sector — would take effect on April 1, with social insurance fee reductions coming May 1, Li said.

“We face many uncertainties this year, so we have to take more preparations, and we have policy space,” Li said.

He said that maintaining growth would ensure that employment remains stable.

China’s normally steady unemployment rate rose to 5.3 percent last month, from 4.9 percent in December last year.

China must “prevent a tide of unemployment,” Li said.

China could use tools such as lowering interest rates and reducing the amount of cash banks must keep in reserve to support growth, he said.

Last year, China lowered banks’ reserve requirement ratios five times to release more funding into the economy and further cuts are expected this year.

Beijing is counting on its millions of consumers and renewed investment to stabilize the economy as slowing global growth and a trade dispute with the US hit its export machine.

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