Chinese economy faces big slowdown, admits Premier Li

Admitting that China’s economy is facing considerable downward pressures due to the slowdown, Premier Li Keqiang on Sunday said the new GDP target of around 7 per cent set for this year is not easy to meet but the government has host of policy to halt the slide.

“This year we set the anticipated GDP target approximately 7 per cent. It is true that we have adjusted downward our GDP target but it will by no means easy for us to meet this target,” he said at his annual press conference at the end of the 10-day meeting of the legislature, the National People’s Congress (NPC).

China registered 7.4 per cent growth last year, slowest in 24 years. A recent IMF forecast said China’s growth rate would further decline to 6.8 this year and 6.3 next year. Li said because China’s economic aggregate is expanding it size now is valued at about $10 trillion which is equivalent to the total economy of a medium sized country.

“I recognise that there is considerable downward pressure on China’s economic growth and we still face multiple challenges. This requires that the government must strike a proper balance between maintaining steady growth and making structural adjustments,” he said.

Referring to the concerns and worries about slow growth in China, he said, “we must ensure Chinese economy operate within a proper range”. “If our growth speed comes close to lower limit of the proper range of economic operation and affects the employment situation and people’s livelihood incomes, we are prepared to step up targeted macro-economic regulation to boost the current market confidence while at the same time maintain continuity about our microeconomic policies to anchor long term market expectation,” he said. 

“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 economic regulation and we still have host of policy instruments at our disposal,” he said.

Likening the required policies to halt the slowdown to Chinese chess game, Li said that his government needs to get the key moves right.

“When it comes to Chinese economy we must meet both ends of maintaining steady growth and making structural adjustments,” he said. “We want to further upgrade the Chinese economy to medium high level of development and maintain balance economic growth at a medium high speed. We want pursue growth that has improved quality and performance,” he said, adding this will help lay solid foundation for China to achieve modernisation and make a contribution to global economic growth. 

“This way we will be able to get a handle on the big situation. This requires that we need to have vision perseverance and courage. I have confidence with joint efforts we are able to maintain the long term positive fundamentals of the overall Chinese economy,” he said.

About the real estate which is blamed for slowdown, he said it will have “steady and sound growth in the long run.” He said the government encourages people to buy homes for their personal use or buy second homes.

China is still a large developing country. Housing is not just an economic issue, but also one that concerns people’s livelihood, he said. The Chinese government needs to meet the basic housing needs of low-income people in China, Li said.