BEIJING, July 17: China’s Premier Li Keqiang won’t rush into changing his policy of pushing reform as long as growth stays within the official comfort zone, but he has also signalled he is aware the government needs to be vigilant about a sharper slowdown.
The government is able to achieve key economic tasks for this year, state television quoted Li as saying late on Tuesday, reinforcing the official view that a 7.5 percent annual economic growth target remains achievable.
Li’s remarks, a restatement of his view that reform has to take precedence over growth figures to put the economy on a more sustainable footing and wean it off a reliance on exports and investment, come amid a slowdown in China that has raised questions over government plans.
‘Neither should we change policy orientation due to temporary economic fluctuations, which may affect the hard-won restructuring opportunity, nor should we lack vigilance and preparations when the economy might slide below the reasonable range,’ Li was quoted as saying.
China’s annual gross domestic product growth slowed to 7.5 percent in the second quarter from 7.7 percent in the previous quarter – putting pressure on Beijing to quicken reforms rather than slow them to take up the economic slack.
Analysts have steadily cut their forecasts this year for China’s growth as data consistently comes in weaker than expected and government officials have talked of slowing growth. They mostly forecast 2013 growth between 7 and 7.5 percent.
There has also been some confusion over where the government’s bottom line on growth might be, after Finance Minister Lou Jiwei was reported by the official Xinhua news agency on Friday as saying the 2013 target was 7 percent.
However, the Xinhua report was later changed to show Lou said 7.5 percent, and in recent days a number of officials have expressed confidence that the target will be met.
‘We think (Li’s remarks) mean that the macro-economic policy stance will be kept unchanged near term, but at micro-levels, there will be more pro-growth efforts,’ said Li Wei, China economist at Standard Charted Bank in Shanghai.
‘Indeed we already noticed that, over the past three weeks, the government has geared up its support for urban low-quality housing reconstruction, SME financing, Lushan post-quake rebuilding, energy saving, environmental protection, IT, photovoltaic industries,’ he said.
The commerce ministry said on Wednesday that it would soon release measures to support exports and imports, though it did not give specific details. Exports fell in June for the first time in 17 months.
Li reiterated that the government would safeguard the ‘lower limits’ for economic growth and employment while keeping a lid on inflation.
The government should focus on market-based reforms to revitalise the economy as long as growth stays within a ‘reasonable range’, Li said without elaborating.
Many analysts believe the government will step in to support the economy if year-on-year growth slips in a quarter to 7 percent.
(AGENCIES)
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