Beijing (AFP) – The Chinese government has more weapons in its arsenal to boost the world’s second-largest economy, Premier Li Keqiang said Sunday as he sought to ease concerns about flagging growth.
Li earlier this month reduced China’s annual growth target to “approximately seven percent”, the lowest since a similar goal in 2004. The economy expanded 7.4 percent last year, the slowest pace in nearly a quarter of a century.
Fears are growing that Chinese expansion, a key driver of the global economy, may slow further after official data released last week showed production, consumption and investment growth all fell to multi-year lows.
Authorities have so far avoided big-ticket incentives to bolster growth like the unprecedented four-trillion-yuan (now $640 billion) stimulus package Beijing deployed at the height of the global financial crisis.
But Li signalled that more measures could be taken, telling reporters at his annual press conference: “We still have a host of policy instruments at our disposal.”
Beijing was prepared to “step up our targeted macro-economic regulation” to boost market confidence if growth slowed to approach the “lower limit of our proper range” and threatened employment and incomes.
“The good news is that in the past couple of years we did not resort to massive stimulus measures for economic growth,” he said after the close of the country’s Communist-controlled National People’s Congress legislature.
That gave authorities “fairly ample room” to act, he said.
Top Chinese leaders have said the economy is in a delicate transition away from decades of double-digit annual growth to a new, slower model that authorities say is more sustainable, a stage that they have branded as “new normal”.
– Still behind –
Li dismissed theories that China’s boom has seen it overtake the US to become the world’s number one economy, describing such purchasing power parity calculations as a “misleading exaggeration”.
“According to authoritative standards, China is still the second-largest economy in the world,” he said, stressing that it remained “behind about 80 countries in the world” in terms of per capita GDP.
He recalled a recent visit he paid to two rural families in the nation’s remote and backward west, where he met a man in his 40s who could not afford to marry and a college student who depended on his younger sister’s income as a migrant worker in the cities to pay his tuition fees.
“It truly pains me to see our people living in such distress and I’m sure that there are many more such families in the vast land of China,” he said, adding nearly 200 million Chinese remained in poverty by World Bank standards.
“China is still a developing country in every sense of this term.”
Underlining official concerns over the economy, the central People’s Bank of China cut benchmark deposit and lending interest rates in late February for the second time in three months, citing “historically low inflation”.
Consumer inflation fell in January to a more-than-five-year low of 0.8 percent. It rebounded to 1.4 percent last month during the Chinese New Year holiday but remained far below this year’s government target of “around three percent”.
Li denied accusations that China was “exporting deflation” and blamed falling prices for commodities such as crude oil and iron ore for the drop in the value of imports. The country bought increased amounts of such goods last year, he said.
“We are prepared to cope with such a situation and at the same time what we hope more to see is that there will be a quicker global economic recovery and the global economy will regain its momentum of robust growth,” he said.
Original Article: China has ‘ample’ room for economic stimulus: premier