China premier seeks to reassure markets with pledge of support for economy

Friday 28 March 2014 15.27
China has set a GDP growth target of around 7.5% for 2014
China has set a GDP growth target of around 7.5% for 2014

China's Premier Li Keqiang sought to reassure jittery global investors that Beijing was ready to support the cooling economy.

The Premier said his government had the necessary policies in place and would push ahead with infrastructure investment.

Recent weak economic data and mounting signs of financial risks have dimmed the outlook for the world's second-largest economy, sparking talk of imminent government action or even a mini-stimulus plan to shore up growth.

In a speech to a meeting in China's northeast made on Wednesday and reported by the Xinhua news agency today, Li said the government had policies well prepared and would roll out targeted measures step by step to aid the economy.

"We have gathered experience from successfully battling the economic downturn last year and we have policies in store to counter economic volatility for this year," Li said.

"We will launch relevant and forceful measures according to what we have planned in our government work report," he said, referring to his report to China's annual parliament session this month.

Among those measures are speeding up construction of basic infrastructure, including railways, highways and water conservation projects in the central and western provinces, as well as boosting trade and cutting companies' financing costs.

"The overall performance in the economy so far this year is relatively stable and we saw some positive changes, but we cannot neglect the increasing downward pressure and difficulties," he said.

State radio later quoted Li as saying that China's economic growth was still within a "reasonable range" as the job market remained stable and inflation was "better than expected.

"Whether we could safeguard relatively full employment is very important, but currently we see no apparent employment pressures," he was quoted as saying.

Li has said that China's economy must grow 7.2% annually to create 10 million jobs a year.

China's exports unexpectedly tumbled last month and other economic data and business sentiment surveys have consistently undershot expectations, suggesting the economy's first quarter performance was the weakest in five years.

Adding to market jitters are signs of financial strain - China's first ever bond default earlier this month, a bankruptcy of a small property developer and a run on small rural banks in one of China's coastal provinces earlier this week.(

While isolated and of limited scale, the events feed into growing sense of unease about risks stemming from a combination of a rapid rise in corporate debt and slowing economy.

But Li said the economy was robust enough to fend off potential risks. "We must also note that China's economy has quite strong tenacity and large wiggle room," he stated.

China has set a GDP growth target of around 7.5% for 2014, which some economists said could be too ambitious after a likely weak first quarter.

The government itself has said that the target is not fixed and that growth near that level would also be acceptable. However it has also pledged to boost employment, meaning that it must keep growth near the target or risk failing to meet its job promise.