BEIJING–Despite a slight economic slowdown, China still has a string of policy tools at the government’s disposal to bolster economic growth, aiming to achieve a better-quality economic development, Premier Li Keqiang said here Sunday.
It is “by no means easy” to achieve this year’s target of registering an economic growth at around 7 percent, as, with the expansion of the economy, a 7-percent increase in the Chinese economy is equivalent to the total size of a medium-sized economy, Li said at a press conference after the conclusion of China’s annual parliamentary session.
China’s gross domestic product (GDP) expanded 7.4 percent last year, its slowest pace since 1990, as it expanded to 63.65 trillion yuan (10.3 trillion U.S. dollars), making it second only to the United States.
The government-set economic growth goal for this year was 0.5 percentage point lower than that of 2014, triggering worries that the Chinese economy might slide further, as some major economies are confronted with anemic economic growth and deflation risks.
The government usually announces its annual growth target when the government work report is unveiled to national lawmakers. The growth target is not only seen as an official barometer of Chinese economy, but also sheds further light on how China plans to expand its economy.
Li used this press conference to beef up investors’ confidence in the world’s second largest economy.
In the “new normal” era, China needs to ensure its economic growth operate within an appropriate range, he said.
If China’s economic growth speed comes close to somewhere lower in the proper range to affect the employment rate and the increase of income, he said, “we will be prepared to step up our targeted macro-economic measures to boost the confidence.”
Li reiterated that China will maintain the continuity of macro-economic policies to stabilize long-term market expectations.
“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 exercise macro-economic regulation, and we still have a host of policy instruments at our disposal,” he said.
China is sticking to the combination of a proactive fiscal policy and prudent monetary policy to balance steady growth and ongoing economic restructuring, experts said.
The M2 money supply, a broad measure of money supply that covers cash in circulation and all deposits, is forecast to grow by around 12 percent in 2015, “but the actual supply may be slightly higher than this projection depending on the needs of economic development,” according to the government work report delivered by Li to national lawmakers at the opening of the annual parliamentary session.
China has cut the benchmark interest rates twice and dropped the reserve requirement ratio for banks over the past four months. Some analysts believe more easing moves may be rolled out if necessary.
To shore up growth, the Chinese government also plans to raise the fiscal deficit target for 2015 to 1.62 trillion yuan. That would be 2.3 percent of GDP, up from 2.1 percent in 2014.
“Our proactive fiscal policy must sustain the momentum of economic growth and increase economic returns,” the report said..
On the property sector that is important to China’s economic growth and local authorities’ fiscal revenues, Li said the government encourages people to buy homes for their personal use or buy second homes, hoping to see steady and sound growth of China’s real estate market in the long run.
Li also pledged efforts to be made on improving the quality of economic development to make China’s growth more sustainable.
“We want to further upgrade China’s economy to a medium-high-level of development and maintain China’s economic growth at a medium-high speed,” Li said.
“We want to pursue a growth that has improved quality and performance. This will help lay a more solid foundation for us to achieve modernization. It will also be China’s contribution to global economic growth,” he said.
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Special coverage on China's Two Party Sessions by The Daily Mail - People's Daily