Is China heading for a hard landing? No way, says Premier
Li Keqiang says that despite domestic and external risks, economy can meet this year’s 6.5% growth target
Premier Li Keqiang said on Wednesday that forecasts of a hard landing for the world’s second-largest economy should stop, though domestic and external risks remain and meeting the target of 6.5% growth for this year won’t be easy.
“Almost every year I have heard a prediction of the Chinese economy having a hard landing,” Li said at his news conference at the end of the annual meeting of China’s parliament.
“But I believe that our economic performance in the past several years…should suffice to put a full stop to such prophecies of a hard landing.”
China has cut its economic growth target this year to around 6.5% from its 2016 goal of 6.5 to 7%, while pushing through reforms to tackle rising debt and reduce financial risks.
“As for the projected target of GDP growth this year at about 6.5%, I have read some foreign media describing it as a move by the Chinese government for moderate downward adjustment of GDP growth,” Li said.
“I should point out that 6.5% growth is not a low speed and will not be easy for us to meet.”
China’s gross domestic product grew 6.7% last year, supported by record bank loans, a speculative housing boom and billions in government investment.
Looking ahead, the head of a government research center said the risk of a steep slide in China’s economy has reduced, adding that the country had moved through an “L-shaped” pattern of slowing to now “horizontal” growth.
But China continues to pump large amounts of credit into the economy, with bank lending this January the second highest on record and new credit not slowing as much as expected in February.
Li said the economy faced risks this year, but the country had many policy tools to cope with them.
“We need to take very seriously the risks we are facing on the domestic front, especially in the financial sector…We will take prompt and targeted measures to prevent them from further spreading,” Li said.
“China’s financial system is generally stable and there are no systemic risks. We still have a good reserve of policy options and instruments at our disposal.”