News / Economy

China's Premier Pledges Support for Economy

FILE - Chinese Premier Li Keqiang.
FILE - Chinese Premier Li Keqiang.
Reuters
China's Premier Li Keqiang sought to reassure jittery global investors that Beijing was ready to support the cooling economy, saying the 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 outlook for the world's second-largest economy, sparking talk of imminent government action or even a mini-stimulus plan to shore up growth.
          
“They don't want investors and businesses to lose confidence. So obviously they want to make it clear they have the ability to step in if necessary. So I think that's probably the main point behind it,” said Julian Evans-Pritchard, China economist at Capital Economics in Singapore.
          
In a speech to a meeting in China's northeast made on Wednesday and reported by the Xinhua news agency early on Friday, Li said government has policies 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 added, referring to his report to China's annual parliament session earlier 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.
          
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.
          
Sense of unease
          
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.
          
However, 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 said.
          
Market reaction to Li's comments was muted, with only Hong Kong shares ticking up.
          
“The market reaction really hasn't been that great as these comments have been said many times before,” said Du Changchun, an analyst at Northeast Securities in Shanghai.
          
“No matter whether you look at industry performance or economic data, things aren't looking too optimistic. So even if he [Li] says this, unless we see some positive policies the market will not go up too much,” said Changchun.
          
China has set a GDP growth target of around 7.5 percent for 2014, which some economists said could be too ambitious after what data will likely show was a 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.
          
Other analysts said it is not easy for Beijing to turn on the stimulus taps, given an already acute overcapacity problem in some industries and the current government focus on putting structural reforms ahead of growth.
          
“Those measures Li mentioned were not new. It only means government will start work on projects that have already been approved,” said Xiao Bo, economist at Huarong Securities in Beijing.
          
“It's impossible for the government to unveil stimulus policies as we haven't solved the problems left over from the 4 trillion yuan spending,” he said, referring to China's big stimulus package unveiled in late 2008 in response to the global financial crisis.

You May Like

Hong Kong Democracy Calls Spread to Macau

Macau and Hong Kong are China’s two 'special administrative regions' which gives them a measure of autonomy More

After Nearly 2 Years, Pistorius Remains Elusive

Reporter Anita Powell reflects on her experience covering the Olympic athlete's murder trial More

Kenyan Coastal Town Struggles With Deadly June Attacks

Three months after al-Shabab militants allegedly attacked their town, some Mpeketoni residents are still bitter, question who was really behind the assaults More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Obama to Ramp Up Anti-Ebola Efforts in Africai
X
Luis Ramirez
September 15, 2014 11:01 PM
President Barack Obama on Tuesday will unveil his plan to ramp up efforts against the spread of the Ebola virus in Africa. VOA White House Correspondent Luis Ramirez reports.
Video

Video Obama to Ramp Up Anti-Ebola Efforts in Africa

President Barack Obama on Tuesday will unveil his plan to ramp up efforts against the spread of the Ebola virus in Africa. VOA White House Correspondent Luis Ramirez reports.
Video

Video West Trades Accusations Over Ransoms

As world leaders try to forge a common response to the threat posed by Islamic State militants in Iraq and Syria, there is simmering tension over differing policies on paying ransoms. In the past month, the jihadist group has beheaded two Americans and one Briton. Both countries refuse to pay ransom money. As Henry Ridgwell reports for VOA from London, there is uncertainty in the approach of some other European nations.
Video

Video Scotland Independence Bid Stokes Global Interest

The people of Scotland are preparing to vote on whether to become independent and break away from the rest of Britain, in a referendum being watched carefully in many other countries. Some see it as a risky experiment; while others hope a successful vote for independence might energize their own separatist demands. Foreign immigrants to Scotland have a front row seat for the vote. VOA’s Henry Ridgwell spoke to some of them in Edinburgh.
Video

Video Washington DC Mural Artists Help Beautify City

Like many cities, Washington has a graffiti problem. Buildings and homes, especially in low-income neighborhoods, are often targets of illegal artwork. But as we hear from VOA’s Julie Taboh, officials in the nation's capital have come up with an innovative program that uses the talents of local artists to beautify the city.
Video

Video US Muslim Leaders Condemn Islamic State

Leaders of America's Muslim community are condemning the violent extremism of the Islamic State group in Iraq and Syria. The U.S. Muslim leaders say militants are exploiting their faith in a failed effort to justify violent extremism. VOA correspondent Meredith Buel reports.
Video

Video Americans' Reaction Mixed on Obama Strategy for Islamic State Militants

President Barack Obama’s televised speech on how the United States plans to “degrade and destroy” the group known as the Islamic State reached a prime-time audience of millions. And it came as Americans appear more willing to embrace a bolder, tougher approach to foreign policy. VOA producer Katherine Gypson and reporter Jeff Seldin have this report from Washington.
Video

Video Authorities Allege LA Fashion Industry-Cartel Ties

U.S. officials say they have broken up crime rings that funneled tens of millions of dollars from Mexican drug cartels through fashion businesses in Los Angeles. Mike O'Sullivan reports that authorities announced nine arrests, as 1,000 law enforcement agents fanned out through the city on Wednesday.
Video

Video Bedouin Woman Runs Successful Business in Palestinian City

A Bedouin woman is breaking social taboos by running a successful vacation resort in the Palestinian town of Jericho. Bedouins are a sub-group of Arabs known for their semi-nomadic lifestyle. Zlatica Hoke says the resort in the West Bank's Jordan Valley is a model of success for women in the region.


Carnage and mayhem are part of daily life in northern Nigeria, the result of a terror campaign by the Islamist group Boko Haram. Fears are growing that Nigeria’s government may not know how to counter it, and may be making things worse. More

AppleAndroid

World Currencies

EUR
USD
0.7735
JPY
USD
107.03
GBP
USD
0.6155
CAD
USD
1.1011
INR
USD
60.954

Rates may not be current.