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10-04-2014, 11:13 PM
Beijing set for target without stimulus: Li
SCOTT MURDOCH THE AUSTRALIAN APRIL 11, 2014 12:00AM
CHINESE Premier Li Keqiang has ruled out a major fiscal stimulus program to cover short-term economic volatility, despite the nation recording a dramatic trade slump.
In a speech to the Boao Forum for Asia, Mr Li said China was performing well compared with the rest of the world, and was on track to achieve its 7.5 per cent official growth target this year.
China’s economy, the second-largest in the world, grew by 7.7 per cent last year but the expansion rate was the slowest in 14 years.
A growing number of economists believe China could miss its growth target this year, which would be the first time in 25 years that the objective was not met.
Last week, the government delivered a mini-stimulus to some parts of the economy to maintain growth, with tax cuts to small and medium-sized enterprises and increased railway investment.
However, Mr Li ruled out a broader stimulus package.
“We will not take, in response to momentary fluctuations in economic growth, short-term and forceful stimulus measures,” he said. “We will instead focus more on healthy development in the medium to long-term.
“We have set our annual economic growth target at about 7.5 per cent. As it is an approximate figure, it means there will be fluctuations.”
In the speech to the influential forum, Mr Li said China could survive growth of less than 7.5 per cent but the government was committed to reaching the target.
“It does not matter that economic growth is a little bit higher than 7.5 per cent, or a little bit lower,’’ he said. “As long as we can ensure relatively sufficient employment and do not have relatively big fluctuations, then economic growth will still be in a reasonable range.”
Mr Li said that despite signs of an economic slowdown, he believed the nation was well placed and performing solidly.
“With all the principles established and policy options at our disposal, we can handle all possible risks and challenges,’’ he said. “China’s development has strong resilience.”
Financial markets were surprised yesterday after the National Bureau of Customs revealed that March exports had dropped by 6.6 per cent, year on year, which was much worse than expected.
The majority of economists had forecast an increase of at least 4.4 per cent. Imports were down 11.4 per cent on a year earlier, compared with a projected 2.8 per cent increase.
The sudden decline was blamed on the People’s Bank of China tightening financing, reducing the amount of credit available in the economy.
ANZ’s chief China economist Liu Li-Gang said that the weak trade performance could also be blamed on the renminbi’s recent depreciation against the US dollar.
“The RMB’s depreciation will be short-lived if there is no fundamental change to the one-way capital flows that are under way, especially when China still has a very sizeable current account surplus,” he said.
SCOTT MURDOCH THE AUSTRALIAN APRIL 11, 2014 12:00AM
CHINESE Premier Li Keqiang has ruled out a major fiscal stimulus program to cover short-term economic volatility, despite the nation recording a dramatic trade slump.
In a speech to the Boao Forum for Asia, Mr Li said China was performing well compared with the rest of the world, and was on track to achieve its 7.5 per cent official growth target this year.
China’s economy, the second-largest in the world, grew by 7.7 per cent last year but the expansion rate was the slowest in 14 years.
A growing number of economists believe China could miss its growth target this year, which would be the first time in 25 years that the objective was not met.
Last week, the government delivered a mini-stimulus to some parts of the economy to maintain growth, with tax cuts to small and medium-sized enterprises and increased railway investment.
However, Mr Li ruled out a broader stimulus package.
“We will not take, in response to momentary fluctuations in economic growth, short-term and forceful stimulus measures,” he said. “We will instead focus more on healthy development in the medium to long-term.
“We have set our annual economic growth target at about 7.5 per cent. As it is an approximate figure, it means there will be fluctuations.”
In the speech to the influential forum, Mr Li said China could survive growth of less than 7.5 per cent but the government was committed to reaching the target.
“It does not matter that economic growth is a little bit higher than 7.5 per cent, or a little bit lower,’’ he said. “As long as we can ensure relatively sufficient employment and do not have relatively big fluctuations, then economic growth will still be in a reasonable range.”
Mr Li said that despite signs of an economic slowdown, he believed the nation was well placed and performing solidly.
“With all the principles established and policy options at our disposal, we can handle all possible risks and challenges,’’ he said. “China’s development has strong resilience.”
Financial markets were surprised yesterday after the National Bureau of Customs revealed that March exports had dropped by 6.6 per cent, year on year, which was much worse than expected.
The majority of economists had forecast an increase of at least 4.4 per cent. Imports were down 11.4 per cent on a year earlier, compared with a projected 2.8 per cent increase.
The sudden decline was blamed on the People’s Bank of China tightening financing, reducing the amount of credit available in the economy.
ANZ’s chief China economist Liu Li-Gang said that the weak trade performance could also be blamed on the renminbi’s recent depreciation against the US dollar.
“The RMB’s depreciation will be short-lived if there is no fundamental change to the one-way capital flows that are under way, especially when China still has a very sizeable current account surplus,” he said.