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China’s economic development ‘steady’, Premier says

Updated: Jul 8,2017 4:15 PM Beijing News

Premier Li Keqiang on July 6 hosted a meeting with experts and entrepreneurs on current economic performance and suggestions about future economic work.

The Premier affirmed the country’s stable economic performance with good momentum in the first quarter, and dispelled worries about whether the momentum can be sustained in the second quarter.

The stable growth is not only reflected in GDP, but also in employment, he said.

“Sufficient employment, increasing income and continuously improving environment can prove the economy is running at a reasonable range,” the Premier said.

In the second quarter of the year, the unemployment rate for 31 major cities is higher than that of the first quarter, as well as the same period last year.

Meanwhile, China’s economic structure is optimizing, the Premier said.

“In the first half, we continued to deepen reforms and push structural adjustments under proactive fiscal policy and prudent monetary policy,” he said.

Key economic data show consumption has become the major growth driver, contributing 77.2 percent to GDP growth in the first quarter from 47 percent in 2013.

Added value in the service sector accounted for more than half of GDP, and the proportion is still increasing, which is a very profound change amid economic transformation, said the Premier.

New driving forces are emerging, he said.

“These new industries and new business formats will play a major role in boosting employment, a change we’d really be glad to see,” the Premier said.

Keep a close eye on global uncertainties

Uncertainties are increasing in the world situation. Premier Li urged the country to be better braced for difficulties and changes ahead as it has become increasingly integrated into the global economy.

In the first half of this year, investment, especially effective investment, has turned for the better than last year. But private investment still falls short, despite a rebound in growth rate, compared with that of fixed asset investment.

Financing difficulties faced by small and medium-sized enterprises should also be addressed with more effective measures, as it concerns not only employment, but innovation as well.

Overall financial risk still exists, but is controllable, said the Premier.

“There are concerns over financial leverage. But as I look at it, the country’s personal savings rate stands at 40-50 percent, the highest in the world. And as for those companies with high debts, we have to pay more attention,” he said.

Maintain steady growth in second half of the year

“We have to focus on the following priorities in a bid to keep steady economic growth in the second half of this year,” said the Premier.

First, macroeconomic policies and market expectations need to be stabilized. Believing makes it so. Therefore, it’s very important to manage expectations in a market economy, and policies play a guiding role in this respect.

“It is widely agreed upon that consistent macroeconomic policies help stabilize market expectations. At the same time, though, we still need to make well-timed adjustments,” he said.

“For instance, we have to consider how to make it more targeted while keeping proactive fiscal policy, how to make full use of surplus budgetary funds, and how to keep a sound and stable financial market under current prudent monetary policy. “

Second, further streamline administration, cut taxes and reduce fees to create a more competitive business environment, the Premier said. The value added tax reform is now in full swing, and has helped bring down more than 2 trillion yuan in taxes and fees during the past few years.

It’s not enough, said Premier Li.

“We have to continue our efforts to ease the burden of companies, in particular by cutting transaction costs caused by government red tapes, and boost their competitiveness in the international arena,” he said.

“Third, encourage entrepreneurship and innovation to cultivate new growth drivers. In the new round of technological reform, we see a lot of changes in our demand which has become more varied and customized,” the Premier said.

Another trend is that large companies become more integrated with small and medium-sized enterprises. Such cooperation will greatly bolster development and provide mutual benefit.

“Industrial revolution creates opportunities as well as challenges. We have to seize the chance to transform government functions and administration models to face up to it,” he said.

The Premier said he heard an economist mention a European report that said China’s technological upgrading, such as the Internet Plus strategy, outstrips other countries in the world.

As a frontrunner, the country also has to step up efforts to promote structural adjustment, accelerate the shift in driving forces, and bolster economic development, he noted.

The Premier said he strongly believes the country can continue keeping steady growth to better achieve the full-year economic goals this year, maintaining a medium-to-high level of growth while realizing a sound and sustainable development in the long run.