China grows at ‘reasonable’ pace, says Premier Li

As global markets fear over slowdown in world’s second largest economy, Chinese Premier Li Keqiang says country grows despite pressure, no basis for yuan’s further depreciation

Photo by: AP
Photo by: AP

A woman reads a paper near the fashion clothes hanging for sale at the Mutianyu section of the Great Wall of China in Beijing, July 23, 2015

China's economy is growing at a "reasonable" pace and, despite growing pressure, the government can handle well the risks the country faces, Chinese Premier Li Keqiang said.

The premier, in remarks published late Saturday after a special cabinet meeting, said China is continuing to steadily manage its economy.

Li said international market instability "has increased the uncertainties around the global economic recovery, and the impact on China's financial market and imports and exports has also deepened, with the economy facing new pressure."

He defended China's efforts to steer through a volatile period since mid June, when China's stock market plunged. On Friday, Shanghai's benchmark index was nearly 38 percent below where it was on June 12.

The premier reiterated earlier remarks that there's no basis for continued depreciation of the yuan following its devaluation on August 11. The yuan "will stay basically stable as a reasonable and balanced level," he said.

Li said recent cuts in the reserve requirement ratio (RRR), interest rates, taxes and fees and measures aimed at stabilizing the market were already paying off.

Analysts say that further measures are necessary to support the economy and calm markets.

China's economy, which in the past produced double-digit growth, is slowing. The government reported that annual growth in the second quarter was 7 percent, a figure that some economists doubt.

Li said China would "enact more targeted and responsive macro-regulation to offset downward economic pressure, more robust reform and innovation efforts to energize the market, and more effective delivery to secure the positive momentum for growth".

He said China needed to encourage new forms of investment and financing by local governments and businesses, such as local debt swaps and corporate bonds.

He reiterated the role of an open, transparent capital market but said risk management needs to be improved to prevent regional or systemic risks.

"China has great potential for further development and is well capable of effectively managing risks and keeping them under control," Li said.