China says no hard landing; more hopes than difficulties for world’s second-biggest ecnomy

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Chinese Premier Li Keqiang

Premier Li Keqiang said that China’s economy will not suffer a hard landing and there are more hopes than difficulties for the world’s second-largest economy.

China will also balance reform and development well and avoid massive layoffs while cutting overcapacity, he added.

“As long as we stay on the course of reform and opening up, China’s economy will not suffer a hard landing,” Li told a press conference following the conclusion of the country’s annual legislative session, Xinhua reported.

Li said global economic growth was sluggish and China had been affected by the weak performance. The country is also going through a transition and some deep-seated problems, which have built up over the years, have become more acute.

“All these have added to downward pressure on China’s economic growth,” he said.

The premier warned that that growth prospects for different regions and sectors had become more divergent, as the economy makes a shift from focus on manufacturing to services.

“There are both difficulties and hopes for China’s economy. But given the underlying trend and fundamentals, there are more hopes than difficulties,” said Li, adding that the leadership had full confidence in the bright future of the economy.

China has enormous potential in its big market, and there is immense creativity among the people, said the premier, adding that the government needed to step out from some parts of the economy to ensure therewas a level playing field.

The supply-side structural reforms China has been pursuing, including streamlining administration, delegating powers of the government and cutting corporate taxes, will unleash more market vitality.

“There is much room for us to boost industrialization and urbanization that represent the largest source of domestic demand,” said Li, adding that in China’s central and western regions, there is enormous room for more effective investment.

Propelled by the twin engines — the new growth drivers and upgraded traditional ones, China’s economy will be able to get beyond difficulties and rise to a more promising level, said Li.

Li said China was determined to press ahead with its reform agenda, and reform and development were not in conflict, as pursuing structural reforms can further release market vitality and drive economic growth.

Li pointed out some sectors are burdened with overcapacity, especially in heavy and petro-chemical industries, and China had selected the steel and coal sectors for cutbacks while avoiding massive layoffs.

In the past two years, China has phased out over 100 million tonnes of steel-making capacity involving some 1 million employees. With high priority given to the rights and interests of enterprise employees, the government has taken strong steps to resettle these people or get them reemployed with other jobs.

“In a word, we will press ahead with cutting overcapacity while avoiding massive job losses,” Li said, adding that central and local governments have the resources to help the laid-off employees.

To cushion the effect of job losses on families and society, the central government decided to allocate 100 billion yuan ($15.34 billion) to help the laid-off workers find new jobs. The fund can be increased if necessary and the local governments should do their own job accordingly, according to Li.

 

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