TIANJIN — Premier Li Keqiang said on Sept 10 that the government was not distracted by short-term fluctuations and assured the world of more quality-focused growth achieved through deepening reform and encouraging innovation.
Li’s remarks came as signs of slowdown was observed in a few economic indicators in the past month, fanning speculation of subdued growth momentum in the world’s second largest economy.
“We focused more on structural readjustment and other long-term problems, and refrained from being distracted by the slight short-term fluctuations of individual indicators,” Li said in his keynote speech at the Annual Meeting of the New Champions 2014, which opened on Sept 10 in north China’s port city of Tianjin.
The premier urged the world to “look at the overall trend, the bigger picture and the total score” of the Chinese economy. He named a few areas of highlight including steady growth in employment, a surge of newly founded companies and better economic structure that were achieved despite strong downward pressure.
China’s GDP expanded 7.4 percent from a year ago in the first half of this year with a slightly stronger second quarter, while the annual growth target was set at around 7.5 percent.
At the same time, the government rolled out a raft of reform measures including speeding up shantytown renovation and guiding credit into the agricultural sector and small businesses.
“We did not adopt strong stimulus, nor did we relax monetary policy. Instead, we push forward reform, adjust structure and try to benefit the people,” the premier said.
Analysts have viewed the reform measures in the first half of the year as “mini-stimulus,” a means of boosting selective sectors to fine-tune the macro-economy.
“The strength of China’s reform has been strong,” Jerry Zhang of Standard Chartered Bank (China) told Xinhua. Zhang said the country took cautious steps in speeding up reform without giving excessive remedy to problematic sectors.
He expected more mini-stimulus to come out in the third quarter this year, before the economy stabilizes in the final quarter or in the next year.
JOB MARKET IN FOCUS
Premier Li reiterated the idea of growth in “a proper range,” highlighting job market expansion as a key factor to stabilize growth.
“Judging by the principle of range-based macro-control, we believe the actual economic growth rate is within the proper range, even if it is slightly higher or lower than the 7.5 percent target,” Li said.
The premier said the floor of the government macro-control is to keep employment at sufficient level. The bigger volume of the job market, the greater tolerance for fluctuations, he said.
Zhang Liqun, an economist with the Development Research Center of the State Council, said the speech signals the government’s new strategy of macro-control, which no longer dwells in a headline growth target but outlines a host of specific goals to be achieved.
The scale and structure of the labor market will certainly be high on the agenda. The premier said the government should inject vigor into the society by fostering innovation and entrepreneurship among the country’s 800 million to 900 million labor force, which could be an engine for China’s sustainable growth in the future.
More support, training and education resources will be offered to the country’s skilled labor, estimated at around 200 million, the premier said.
China is seeking to unleash the power of its talents through reform, Zhang said.
CLARIFYING GOVERNMENT FUNCTIONS
Responding to the theme of this year’s forum, “Creating Value Through Innovation,” the premier stressed China’s reform itself is a sort of institutional innovation.
The government will strive to finish a five-year goal of cutting red tape and decentralizing administrative approval rights within just two years, Li said.
The government will improve ongoing oversight and perform its role as a referee of the market, Li said. The power and responsibilities of the government shall be clearly defined.
“Only by so doing can we build a market environment that favors honest operations and fair play, energizes businesses and encourages innovation and creativity,” he said.
China will punish companies, domestic or foreign, that are involved in producing counterfeit or shoddy products, engage in fraud or deception or steal trade secrets, he said.
China launched a series of probes into big foreign companies in recent years, with the latest episodes being antimonopoly investigations against Microsoft and Jaguar Land Rover as well as price probes into 12 Japanese automakers.
Although these cases stirred unease among some investors, others think it just came along with China’s economic transition.
Foreign firms are now beginning to receive the same treatment with the Chinese players and getting more regulation from local regulators, said Zhang from the Standard Chartered Bank. As a result, they should act positively to adjust its own strategy, Zhang said.
On Sept 9, the premier clarified that recent antitrust probes do not target particular firms or industries as foreign firms accounted only 10 percent of those involved in such probes.