“We got this,” is basically the message Premier Li Keqiang gave to everyone worried about China’s economic slowdown. For every problem that was thrown at him, Li offered a clear response — but with few details.
Speaking Thursday at an annual forum in Bo’ao on the southern Chinese island of Hainan, Li acknowledged that the high economic growth rates China has seen over the past two decades are not sustainable. But in an effort to calm many fears about the economy’s growth, he said, it will be quality over quantity going forward.
Despite the country’s “deep rooted” structural problems of slowing growth, soaring debt, industries that need restructuring and overdue economic reforms, Li said China has enough policy tools to keep the economy stable.
“Domestically, China faces deep-rooted, structural problems and the economy continues to face downward pressures, especially as we try to restructure and upgrade,” Li said, according to Reuter’s reports.
“China is a responsible nation and there’s no possibility that our exchange range will depreciate in the long-term,” he said.
A big part of the problem is that many of China’s industries, such as steel and coal, are running at overcapacity. One way China plans to restructure and streamline these businesses is by laying off millions of people. In order to offset the huge impact of millions of unemployed people, Li said the government would “use market tools” to create new job opportunities. He did not elaborate.
“There’ll be short-term difficulties in the job market as some companies go bankrupt, but the government needs to help people find new employment opportunities and ensure a basic standard of living. Both the central government and local governments have already started doing this,” he said.
He also said the government would help develop smaller private enterprises, but didn’t give any details.
Li addressed the country’s growing debt problems by saying the country’s debt-to-GDP ratio was not high.
One way to facilitate businesses and fuel economic growth would be to ease taxes and red tape, Li said, repeating commitments he has made in the past. Li also reiterated that the country hopes to cut taxes by 500 billion yuan ($76.77 billion) in 2016 and promote reforms to the value-added-tax (VAT) system.