There won’t be any hard landing in the Chinese economy Premier Li Keqiang told the Annual Meeting of the New Champions 2016, or Summer Davos, in Tianjin on Monday, according to Xinhua, China’s state news agency.
“We can deliver the major targets of economic and social development set for 2016,” he said at the opening ceremony of the forum for business people and leaders of rapidly emerging economies.
So far this year, the Chinese economy appears to be right on target with 6.7% growth in the second quarter, matching the first quarter’s growth.
New economic drivers are developing rapidly and major economic indicators are stabilizing or improving, according to the premier.
In the first five months, 5.77 million urban jobs were created. The unemployment rate in 31 major cities was 5.02% in May.
“We are optimistic about the economy now and in the future,” said Li, adding that China’s economic fundamentals are unchanged, and that the government will keep macro policies constant and stable.
“Generally speaking, the economic structure is optimizing. The quality of growth is improving. Momentum is gathering,” he said.
The premier was not afraid to mention headwinds such as weak external demand, sluggish private and manufacturing investment, financial risks and overcapacity. However, he vowed to keep pushing for supply-side structural reform with a focus on reducing capacity, destocking, deleveraging, and reducing the costs of doing business.
Li said about 40,000 new market entities have been set up every day lately and that the government will continue to cut excess capacity in steel and coal sectors in “a market-oriented and lawful” manner.
Li also promised that China will make adjustments in fiscal, financial and investment areas to support the real economy, deepen reforms in state-owned enterprises and give private firms more access to the market.
Over the past few months there has been talk that Li and President Xi Jinping are at odds over the best way to spark growth in the economy. Some experts say Xi wants to curb debt-fueled growth before it destroys the economy, while Li feels the best way to spark growth is through debt-fueled stimulus. They believe Xi is moving behind the scenes to consolidate control of the economic engines and oust Li. Others say such policy disagreements (if they exist) are overblown.
Well, today’s story hints to Asia Unhedged that if there was friction, Li has been paying attention and is coming around to Xi’s way of thinking.