China’s Premier Li says confident in economy, vows no hard landing

Chinese Premier Li Keqiang speaking during a press conference after the closing session of the National People's Congress in the Great Hall of the People in Beijing, on March 16, 2016.
Chinese Premier Li Keqiang speaking during a press conference after the closing session of the National People's Congress in the Great Hall of the People in Beijing, on March 16, 2016.PHOTO: AFP

BEIJING (REUTERS) - China’s Premier Li Keqiang defended the country’s economic policies on Wednesday (March 16), repeating well-worn lines that there was more opportunity than risk and vowing there would be no hard landing for the world’s second-largest economy if the government presses ahead with reforms.

China will cut red tape for businesses, work to reduce corporate debt, improve financial regulation and ensure no mass layoffs will result as it restructures heavy industries such as coal and steel, Mr Li said at a news conference at the end of the annual meeting of parliament.

“We are confident that as long as we continue to reform and open up, China’s economy will not suffer a hard landing,” he said.

“Economic productivity is being held back by unnecessary government interference and we need to create a more level playing field and more oversight.”

China’s supply-side reforms will unleash fresh economic growth drivers, Mr Li added at his one news conference of the year.

Central government funding can be increased to help laid-off workers if necessary, he said, in addition to a 100 billion yuan (S$21.3 billion) fund announced in February aimed at relocating workers who lose their jobs as China attempts to curb overcapacity.

 

He did not provide specific numbers on how many workers would be laid off nor give details on how workers would be relocated or retrained.

 

Sources have told Reuters that China is expecting to lay off 5 million to 6 million state workers over the next two to three years as part of efforts to curb industrial overcapacity and pollution.

 

Weighed down by sluggish demand at home and abroad, faltering investment and massive industrial overcapacity, China’s economy expanded by 6.9 per cent last year, its weakest pace in a quarter of a century.

The government has set a growth target of 6.5-7 per cent for 2016 and is widely expected to continue a year-long stimulus blitz to spur activity.

Some China watchers, however, believe real growth levels are already much lower than official data suggests.