BEIJING: China’s economy will not suffer a “hard landing,” Premier Li Keqiang said Wednesday, stepping up Beijing’s charm offensive to reassure investors that the government can manage slowing growth.
“We have long-term confidence in the Chinese economy and this confidence isn’t without a foundation,” Li told his once-a-year press conference at the end of the National People’s Congress (NPC), the Communist-controlled legislature.
Beijing has been looking to send positive messages in recent weeks after expansion in the world’s second-largest economy fell to a 25-year low of 6.9 percent in 2015, raising concerns on global markets and sending commodity prices plunging.
Li has reduced the target for this year to a range of 6.5 percent to 7 percent, while ratings agency Moody’s has lowered its outlook on Chinese bonds.
Authorities have spent hundreds of billions of dollars to defend share prices and the yuan currency in recent months, raising questions over their commitment to market reforms.
Li acknowledged that the government had “controlled some things that should not be controlled, hindering productivity,” and said leaders had failed to ensure a fair playing field in the economy.
But he added: “As long as we persist with reform and opening up, China’s economy won’t have a hard landing.”
Questions have to be submitted in advance for the set-piece event. Li spoke for two hours in a cold room under glittering chandeliers in the Great Hall of the People—which monitoring devices showed did not escape the pollution blanketing Beijing.
“China’s economy has both hopes and difficulties,” Li said, adding: “If we look at it in light of the fundamentals and the overall trend, the hopes are greater than the difficulties.”
Coal and steel
Li spoke after the rubber-stamp parliament approved an economic roadmap for the next five years and a charity law.
Votes at the NPC are normally overwhelming approvals of measures decided long in advance by the ruling Communist party.
As the balloting started, a voice boomed over a loudspeaker asking delegates to press the voting buttons. Thousands of arms in suit jackets reached across the desks simultaneously.
There were 2,778 ‘yes’ votes for the 13th Five Year Plan, or 97.27 percent of the total, the official Xinhua news agency reported, and 2,636 in favour of the charity law—92.49 percent.
The five-year plan for economic and social development pledged average growth of at least 6.5 percent a year over the 2016-2020 period—implying that at times it could be lower.
Such plans are a legacy of China’s command economy era but still guide policymakers at all levels.
Cracks in the economy are already showing as growth slows. Thousands of miners went on strike in northeastern China to protest at unpaid wages, amid fears of mass layoffs as the government seeks to restructure lumbering state-owned industries.
A human resources and social security ministry official said last month the government plans to lay off about 1.8 million workers in the steel and coal industries.
Premier Li worked to dispel fears on the issue. “We have chosen the two sectors of coal and steel to make breakthroughs, and at the same time avoid a massive wave of layoffs,” he said.
According to the plan, gross domestic product (GDP) is set to rise from 67.7 trillion yuan ($10.4 trillion) last year to more than 92.7 trillion yuan in 2020.
It also seeks to significantly reduce poverty by 2020. Officials have declared charitable organizations essential to achieving the goal and hope to encourage more giving with the charity law.
As the economy has grown to the world’s second-largest, charitable giving has lagged, with China ranking 144th out of 145 countries for giving, according to a study last year by the Charities Aid Foundation.
Chinese citizens donated just $16 billion in 2014, according to the most recent data from the China Charity Information Centre—less than 0.2 percent of annual GDP.
Xinhua said the new law was intended to “recruit help from good Samaritans in realizing the 2020 poverty alleviation target.”