China economy won't crash, says Premier
CHINA will avoid a hard landing despite worries over a slowdown in the world's No. 2 economy and a flagging real-estate market, Chinese Premier Li Keqiang said in a speech in Germany on Saturday.
The comments, reported by state news agency Xinhua, echoed earlier ones he made in London in June.
"China's economy will not suffer a 'hard landing' like some people fear, but will bring a positive impact to the global economy," Mr Li said during the speech in the city of Hamburg.
China's third-quarter growth is likely to be its weakest growth in more than five years, as a property downturn weighed on demand, according to a Reuters poll of 20 economists released on Friday.
According to the poll, the economy may have expanded 7.3 per cent in the third quarter from a year earlier, the weakest reading since 6.6 per cent growth in the first quarter of 2009.
Mr Li said that staying power will be more important to China's economy than speed of growth. "Economic development is not a sprint, but a long-distance race without end. You need a certain amount of speed, but even more important are endurance and stamina," he said.
Ma Jun, chief economist at the People's Bank of China, said on Saturday that the chance of China facing a hard landing was "very small". The Chinese central bank economist was speaking at the International Monetary Fund (IMF) and World Bank autumn meetings in Washington.
A former central bank adviser has said weakening property demand will dim China's economic prospects, dragging growth lower in the country.
Gross domestic product will expand 7.4 per cent this year before growth slows further to 7.3 per cent next year, said Li Daokui, head of the Economic Research Center at Tsinghua University. The centre previously put China's growth rate this year at 7.6 per cent.
His latest forecast echoes other state-backed researchers in anticipating lower growth as economists from quasi-official sources assign little probability that leaders will splurge on stimulus to meet the government-set growth target.
Premier Li has reiterated this year that growth can be slightly above or below 7.5 per cent and said last week that China prefers reform to stimulate the economy.
Mr Li Daokui said: "The property industry, which has been a traditional driving force for the Chinese economy, has lost power and is expected to remain weak."
According to the statistics bureau, China's growth goal was 7.5 per cent in 2012 and last year, and expansion came in at 7.7 per cent each year.
The IMF in July urged China to set a growth target of 6.5 per cent to 7 per cent for next year, warning of a "web of vulnerabilities" in the economy from real estate and rising debt.
Chinese policymakers eased some property restrictions this month for the first time since the global financial crisis, according to the central bank's statement on Sept 30.
Still, slowing property investment and industrial production pose a threat to growth while the government appears adamant in its resolve to press ahead with reform and eschew broad stimulus to repeat those excessive investments in industries with overcapacity and a housing bubble.
China's growth may slow to 7.1 per cent next year from an estimated 7.4 per cent this year, said Chen Dongqi, a deputy director of the research arm of the National Development and Reform Commission.
In the event that growth slows to a range of 6.5 per cent to 6.8 per cent, China can still opt for monetary policy tools, including "benchmark interest rates and required reserve ratio", Mr Chen said at a forum in Beijing yesterday.
On the fiscal side, the country may also dispense resources to boost investment in railways to cushion a slowdown, he said.