Premier Li Keqiang today defended his move to cut China's GDP target to 6.5 per cent and asked the critics to stop forecasts of a hard landing for the world's second largest economy. "If we achieve the 6.5 per cent GDP in 2017 it would generate more economic output than the last year. This growth is based on 70 trillion RMB or USD 11 trillion, a very large base figure. This is a growth that will generate 11 million new urban jobs," he said at an annual media conference. "Almost every year I have heard a prediction of the Chinese economy having a hard landing.... But I believe that our economic performance in the past several years ... Should suffice to put a full stop to such prophesies of a hard landing," Li said. China's contribution to global growth will not come down and the Chinese economy will continue to be a strong driving force in the face of sluggish global economy, he said. The Chinese Government is hoping to expand GDP by about 6.5 per cent this year - a slowdown from 6.7 per cent growth last year. "I should point out that 6.5 per cent growth is not low speed and will not be easy for us to meet." Li's press conference covered a wide-ranging domestic and foreign issues. He also allayed fears over the job growth as the Chinese leadership headed by President Xi Jinping set to complete first five years of their 10-year tenure later this year. Li is the second ranking leader of the ruling Communist Party of China (CPC) after Xi.
The party later this year is set to hold a key party congress to select new officials for its top policy and administrative bodies. About the risks faced by China's economy, Li said growing uncertainties in the international political and economic landscape posed problems for the country. "These are the risks we need to address on the external front. As for China, lack of development will represent biggest risk for the country," he said. "We need to take on the risks we are facing on the domestic front, specially on the financial sector. We are fully aware of the potential risks and take prompt targeted measures to prevent them from further spreading," he said. "China's financial system is generally stable and there is no systemic risk. We still have good reserve of policy options and instruments," he said. The budget deficit to GDP ratio is below three per cent. The capital adequacy ratio of commercial banks in China is 13 per cent and their provision coverage ratio about 176 per cent, both above international standards for financial security, Li said. "We need to fasten our seat-belts and prevent acute outbursts of financial risks. We will also make sure we will prevent regional and systemic risks," he said. Instead of resorting to massive stimulus, China has innovated macro-control approaches, upgraded industrial and consuming patterns and fostered new growth sources to keep the economic running in a proper range, Li said.
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