Nations should maintain free trade amid fragile world economy, China says

BEIJING (Reuters) - The world economy is showing positive signs but is still fragile and countries should rely on structural reforms, not quantitative easing, to support growth, Chinese Premier Li Keqiang said on Tuesday.

Li, who met with the heads of global bodies, including International Monetary Fund Managing Director Christine Lagarde and World Bank President Jim Yong Kim in Beijing, said that countries should maintain free trade.

"There are increased positive factors in the global economy and signs of warming-up in some aspects. But at the same time, the fragility persists and unstable and uncertain factors are still increasing," Li told a joint news conference with the heads of international agencies.

"Free trade is a good medicine for resolving problems. Through free trade, we can resolve many problems in the difficult recovery, help companies transform and give consumers more choices," he said.

Turning to China, Li said the economy would remain steady and continue to improve.

China's economy grew a stronger-than-expected 6.9 percent in the first half, defying expectations of a slowdown and putting the country on pace to easily meet its growth target of around 6.5 percent.

"Based on the growth trend in recent months, the economy will continue to maintain the trend seen in the first half," Li said.

He also addressed China's high leverage ratio, which has been the focus of a campaign by policymakers to control risks.

China's leverage has stabilised and has even shown some declines, Li said.

Li also reiterated China's pledge not to resort to competitive currency devaluation.

At the official local close on Monday, the onshore spot yuan had gained around 6.5 percent so far this year, about the same percentage loss it suffered in 2016.

The global economy is recovering, but could easily be derailed by policy uncertainty and the threat of protectionism, IMF chief Lagarde told the same briefing.

(Reporting by Kevin Yao; Editing by Jacqueline Wong)