China has enough policy tools to keep the economy stable despite “deep rooted” structural problems and downward pressure, Premier Li Keqiang said yesterday, channelling calm amid concerns about the country’s slowdown.
Speaking at an annual forum in Boao on the southern Chinese island of Hainan, Li said high economic growth rates are not sustainable, so the government will pay more attention to the quality and efficiency of economic growth.
The comments echoed previous statements by policymakers who are grappling with the challenge of slowing growth, soaring debt and a pressing need to drive restructuring and overdue economic reforms.
“Domestically, China faces deep-rooted, structural problems and the economy continues to face downward pressures, especially as we try to restructure and upgrade,” Li said.
The renminbi currency, watched closely by global markets, will be kept within “a reasonable range”, Li told the forum.
“China is a responsible nation and there’s no possibility that our exchange range will depreciate in the long-term,” he said.
China plans to lay off millions of people as it restructures industries mired in overcapacity, but Li said the government would “use market tools” to create new job opportunities to offset the impact.
“There’ll be short-term difficulties in the job market as some companies go bankrupt but the government needs to help people find new employment opportunities and ensure a basic standard of living. Both the central government and local governments have already started doing this,” he said.  While many economists have highlighted the risks in China’s growing debt, Li said the country’s debt-to-GDP ratio was not high.
To facilitate business and fuel economic growth, the government would move to ease taxes and red tape, Li said, repeating commitments he has made in the past.
He added, however, that the country is inexperienced in implementing such reforms and there would be challenges.
Li also reiterated that the country hopes to cut taxes by 500bn yuan ($76.77bn) in 2016 and promote reforms to the value-added-tax (VAT) system.
The government would continue to reduce overcapacity in steel, coal and other sectors while helping develop smaller private enterprises, Li said without giving details.
China’s leaders have set an economic growth target of 6.5 to 7% for 2016. Growth last year cooled to 6.9%, the slowest in a quarter of a century.