China has policy tools to protect jobs, income: Li Keqiang

China has "a number of policy tools" that it could roll out to protect jobs and income if growth this year dips beyond an "acceptable range", said Chinese Premier Li Keqiang, seeking to allay concerns over the slowing economy.

Mr Li also downplayed potential risks arising from local government debt levels and deflationary trends and admitted that it would not be easy for the world's No. 2 economy to meet even a lower growth target this year.

Economics-related questions dominated Mr Li's annual press conference, which lasted two hours and was held after the close of the national parliamentary session.

Concerns over China's economy rose after it grew 7.4 per cent last year, missing its 7.5 per cent target and registering its slowest pace in 24 years. Fears of a sharp dip grew as data last week showed multi-year lows in output, retail and investment growth.

Mr Li has lowered China's growth target this year to around 7 per cent, its lowest since 2004.

In response to a question from The Straits Times on whether China could handle well what it calls a "new normal" of slower but quality growth, Mr Li said: "I've often said that we will ensure the Chinese economy operates within an acceptable range.

"If our growth speed comes close to the lower limit of the range and affects the employment and increase of people's incomes, we are prepared to step up targeted macroeconomic regulation to boost market confidence."

Mr Li added that the government "still has a host of policy instruments at its disposal", as it has not used any short-term stimulus measures in recent years.

Asked about the risks posed by local government debts, he said China is able to prevent "systemic or regional financial crises" and pointed out that over 70 per cent of that debt is in the form of investment promising good returns.

Chinese leaders have indicated repeatedly their tolerance for slower economic growth and even missed targets, if these do not dip below an "acceptable range".

A bigger goal is job creation - with Mr Li maintaining a target of 10 million from last year - so that unemployment is kept low to prevent social unrest, a big concern of the Communist Party.

The National People's Congress, China's Parliament, yesterday passed revisions to the Legislation Law as part of President Xi Jinping's vision of a law-based society. A key change will make the local governments base their actions on laws, not regulations.

Mr Li underscored Beijing's commitment to "painful" reforms such as divesting the government of powers, saying: "This is not nail- clipping. This is like taking a knife to one's own flesh. But even if it is painful, we have to do so."

Among the wide-ranging questions he fielded were China's social ills such as graft and pollution and bilateral relations such as Sino- Myanmar border tensions. Its ties with Myanmar are being tested after reports that Myanmar troops fighting ethnic rebels in the north- east dropped a bomb in China's Yunnan province across the border last Friday, killing five.

"We have the responsibility and ability to firmly safeguard the security and stability of the Chinese-Myanmar border," he said.

kianbeng@sph.com.sg

This article was first published on Mar 16, 2015.
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