li says future of Chinese economy bright

Allaying fears over China's economic slowdown, Premier li Keqiang has said that the future of the world's second largest economy is "bright" due to its solid base and ruled out any hard landing.

Despite the economy slowdown to seven per cent, China contributed roughly 30 per cent to world economic growth during the first half of this year, li said.

The Chinese economy will not take a "hard landing", he said. But at the same time li noted that China's seven per cent growth during the first half of this year was not an easy achievement amid the slowing world economy.

He said that a seven per cent rise for a USD 10 trillion economy is higher in volume than the 10 per cent growth seen in the past and places China among the top of the world's major economies.

A more encouraging sign, according to li, is that China's economy is more oriented toward consumption, which accounts for half of China's economic output and 60 per cent of growth.

"The Chinese economy has only a bright future," he said.

Speaking at the opening ceremony of the Summer Davos meeting in Dalian in northeast China yesterday, li said his faith was not borne out of blind optimism but based on its huge potential and tenacity.

He said major programmes to promote new industrialisation, IT, urbanisation and agricultural modernisation are now in progress to revamp the economy.

China's variety of industries guaranteed an economy characterised by resistance and self-recovery, li said.

Structural reforms, to realise sustainable economic expansion, have been successful, the premier said.

As the largest developing country in the world, China will continue to roll out measures to maintain medium-high growth with higher efficiency and quality.

In a speech televised live, li highlighted the reform of the financial sector, stressing the importance of market and laws in fostering a fair, transparent and stable capital market as well as improving risk controls.

China has the support of high savings and large foreign exchange reserves, and reforms will improve the usage of such resources to support the real economy.

Besides cutting interest rates and reserve requirement ratios, China has scrapped the interest rate ceiling for both loans and deposits, and will allow more private capital to enter the sector as well as boost private banks, financing assurance and financial leasing, he said.