Premier rules out large-scale stimulus

Premier Li Keqiang has ruled out the option of resorting to large-scale stimulus or excessive liquidity in pursuing an overly high target for economic growth this year, saying that China's macroeconomic policy will be targeted, forceful and appropriate.

Speaking during the World Economic Forum Special Virtual Dialogue with Global Business Leaders on Tuesday, Li said that China can accept both a higher or lower economic growth rate as long as it can maintain relatively sufficient employment and ensure household incomes grow and prices are stable.

The Government Work Report delivered by Li at this year's annual session of the National People's Congress set the target for this year's GDP growth at around 5.5 percent. However, factors such as a surge in COVID-19 cases in Shanghai and other manufacturing hubs in eastern China badly affected economic growth in April.

China's economy grew by 0.4 percent year-on-year in the second quarter of 2022, and it saw 2.5 percent growth in the first half of the year, according to the National Bureau of Statistics.

In response to the mounting downward pressure, Li said China has given greater priority to stabilizing growth, refrained from adopting a deluge of stimulus policies and front-loaded policies which have already been rolled out.

He said that while China's economy rebounded in June and major indicators have returned to positive territory, the foundations of the recovery are not yet solid and more arduous efforts are required to stabilize economic fundamentals.

Li highlighted China's enormous potential as the world's largest developing country, saying that the major factors to ensure that the economy functions within a proper range are a stable job market and commodity price stability.

This year's bumper harvest of China's summer crops, the sound outlook for autumn crops and a steady supply of coal for power generation have laid good foundations for the stability of commodity prices, he added.

The premier pledged continuous strides in deepening high-level opening up and upholding free trade and fair trade, including steps to pursue multilateral and regional trade cooperation.

Foreign businesses will be guaranteed equal access to sectors that have already been opened up, he added.

China will keep refining its policies regarding visas and COVID-19 tests, further resume and increase the number of international flights and steadily promote outbound trade activities and cross-border business travel, Li said.

Wen Bin, chief economist of China Minsheng Bank, said that China's economy could maintain its momentum of recovery in the second half of this year with the implementation of policies which have already been rolled out.

The reason that Li ruled out the use of massive stimulus is to ensure the high-quality growth of the economy and its structural upgrading and sustainability, Wen said.

"With the stability of commodity prices and the job market, economic growth that is even lower than the preset target would still be healthy and sustainable," he said.