“The Chinese economy will face downward pressures in 2015,” Li said in a keynote speech at a special session of the Annual Meeting. “But the Chinese economy will not head for a hard landing.”
He added that the government will press on with structural reforms, which include liberalising its services sectors, promoting mass entrepreneurship and innovation, protecting intellectual property rights and deepening its capital markets. “We will move towards the path of reforms. This way we can shift gear without losing momentum and achieve medium- to high-speed growth, and medium- to high-level developments.”
Using the analogy of a skier at Davos, he promised that China will “go at the right speed, keep balance and be courageous”.
Premier Li’s address came a day after the country announced its slowest growth rate in 24 years, with full-year GDP at 7.4% in 2014. The government has prepared the nation to embrace the “new normal” as it focuses on quality rather than speed of growth, and shifts its focus from an export-investment led model to one that is more reliant on consumption and the services sector.
In his address, Li also suggested that China would eschew stimulus measures through monetary easing but instead step up investments in targeted areas, including health, clean energy and transport, as well as provide support to the country’s small and medium enterprises, create employment for young people and optimise income distribution.
The Premier said China’s economic slowdown reflects the profound adjustments in the global economy and is consistent with its larger economic base. A growth at 7%, he pointed out, produces annual increase of $800 billion (€690 billion) at current prices, larger than a 10% growth five years ago.
On the internationalisation of the renminbi, Li explained that as China’s international trade increases, more countries are demanding the use of the Chinese currency to settle trades and investments. The pool of offshore renminbi has gradually expanded in recent years. Li said China is committed to opening up to the world but the internationalisation of the renminbi is going to be a long-term process.