Economy will make positive impact, says China premier

Reuters

Shanghai

China will avoid a hard landing despite worries over a slowdown in the world’s number two economy and a flagging real-estate market, the country’s premier Li Keqiang said in a speech in Germany on Saturday.

The comments, reported by state news agency Xinhua, echoed earlier ones he made in London in June.

“China’s economy will not suffer a ‘hard landing’ like some people fear, but will bring a positive impact to the global economy,” Li said during a speech in the city of Hamburg.

China’s third quarter growth is likely to be its weakest growth in more than five years as a property downturn weighed on demand, according to a Reuters poll of 20 economists released on Friday.

According to the poll, the economy may have expanded 7.3% in the third quarter from a year earlier, the weakest reading since 6.6% growth in the first quarter of 2009.

Premier Li said that staying power will be more important to China’s economy than speed of growth.

“Economic development is not a sprint, but a long-distance race without end. You need a certain amount of speed, but even more important is endurance and stamina,” he said. Ma Jun, chief economist at the People’s Bank of China, also said on Saturday that the chance of China facing a hard landing was “very small”. The Chinese central bank economist was talking at the IMF and World Bank fall meetings in Washington.

China’s economy, the second largest in the world, gets a spot check this week with a barrage of data due that should indicate how successful Beijing has been in supporting growth.

It may be even more pertinent than usual, given that the Federal Reserve has been surprisingly cautious about the US economy and with eurozone powerhouse Germany suddenly appearing to stagger.

The world economy may not be on the brink of falling back into recession, but it is hardly on fire.

The International Monetary Fund, for example, has lowered its growth expectations for this year and next in Europe, Japan and China, among others.

Since April, Beijing has taken steps to keep up growth, including cutting reserve requirements for selected banks and hastening construction of railways and public housing.

Some of this week’s Chinese data – inflation, trade, bank credit, money supply and FX reserves – will pave the way for third quarter gross domestic product numbers on October 21.