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Li Keqiang hails third-quarter performance as China economy steps out of slump

China’s third-quarter economic performance is better than expected, with solid job creation and signs of things being on a firmer footing, Premier Li Keqiang told a forum in Macau on Tuesday.

Beijing had done particularly well in controlling unemployment – the ultimate target in shoring up the economy in the world’s most populous nation, he said.

“In September, a survey in 31 major cities showed that the unemployment rate was less than 5 per cent – the first time in recent years,” Li said.

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Li’s first public comments about the quarterly economic performance – which come only days before a spate of new data – indicate that China is stepping clear of its economic problems so that Beijing can shift its focus to curbing the problems of housing bubbles in the nation’s major cities.

“Entering the third quarter, China’s economy shows some positive changes, with increasing contributions from retail and services and stabilising indicators that had once suggested weakness or a slump,” Li said in his speech on Tuesday at the 5th Ministerial Conference of the Forum for Economic and Trade Cooperation between China and Portuguese-speaking Countries in Macau, according to transcripts published by Xinhua.

In this year’s first nine months, more than 10 million new urban jobs were created as China maintained the momentum of creating 13 million new jobs annually over the past three years, Li said.

In addition to the heartening employment figures, Li said industrial growth, corporate profits and investment, especially in the private sector, were stabilising and market expectations were improving.

Li also tried to calm fears about the red-hot housing market in major mainland cities and concerns about mounting debt amid the economic slowdown.

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He noted that in general, China’s debt risk was under control, with the main issue being a structural imbalance – high leverage of non-financial enterprises.

Despite that fact, China had limited foreign debt exposure, which meant there was less likelihood of it triggering debt risks, he said.

On the housing front, Li noted that Beijing would continue to strengthen the responsibility of local governments to carry out “targeted policies in different cities” to guide the stable and healthy development of the housing market.

“We are confident and capable of being able to accomplish the major economic targets this year and we are determined to stick to the bottom line of avoiding systematic, regional financial risks by laying a sound foundation for next year’s growth,” Li said.

Fears about an imminent hard landing for the world’s second-biggest economy have abated since the summer with improving economic indicators.

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But alarm over frothy house prices in major cities, such as Shanghai and Nanjing, has increased, leading to a series of measures to tighten housing policies by as many as 21 cities during the nine days spanning the National Day holiday, which began on October 1.

While the battles were being fought locally, the chain of command wound all the way up to President Xi Jinping, according to internal memo and comments by local officials.

“Premier Li’s stance showed that the forthcoming third-quarter data could be optimistic and the worst time of China’s economic plight may be over,” Jiang Mingde, chief economist at Hengtai Futures, said. “The housing bubble issue is now a policy priority.”

Jiang also said the improved data could provide Beijing more scope for carrying out its supply-side structural reform.

ANZ also said in an earlier research note that policy momentum had changed and that China’s central bank, the People’s Bank of China, would delay interest rate cuts.

China is still seeking a delicate balance between bolstering economic growth and averting asset bubbles.

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Beijing is aiming to see gross domestic product growth of between 6.5 per cent and 7 per cent this year. Its economy grew 6.9 per cent in 2015 – the slowest increase for a quarter of a century.

Over the next five years, China’s imports are expected to top US$8 trillion, with outbound investment exceeding US$720 billion and the numbers of mainland travellers heading abroad over the period exceeding 600 million, which would help to create huge business opportunities for international companies, Li said.

He also argued that China was not relying on “liquidity flooding” stimulus, but instead was counting on reform and openness to create new economic engines.

He also said that the major campaign to promote innovation and reduce red tape – which he has often promoted – was helping to ignite economic growth.