Li stressed on Thursday that job creation was the government'
policy priority, telling an investment forum on the southern island
of Hainan that it did not matter if growth came in a little below
the official target of 7.5 percent.
"We will not take, in response to momentary fluctuations in economic
growth, short-term and forceful stimulus measures," Li said in a
"We will instead focus more on medium- to long-term healthy
His comments are among the clearest yet on the government's plans
for the economy, which has rattled global investors this year with a
surprisingly lackluster performance.
Trade data on Thursday showed exports unexpectedly fell for the
second consecutive month in March, the worst showing in more than
four years, while imports fell by the most in 13 months.
Exports fell 6.6 percent in March from a year earlier, following an
18.1 percent slide in February, and imports fell 11.3 percent, their
weakest performance in 13 months.
Economists were most worried by the fall in imports, which was seen
confirming weakness in manufacturing and consumer demand. Some of
the fall in exports was attributed to figures early last year being
inflated by fake invoices before a government crackdown around the
middle of 2013.
"My bigger concern is imports. It suggests a weakening in China's
own economy." Louis Kuijs, economist at RBS in Hong Kong.
Data on April 16 is forecast to show the economy grew an annual 7.3
percent in the first quarter, the weakest rate since early 2009, in
the immediate aftermath of the global financial crisis.
Economists at Barclays lowered their first quarter GDP forecast to
7.2 percent after the trade data, saying it was to reflect more
signs of soft domestic and external demand.
The almost unabated run of disappointing data this year has fuelled
investor speculation the government would loosen fiscal or monetary
policy more dramatically to shore up activity.
But authorities so far have resisted broad stimulus measures. On
Wednesday, the top economic planning agency said the government had
less room to underpin growth because it did not want to inflate
local debt risks.
Still, authorities have take some steps to bolster growth. Earlier
this month, they announced tax breaks for small firms and plans to
speed up some infrastructure spending, including the building of
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The national railway operator now plans to raise its annual
investment by 20 billion yuan ($3.2 billion) to 720 billion yuan in
There have also been moves to cut down on bureaucracy and to open up
state-dominated sectors to private investors.
In his speech, Li said China was positioned to sustain a reasonable
level of growth over the long term.
"We have set our annual economic growth target at around 7.5
percent," he said. "It means there is room for fluctuation. It does
not matter if economic growth is a little bit higher than 7.5
percent, or a little bit lower than that."
Investors have long steeled themselves for growth to slow as China's
economy matures, especially as the government tries to steer it away
from investment- and export-driven growth and towards
But the extent of the slowdown this year has still been a shock to
"A lot of people weren't expecting growth to slow so quickly," said
Julian Evans-Pritchard of Capital Economics in Singapore.
"For us, it's not unexpected. You've seen credit growth slowing
since the middle of last year. We think that the current slowdown is
a natural extension of that," he said, adding it would extend into
the June quarter.
Economists have repeatedly cut their growth forecasts for 2014, with
a Reuters poll showing growth is forecast at 7.4 percent, a shade
below the government's 7.5 percent target.
(Editing by John Mair)
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