Chinese
premier seeks to quell global markets' China fears
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[September 09, 2015] By
Gerry Shih and Pete Sweeney
DALIAN, China/SHANGHAI (Reuters) - China
has fended off the major risks to its financial system while its
economic prospects remain positive, Premier Li Keqiang said on
Wednesday, as he tried to reassure global markets that Beijing can keep
its economy on track and stock markets in check.
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"The government took measures to stabilize the market and prevent
risks from spreading, we have forced out the possibility of any
systemic risks," Li said during a speech at the World Economic
Forum, the Switzerland-based corporate think-tank which runs the
Davos summit of world leaders.
A run of soft economic data combined with China's surprise
devaluation of the yuan and wild swings in Chinese stock prices have
rattled markets around the world over the past month.
Li conceded that China's economy was facing downward pressures, but
tried to allay concerns that after years of break-neck economic
growth it was headed for a hard landing.
"There has been overall stability in China's economic performance in
spite of a certain amount of moderation. There's an overall positive
trend in spite of difficulties we face," he said, adding that
Beijing would "fine tune" its policies to provide more support.
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Earlier on Wednesday China's finance ministry said it would
accelerate major infrastructure construction projects and reforms to
its tax system to help stimulate the economy.
China's government is forecasting its economy will grow by around 7
percent in 2015, a relatively small drop-off in pace from the rate
its posted in recent years.
But the surprise move to weaken the yuan in August led to fears
Beijing thought the economy was slowing more than they had
indicated, causing many investors to bet the currency, also known as
the renminbi, was set for a series of devaluations.
Li reiterated China's position that the devaluation was a reform
aimed at allowing markets a greater role in valuing the currency,
but said he expected it to remain stable from here onwards.
"We believe there doesn't exist (a) basis for continuing
depreciation for the renminbi because China has large amount of FX
reserves," he said.
Data out on Monday showed China's foreign exchange reserves fell by
a record amount in August as authorities sought to prevent the
currency from sliding further.
China did not want to see a currency war, Li added.
"If a currency war does happen, it would only hurt China," Li said.
"The continued devaluation of the yuan is definitely not conducive
to the currency becoming internationalized. This is not our policy
preference."
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Li is the latest Chinese policymaker to come out in recent weeks
with words aimed at soothing investors against a backdrop of sharp
gyrations in the country's equity markets, which have fallen around
to 40 percent since June.
Those efforts appear to have finally brought markets some respite
over the past two days.
The CSI300 index of the biggest stocks listed in Shanghai and
Shenzhen closed up 1.96 percent on Wednesday, while the Shanghai
Composite Index was 2.32 percent higher.
The positive sentiment fed into major markets around the world.
Japan's Nikkei index posted its biggest single-day rally since Oct.
30, 2008, while European shares also jumped, with the pan-European
FTSEEurofirst 300 Index up more than 2 percent.
Li denied that the slew of policy measures introduced by China in
recent weeks to curb speculation in stocks undermined pledges that
Beijing would open up its capital markets, saying overseas investors
were still welcome in the mainland.
"We will continue to ease market access for private banks and
foreign companies to enter the financial sector," he said.
(Writing by Rachel Armstrong; Editing by Mike Collett-White)
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