Economy to grow steadily in 2014

Premier Li Keqiang chats with Cong Lin (right), chief executive officer of ICBC Financial Leasing, during a visit to the company in Tianjin on Friday. The company purchases planes, ships and large engineering equipment and leases them to enterprises. Xie Huanchi / Xinhua

The Chinese economy and financial market will grow steadily in 2014, Premier Li Keqiang said.

By pushing ahead reforms and opening up the market, China has the conditions to maintain the smooth running of its economy and the general stability of its financial market, Li said.

To achieve the target, the premier has promised a prudent fiscal policy. He said the government will maintain liquidity at a proper level, sustain the reasonable growth of monetary credit and social financing, as well as keep prices stable.

A major think tank, the National Academy of Economic Strategy, previously predicted the best scenario for China’s GDP growth next year would be 7.8 percent, a slight rise from 7.6 percent expected for this year.

During his inspection tour in Tianjin on Friday, Li also highlighted the supporting role of the finance industry in the development of the real economy, according to a news release on Sunday.

The real economy refers to the part of the economy concerned with producing goods and services, as opposed to buying and selling on the financial markets.

During the one-day tour, which took him to a sub-branch of the Industrial and Commercial Bank of China, Li stressed that the finance industry must cater to the needs of the real economy.

"We will steadfastly push financial reform forward next year," he said, "to improve the financial market and reinforce its capability to support the real economy."

"The real economy requires the support of the financial market, while the smooth operation of the real economy benefits the financial market in return."

During his visit to ICBC Financial Leasing, Li said the financial leasing market has a lot of potential for growth in China.

"China is still behind in expertise, talent and supportive policies in this regard, but the government will help promote the industry."

Li Peng, head of the general department of ICBC Financial Leasing, said the company has helped domestic airlines cut costs by breaking the monopoly of foreign companies in aircraft leasing. It has leased equipment worth more than 10 billion yuan ($1.6 billion) to small and medium-sized businesses since 2009.

"In the past, more than 60 percent of the civilian aircraft in China was leased from foreign financial leasing companies, and the profits in aircraft leasing are much higher than running an airline company," he said.

The company owns 350 aircraft, 240 vessels of various types and more than 28,000 pieces of large engineering equipment.

Li also visited five families living in a shantytown area in Tianjin, and said the government will press ahead with slum renovation to improve people’s livelihood.

He called for concerted efforts from government and the people to ensure families are relocated into new homes as soon as possible.

Pei Changhong, director of the Institute of Economics at the Chinese Academy of Social Sciences, said the places Li visited in Tianjin are all forces that support the real economy.

"The government has made a great endeavor this year to cut red tape and reduce government intervention, and financial reform is likely to be the next big thing," he said.

The country has pledged to liberalize interest rates as one of its priorities for next year.

The central bank has removed the cap on deposit rates this year.