Business / Economy

Premier promises support for growth

By Chen Jia and Zhao Yinan (China Daily) Updated: 2014-03-29 07:34

Li also told the meeting that the government should speed up important investment, especially in railways, highways and water-conservation projects, disburse budgetary expenditures in a timely manner, support the construction of subsidized housing, boost exports and imports and reduce corporate financing costs through "various" monetary policy instruments.

China's opening-up policy, Li said, will be maintained and revised to adapt to new world conditions. The government will look into "strategic measures" that can revive exports and streamline the procedures of customs clearance, he said.

"The overall performance in the economy so far this year is relatively stable and we have seen some positive changes, but we cannot ignore the difficulties and risks, and [the fact] that growth faces more downward pressure," Li said.

During the first two months, growth in major economic indicators, including industrial output, fixed-asset investment and retail sales all dropped to their lowest point in years.

Global investment banks have started to lower their GDP growth rate forecasts for this year and warned investors about potential slowdown risks in the world's second-largest economy, sparking talk about possible stimulus measures.

A report from Nomura Securities Co Ltd said that the GDP growth rate may slow to 7.3 percent in the first quarter from 7.7 percent in the fourth quarter last year.

"Without a pick-up in policy easing, growth will likely drop below 7 percent in the second or the third quarter." Nomura said it expected looser monetary and fiscal policies starting in April. It said that the central bank may start to cut the required reserve ratio in the second quarter.

Zhu Haibin, chief economist in China at JPMorgan Chase & Co, said that fiscal policy and structural reforms should come ahead of monetary policy easing to address near-term growth concerns. "A valid concern is that monetary easing could lead to unintended consequences such as a rebound in housing prices or further increase in leverage".