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China Focus: China steps on gas pedal to avert sharper slowdown

(Xinhua)    16:39, April 14, 2015

BEIJING, April 14 -- China is enacting several new measures to keep its economic growth momentum going and help create an environment for economic restructuring in the long run.

"Development is the key to solving all the problems in China," Chinese Premier Li Keqiangsaid in Changchun, the capital city of Jilin Province, at a recent meeting attended by leading officials of the northeastern provinces of Jilin, Liaoning and Heilongjiang.

China must take effective steps to tackle downward pressure facing the economy, otherwise both job creation and people's income will be affected and it will be difficult for China to achieve a better quality and more efficient economy, Li stressed.

Northeastern provinces were among the first to embrace heavy industry after the founding of the People's Republic of China in 1949, but they have been confronted with economic headwinds due to factors like a faltering property market and slow industrial upgrades.

Economic growth rates for Liaoning, Jilin and Heilongjiang slowed last year to 5.8 percent, 6.5 percent and 5.6 percent respectively, some of the weakest in all provincial areas.

Against the backdrop an uneven global recovery and anemic consumption growth at home, many other provincial areas in China felt the same pinch.

The Chinese economy on the whole posted a 7.4-percent growth in 2014, the weakest since 1990. The annual growth target set by the government was lowered to around 7 percent for 2015, with more stress to be laid on better-quality and innovation-driven growth.

China's growth is expected to moderate to 7.1 percent and 7 percent in 2015 and 2016 respectively, reflecting continued policy efforts to address financial vulnerabilities and gradually shift the economy to a more sustainable growth path, the World Bank said Monday in the East Asia Pacific Economic Update report.

China is not taking its foot off the gas pedal to spur economic growth, with robust job creation and steady income growth helping to ease pressure when economic reforms enter the deep-water zone, experts believe.

The goal of creating more than 10 million jobs in urban areas this year was announced in the premier's government work report delivered at the national legislature's annual session in March to ensure that registered urban unemployment rate does not rise above 4.5 percent.

A list of measures has been rolled out to arrest economic slowdown and create new growth engines. A plan was unveiled earlier this month to develop city clusters along the middle reaches of the Yangtze River. China has cut the benchmark interest rates twice and dropped the reserve requirement ratio (RRR) for banks over the past five months.

Li called for timely launch of major infrastructure projects in transportation, water conservation and urban underground pipe networks in northeastern China with the support of policy-backed financial institutions.

Chinese authorities also decided to relax mortgage rules for second home buyers last month to address demand for improved housing and lift the sagging market.

Despite a slight economic slowdown, China still has a string of policy tools at the government's disposal to bolster economic growth, aiming to achieve a better-quality economic development, Li said last month at a press conference after the conclusion of the annual parliamentary session.

A list of economic data is scheduled to be released on Wednesday. The Chinese government still has many fiscal, monetary and structural reform policies in its toolkit to spur growth and restructuring, if upcoming data were significantly subpar, analysts projected.

J.P. Morgan China chief economist Zhu Haibin predicted further policy easing in China, including a cut in the RRR by 50 basis points later this month and a benchmark interest rate cut by 25 basis points in June.

Apart from those short-term moves to stabilize growth, priority should be given to ensure current pro-growth moves will not undermine long-term efforts of restructuring and fostering innovation.

"Less focus should be given to the high-polluting and outdated industries including steel and cement like the past decade, while more efforts should be laid on industrial upgrades and environmental protection in northeastern China," said Sun Hao, an expert with Heilongjiang Provincial Academy of Social Sciences.

Innovation will not come from government planning, but from streamlining administration and delegating powers to allow easier market access and less governmental interference, said Li Xi, provincial head of Liaoning.

(For the latest China news, Please follow People's Daily on Twitter and Facebook)(Editor:Huang Jin,Yao Chun)

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