China unjustifiably blamed as trigger of volatility: premier (3)

DALIAN, Sept. 9 (Xinhua) -- Premier Li Keqiang said on Wednesday that China has been unjustifiably blamed for triggering global volatility and the country's economy is on track with systemic risks at bay.

The Chinese economy is growing at a proper rate, government debt risks are controllable and the yuan will not experience a prolonged depreciation, the premier said as he met with business leaders at the annual meeting of the New Champions, also known as the Summer Davos Forum, in northeast China's port city of Dalian.

CHINA NOT TO BLAME

China has been wrongly criticized for causing currency wars as the recent RMB depreciation was blamed for setting off chain reactions in the global market, Li said.

"It's like you are shot by a bullet even though you have assumed a prostrate position," Li said, using a faddish Chinese quip.

China has no intention of boosting exports through the depreciation of yuan and is unwilling to see a currency war, as it will just work against China, Li said.

Using a weaker yuan to boost exports is also not in line with China's ongoing structural readjustment, the premier said.

"There is no basis for continued depreciation of the Chinese yuan, given China's ample foreign exchange reserve and its economy is growing within a proper range."

SYSTEMIC RISKS AT BAY

China has fended off potential systemic financial risks during the recent market gyrations with timely interventions.

Authorities have prevented the spread of financial risks and stabilized the stock market during unusual fluctuations in June and July, Li said.

The measures are normal practice in global markets and do not mean the government is trying to replace or weaken the role of the market, Li said.

China vowed to let the market play a decisive role in resource allocation in a key policy meeting in late 2013.

China will continue to develop a multi-layered capital market and make it open, transparent and stable based on market forces and the rule of law.

Weighed down by volatile global markets, Chinese shares have gone through major fluctuations in the past two months with the benchmark Shanghai Composite Index falling by around 40 percent from its peak in June.

"The recent volatility appeared to be a follow-up to the global financial crisis that broke out in 2008," Li said. "China is not the source of it, but instead remains one of major drivers of global growth."

Li downplayed concerns over government debt as it is at a relatively low level.

Central government debt is only about 20 percent of China's GDP, while 70 percent of local government debt has been used in investment with expected returns, the premier said.

LEVEL PLAYING FIELD

China is striving for a level playing field for both Chinese and foreign firms as the economy is seeking innovation from all sources, for more sustainable growth.

The government has halved the number of industries that are off limits to foreign investors, and has cut red tape for foreign companies, the premier said.

Foreign direct investment in China remained robust at 7.7 percent during the first half this year amid a sluggish global economy, Li said.

China is negotiating with the United States and the European Union over bilateral investment treaties based on the "negative list" approach of clearly-stated banned practices, Li said.