'Like taking a knife to one's flesh': Li Keqiang vows to push on with 'painful reforms'

'Like taking a knife to one's flesh': Li Keqiang vows to push on with 'painful reforms'

Premier Li Keqiang admitted yesterday that China would face difficulties meeting its growth target but vowed to press ahead with "painful reforms" to cut red tape and spur growth through innovation.

Speaking to the world media at the annual press conference to wrap up the national parliamentary sessions, Li said it would be "by no means easy" for the country to achieve its 7 per cent growth target in gross domestic product for 2015 - the lowest in 15 years.

The economy dominated the otherwise lacklustre event, accounting for eight of the 17 questions aimed at the premier. There were no questions from the foreign media about the usual sensitive subjects of Tibet , territorial disputes or human rights.

Li stressed the importance of innovation and e-commerce as new engines of growth, but otherwise offered few details on how the world's second-largest economy would go forward.

GDP grew 7.4 per cent last year - the slowest rate in 24 years, amid the fallout from industrial overcapacity and an ailing property market.

But Li vowed to press on with reforms, saying they would be painful but unavoidable.

"This is not nail-clipping. This is like taking a knife to one's own flesh," Li said.

"But however painful it might be, we are determined to keep going until our job is done."

He said that despite the slowdown in growth, China created more jobs last year as the government continued to reduce its role in the economy.

China would not resort to another major stimulus like the one after the 2008 global financial crisis. Instead, Li said, Beijing would look to the "new economy" - the internet, technology and services sectors - to spur growth.

Unlike his predecessor, Wen Jiabao , who often used poetry to make a point, Li underscored his message with a popular internet phrase.

"We need to position ourselves to where the winds blow. If we catch this wind of the internet, the Chinese economy will fly."

The reference was a variant of a saying popular among tech executives that "even pigs can fly if they catch the right wind".

Mizuho Securities greater China chief economist Shen Jianguang said that cutting red tape and supporting new industries were long-term measures and not immediate solutions to problems like overcapacity.

Li also said the central government still had ample room and "plenty of tools" to keep growth "within a reasonable range".

ANZ Banking Group senior economist Raymond Yeung Yue-ting said Li needed to assure the market that China could manage "the economic downside risks". "China has room to ease monetary policy and property curbs, as well as increase investment to boost economic growth," hesaid.

The central bank cut benchmark interest rates on March 1 and last month cut the banks' reserve requirement ratio by 50 basis points.

Premier Li Keqiang admitted yesterday that China would face difficulties meeting its growth target but vowed to press ahead with "painful reforms" to cut red tape and spur growth through innovation.

Speaking to the world media at the annual press conference to wrap up the national parliamentary sessions, Li said it would be "by no means easy" for the country to achieve its 7 per cent growth target in gross domestic product for 2015 - the lowest in 15 years.

The economy dominated the otherwise lacklustre event, accounting for eight of the 17 questions aimed at the premier. There were no questions from the foreign media about the usual sensitive subjects of Tibet , territorial disputes or human rights.

Li stressed the importance of innovation and e-commerce as new engines of growth, but otherwise offered few details on how the world's second-largest economy would go forward.

GDP grew 7.4 per cent last year - the slowest rate in 24 years, amid the fallout from industrial overcapacity and an ailing property market.

For all the latest news from China’s parliamentary sessions click here

But Li vowed to press on with reforms, saying they would be painful but unavoidable.

"This is not nail-clipping. This is like taking a knife to one's own flesh," Li said.

"But however painful it might be, we are determined to keep going until our job is done."

He said that despite the slowdown in growth, China created more jobs last year as the government continued to reduce its role in the economy.

China would not resort to another major stimulus like the one after the 2008 global financial crisis. Instead, Li said, Beijing would look to the "new economy" - the internet, technology and services sectors - to spur growth.

Unlike his predecessor, Wen Jiabao , who often used poetry to make a point, Li underscored his message with a popular internet phrase.

"We need to position ourselves to where the winds blow. If we catch this wind of the internet, the Chinese economy will fly."

The reference was a variant of a saying popular among tech executives that "even pigs can fly if they catch the right wind".

Mizuho Securities greater China chief economist Shen Jianguang said that cutting red tape and supporting new industries were long-term measures and not immediate solutions to problems like overcapacity.

Li also said the central government still had ample room and "plenty of tools" to keep growth "within a reasonable range".

ANZ Banking Group senior economist Raymond Yeung Yue-ting said Li needed to assure the market that China could manage "the economic downside risks". "China has room to ease monetary policy and property curbs, as well as increase investment to boost economic growth," hesaid.

The central bank cut benchmark interest rates on March 1 and last month cut the banks' reserve requirement ratio by 50 basis points.

Source: http://www.scmp.com/news/china/article/1738660/taking-knife-ones-flesh-li-keqiang-vows-push-painful-reforms