PM Li's speech at Summer Davos boosts market confidence

Chinese Premier Li Keqiang's speech at the opening ceremony of the Summer Davos Forum on Wednesday has drawn positive international reactions with foreign experts and media lauding it as boosting confidence in China's economy. "The Chinese new leadership has done well managing expectations about growth," said Ryan Rutkowski, a China research analyst with the Washington-based Peterson Institute for International Economics. In his speech, Li reaffirmed his commitment to reform and innovation Wednesday in Dalian, a port city in northeastern China. "They are telling the world that they are happy with the current growth level of 7-8 percent, and have made the necessary adjustments to maintain this level of growth," Rutkowski said. Li was "accurate" in his statements about external risk, he said. "China has a strong net international investment position and low exposure to short-term foreign investments due to capital controls," he stressed. "More broadly, the region has a better footing than in the late 1990s," said Rutkowski. "And improving demand in the U.S., Europe, and Japan will have a positive impact on growth in the region." In its report, Bloomberg quoted Li as saying: "foundations of a growth rebound aren't solid while stimulus won't help resolve deep-rooted issues." The report also said that China was taking targeted measures to address the issue of local government debts. "China has entered a phase of a medium-high rate of growth, down from a high rate, yet the pace is still a high rate among major economies around the world," Li was quoted by Bloomberg as saying. The Wall Street Journal believed that Li regarded the current pace of growth at around 7.5 percent as "the new normal." It said China had decided against the idea of a new stimulus after "weighing the pros and cons," and "medium to high speed" should be maintained "at all costs." In its report, the Associated Press pointed out Li's determination as "promising to promote growth by opening markets to private competition and improving the investment climate for foreign companies." The news agency also laid stress on China's focus on "structural reforms aimed at making the economy more productive and efficient." "Beijing is in the midst of a marathon effort to nurture more self-sustaining growth based on domestic consumption rather than trade and investment," the AP reported. Premier Li also quelled concern about debts run up by local governments of China, and Li ensured the situation is "on the whole safe and manageable," said the report. According to a Kyodo News report, Li stressed the need to advance economic reform so as to achieve stable long-term growth. Li also made it clear that local government debts were generally under control, said the report. Nihon Keizai Shimbun, a leading Japanese economic newspaper, reported that Li used "medium to high speed" to describe China's economic growth and highlighted the target of keeping steady economic growth. Citing improvements in economic data such as industrial output in July and August, Li said the Chinese economy had stabilized and taken a turn for the better, sending signals for further reforms in China, said the report. The Chinese premier has voluntarily touched upon the issue of local government debts, making plain the Chinese government's confidence in its ability to address the issue, it said. In an interview with Xinhua, Macharia Munene, a lecturer on International Relations at the University of Nairobi, said that Li's speech could affect the global economy as China was a major player in the social, political and economic sectors of the world. Given the current economic slowdown, it could provide encouragement to the rest of the world to increase cooperation on all fronts, Munene said. It was Africa's hope that China would continue the policy to open its vast markets for goods produced by Africa, offer its assistance in the development of infrastructure, and bring more high technologies.