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China keeps stimulus powder dry as reforms still high on agenda

Source:   Time:

BEIJING, July 23 (Xinhuanet) -- Premier Li Keqiang has issued a new call for China’s macroeconomic policies to be more "scientific, forward-looking and targeted" in order to promote more sustainable growth.

Li added the nation will pursue a balance between economic stabilization and restructuring to bolster the economy.

Such confidence-building talk shows the Chinese policymakers are keeping their stimulus powder dry and further reforms still high on their agenda.

It came as latest government data showed China's economic growth slowed to 7.5 percent in the second quarter from 7.7 percent in the first.

Li said the country's economy has entered a new phase, where it has to rely more on economic transformation and upgrading.

"We would maintain the economic development under a rational micro-policy frame. If exceeded, adjusted measures involving maintaining economic increase, adjusting structure as well as accelerating reform should be taken. Within the frame, the key task is still to change development mode to realize sustainable and health economic development in a long run."

However, the Chinese premier also cautioned that economic fluctuations are inevitable, saying it's the government's task to avoid sharp fluctuations and keep economic growth within a reasonable range.

Like Li, experts remain optimistic about China's economic prospect despite the fact that the second quarter’s slowdown marked the 11th out of the past 13 quarters.

Every economy slows down at the end of the take-off phase as numerous cases have shown, they note. China now "gets to a point where applying more and more investment doesn't work," said Douglas Paal, vice president for studies at the Carnegie Endowment for International Peace.

"China can avoid a hard landing," said Paal, adding "China now faces a transition period over a number of years out of the take-off and into a more stable growth model."

"China could have another decade of substantial growth rates perhaps at seven to eight percent," if it implements the range of measures "that have been discussed in the financial reform and tax reform,” said Bonnie Glaser, senior adviser for Asia at Center for Strategic and International Studies.

As for further reforms, the Chinese government "will have to scrutinize their impact and adjust as they go forward and China has this phrase of feeling the stones as you cross the river," Glaser added, "Ultimately it's not all about the rate of growth, it's about the quality of growth."

"We may sacrifice some growth, but it's necessary," said Yu Yongding, an economist at the Chinese Academy of Social Sciences.

"The Chinese economy is slackening, but it has not broken the bottom line. The new government is right about deepening structural reforms."

"There is no need to be pessimistic or fearful about China's potential growth. As long as the GDP growth can stay between 7 and 8 percent, there will be no problem advancing reforms."

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