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China Daily Website

Q1 GDP growth within 'rational range'

Updated: 2013-05-25 01:01
By Ding Qingfen in Zurich, Switzerland and Zheng Yangpeng in Beijing ( China Daily)

Premier Li Keqiang assured a lunchtime audience of Swiss business leaders on Friday that China's GDP growth in the first quarter is within a "reasonable range".

Indicating he did not have any intention of pump-priming the economy, Li said: "China's economy delivered steady growth in the first quarter, and is still within a reasonable range."

China's GDP growth eased to 7.7 percent on a year-to-year basis in the first quarter, down from 7.9 percent in the fourth quarter of 2012.

The performance was lower than many forecasts, and the situation shows little sign of significant improvement in April and May.

The flash HSBC Purchasing Managers' Index for May, released this week, fell to 49.6, indicating factory activity shrank for the first time in seven months.

During his speech, Li attributed the slower growth to the "complicated" international economic conditions, the size of China, and accumulated problems in the country's economy over a period of years.

"It is not easy to realize this pace of economic growth," Li said, adding that in order to achieve its goal of doubling its GDP from 2010 to 2020, China has to post an annual GDP growth of 6.9 percent.

Li said China will be in the midst of its industrialization and urbanization program for a long period, which will offer tremendous market potential to the country and the rest of the world.

But he also cautioned that China would not be complacent.

The government will monitor economic indicators closely and respond with appropriate measures according to the circumstances, he said.

He vowed to maintain domestic employment levels, keep adjusting the economic structure and upgrading the economy. China will also expand its openness to the world, he said.

"China's leadership seems to have a greater tolerance toward slower growth, and is paying more attention to its reform agenda," said Wang Tao, chief economist with Swiss bank UBS.

"The government seems to realize that its credit-expansion powered, investment-driven growth model is facing a bottleneck."

The People's Bank of China, the country's central bank, said in a separate report on Friday that China's financial system remains sound, but that faced with an ever-complicated domestic and external environment, potential risks sit alongside steady growth.

The report noted that credit risks are emerging in certain regions and industries, and that risks in wealth management products provided by banks and off-balance sheet activities cannot be ignored.