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Chinese PM Li defends free trade, promises more reforms

, June 27, 2017, 0 Comments

chinese-china-pm-li-marketexpress-inChinese Premier Li Keqiang has hailed the benefits of globalization, stressing that free trade is a “precondition of fair trade.” Li also said China can control growing financial risks and hit this year’s growth targets.

“Free trade is the precondition of fair trade,” Li said as he opened a World Economic Forum event known as the Summer Davos in the northeastern Chinese city of Dalian. “Restricting free trade will bring unequal trade.”

“Economic globalization is bringing benefits to all countries,” Li underlined. “It is important to promote growth that benefits all.”

Li’s speech was reminiscent of Chinese President Xi Jinping’s vigorous defense of globalization and free trade in Davos in January and contrasted with US President Donald Trump’s protectionist measures and calls for “fair” trade deals.

Despite the Chinese leaders’ declared support of free trade, China has long been criticized for restricting access to its market for foreign firms.

European companies last month said they find it more difficult to conduct business in China and feel less welcome than before.

Li said China would further open up its markets and create a level-playing field for domestic and foreign enterprises. But he announced no new initiatives and made no mention of foreign complaints that Beijing is reducing access to its markets for computer security technology, farm-related biotech and other fields.

Rising debt levels

Li also tried to dispel concern about the rapid rise in Chinese debt since the 2008 crisis, which private sector analysts cite as the biggest potential risk to the world’s second-largest economy.

The Moody’s rating agency cut Beijing’s credit rating May 25 and the International Monetary Fund urged Beijing on June 14 to take faster action to get debt under control.

“In the financial sector there are some risks, but we have the ability to uphold the bottom line of no systemic financial risks,” said Li to an audience of Chinese and foreign businesspeople.

China has relied on infusions of credit to prop up economic growth since 2008, causing total nongovernment debt to rise from the equivalent of 170 percent of annual economic output in 2007 to an estimated 260 percent last year.

That unusually high level for a developing country has prompted warnings it could cause a financial crisis or drag on economic growth.

Growth and climate

Li said China is “fully capable” of hitting its economic development targets.

China’s economic growth is maintaining momentum from the first quarter, when GDP grew by 6.9 percent year-on-year, Li said. The country can reach its economic growth target of about 6.5 percent for the whole year, he said.

“China has refrained from massive stimulus,” Li said, adding that the Chinese economy was relying less on exports and investments and more on consumption.

The premier also affirmed Beijing’s pledge to stick to its commitments on climate change, another area where it has split with Washington following Trump’s withdrawal from the Paris climate treaty.

Li promised “tremendous efforts” to control climate change.

“Countering climate change is the common responsibility of the international community,” he said. “China will honor its commitment and implement the measures to deal with climate change.”