Premier Li Believes China Will Avoid Excess Volatility in Economy

Chinese Premier Li Keqiang said the nation will seek to keep economic growth, employment and inflation within limits, avoiding “wide fluctuations,” without elaborating on what the government deems acceptable.

China should also develop a “scientific macroeconomic policy framework” to offer markets “stable predictability,” Li told a forum of advisers and executives yesterday, according to a summary of the event published on the government’s website.

Li’s comments, the first made public since the National Bureau of Statistics reported that economic growth slowed for a second quarter, signal he won’t let expansion slow too much, without indicating any immediate plans for stimulus. Gross domestic product rose 7.5 percent in the April-to-June period from a year earlier, putting at risk the official full-year target for the same pace.

Last month, Li’s government engineered a stress test on banks that prompted the nation’s broadest measure of credit to fall to a 14-month low in an interbank cash squeeze. China’s lack of transparency became a cause of worldwide concern as it rocked bond and commodity markets and helped wipe out $4.5 trillion in global equity value.

While China should continue restructuring its economy to promote sustainable growth, some economic fluctuation is “objectively inevitable,” Li said. China will focus on restructuring when the economy runs within the limits of growth and inflation, shifting to stabilizing growth or preventing inflation when those limits are approached, Li said.

Bloomberg

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