Maintaining credit growth is key, Li tells business heads

By Zhao Yinan in Chifeng, Inner Mongolia (China Daily)

Updated: 2014-05-24

Premier Li Keqiang said appropriate policy tools and timely fine-tuning have been developed to tackle capital shortages in the real economy, as the world's second-largest economy continues to face "relatively big" downward pressure.

"The reasonable growth of monetary credit must be maintained to address financing difficulties and reduce the cost to small and medium-sized companies, as well as those based in central and western China," Li told corporate leaders and bank directors in Chifeng, Inner Mongolia autonomous region, on Thursday after listening to their opinions on the continued economic slowdown.

At the gathering, corporate leaders from a number of industries - energy, chemicals, nonferrous metals, textiles and food - along with directors from both State-owned and local banks, vented their difficulties and identified challenges ahead as they suggested how financial institutions can better support the real economy.

Describing finance as the "lifeblood and major support" for the economy, Li reiterated his determination to push forward financial reform to create a favorable financial climate. He asked financial institutions to offer innovative services to solve the money shortage for businesses.

After dipping to a 7.4 percent growth rate in the first quarter, China's economic expansion did not show signs of recovery in the second quarter as many had expected, raising the risk that China could miss its economic growth target - set at 7.5 percent - for the first time in 15 years.

Industrial output, fixed-asset investment and retail sales have all showed slower year-on-year growth compared with March, and the growth in average new home prices has also slowed to near a one-year low in April.

But Li said the Chinese economy is "stable in general", with positive signs of restructuring showing.

"Yet we cannot let down our guard against further economic decline. We must keep in mind that development is our top priority," he said.

Addressing a complaint about government inefficiency that was raised by some corporate leaders, Li urged local governments to carry out the projects and policies that have been endorsed by the central government, as well as to take "targeted measures" that fit local conditions.

"We emphasized that the role of the market does not mean that the government can be hands-off. Instead, it is the government's responsibility to create a favorable environment in which the market can play a better role," he said.