Chinese premier warns stimulus not a solution

Chinese Premier Li Keqiang said the foundations of a growth rebound aren’t solid while cautioning that stimulus won’t help resolve deep-rooted issues in the world’s second-largest economy.

“The foundation of an economic recovery is not solid yet with many uncertain factors,” Li said in a speech today at the World Economic Forum in Dalian, China. The nation is taking steps to stabilise growth and can achieve the main economic targets this year, Li said.

Policy makers have signalled they will defend a 7.5% expansion goal for 2013 and seek to ensure a pace of 7% in the coming years. Li pledged reforms that would ripple throughout the financial system as Communist Party leaders prepare for a November meeting to lay out a blueprint for sustaining long-term growth.

“An important part of economic-system reform is financial reform,” Li said in a question-and-answer session after the speech.

“It is because it is such a complicated systematic project, it indicates China’s reform has entered a deep-water zone, or the most difficult phase.”

Li reiterated that China would push forward interest-rate and exchange-rate reforms and the internationalisation of the yuan while promoting the currency’s convertibility.

Government reports yesterday showed industrial production and aggregate financing, the nation’s broadest measure of new credit, rose more than estimated in August, in a sign leaders are committed to meeting economic goals.