The premier, in remarks published late on Saturday after a special cabinet meeting, said China is continuing to steadily manage its economy.
Li said international market instability “has increased the uncertainties around the global economic recovery, and the impact on China’s financial market and imports and exports has also deepened, with the economy facing new pressure.”
He defended China’s efforts to steer through a volatile period since mid-June, when China’s stock market plunged. On Friday, Shanghai’s benchmark index was nearly 38% below where it was on June 12.
The premier reiterated earlier remarks that there’s no basis for continued depreciation of the yuan following its devaluation on August 11.
The yuan “will stay basically stable at a reasonable and balanced level,” he said.
Li said recent cuts in the reserve requirement ratio (RRR), interest rates, taxes and fees and measures aimed at stabilising the market were already paying off.
Analysts say that further measures are necessary to support the economy and calm markets.
China’s economy, which in the past produced double-digit growth, is slowing. The government reported that annual growth in the second quarter was 7%, a figure that some economists doubt.
Li said China would “enact more targeted and responsive macro-regulation to offset downward economic pressure, more robust reform and innovation efforts to energise the market, and more effective delivery to secure the positive momentum for growth”.
He said China needed to encourage new forms of investment and financing by local governments and businesses, such as local debt swaps and corporate bonds.
He reiterated the role of an open, transparent capital market, but said risk management needs to be improved to prevent regional or systemic risks.
“China has great potential for further development and is well capable of effectively managing risks and keeping them under control,” Li said.
Meanwhile, just under half of British manufacturers have said they are worried by the possibility of a sharp slowdown in China’s economy and one in ten are reviewing their business plans, a survey from an industry group showed yesterday.
EEF said 47% of manufacturers were concerned by signs of a slowdown in China, which have rocked financial markets over the past week. Big manufacturing firms were most likely to be worried, and also more likely to be looking at their business plans to take into account different scenarios, the survey showed.
“Overall, UK factories send only a small proportion of their goods to Chinese customers, but a sharper slowdown would also see a halt to growth in export sales through supply chains in Europe,” said Lee Hopley, EEF chief economist.
“The more widespread impact, at least in the near-term, is likely to be the knock to already delicate confidence levels.
Time will tell whether this takes a further toll on growth across the sector.”
The survey of 284 companies also showed just over a fifth of manufacturers were still worried about a re-escalation of Greece’s crisis.