China’s economy faces challenges and downward pressures but there is no risk of a hard landing as the government is fully capable of supporting growth, said the country’s premier Li Keqiang yesterday.
Li told the World Economic Forum in Dalian, in north-eastern China, that he was confident that the government would achieve its main economic targets this year.
China will take steps to expand domestic demand and will implement policies to boost imports, he said.
Premier Li also said China will never start a currency war and countries should instead boost economic co-operation as the global economy remains sluggish.
He told the forum countries should not rely on quantitative easing to deal with global economic problems and he reiterated that China would keep the yuan “basically stable at a reasonable and balanced level”.
The government is still struggling to stabilise the yuan after its surprise devaluation of the currency last month and halt a stock market rout that has seen the country’s share indexes plunge 40% since mid-June.
A central bank policy adviser also noted, yesterday, that China will not see “excessive” depreciation in its yuan currency as long as the government is able to stabilise economic growth.
“There will be no excessive [yuan] depreciation. The most important thing is to stabilise the economy,” Huang Yiping, a member of the central bank’s monetary policy committee, said.
China’s commerce ministry yesterday said exports will see positive growth this year while the decline in imports will ease.
China’s yuan shot higher in offshore markets on suspected intervention by Chinese state banks, putting the offshore rate on track for its biggest daily gain on record.
The intervention was seen by traders as another bold gesture by Chinese authorities to shake out speculators and dampen expectations for further depreciation in the yuan.
The offshore yuan spot rate strengthened more than 1% to 6.39 per dollar from 6.4698 earlier in the day as the suspected intervention prompted those betting on yuan depreciation to cover their positions.
Offshore traded volumes spiked as much as 10 times their monthly average.
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