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Moderate growth needed to avoid hazards, Li says

By Zhao Yinan in Guangzhou | China Daily | Updated: 2015-01-07 07:36

A moderate level of economic growth is necessary to prevent multiple risks to the nation in 2015, Premier Li Keqiang said during his New Year's trip to Guangdong province, China's traditional economic powerhouse.

Li said the Chinese economy has to expand within a reasonable range, otherwise economic and social problems will emerge.

"It's like rocks being nearer the surface when the tide recedes," he said. "Ships could hit them."

He was speaking at a meeting with local Guangdong officials on Monday to gauge the economic pulse of the region.

Development remains the key solution to problems the world's second-largest economy has encountered on its path to modernization, Li said. "Development is the hard truth," he said, quoting Deng Xiaoping, who masterminded China's reform and opening-up in the late 1970s.

Li urged Guangdong, China's largest provincial economy representing 10 percent of the country's economic output, to keep its economic growth above the national average. He called it "an important support for the overall situation".

But that growth should be generated from reform and restructuring, rather than from an outdated economic model, Li said.

Meng Lin, general manager of Guangdong Xinhua South Software Outsourcing, said the rate of business growth has slumped from more than 30 percent annually in previous years to about 20 percent today.

"Although the absolute number is still not bad, the lower rate is significant," he said.

Shrinking demand, rising labor costs and uncertainties in the exchange rate have added to the pressure on companies.

China adjusted its growth target for foreign trade to 6 percent for 2015, down from about 7.5 percent in 2014.

Standard Chartered, a multinational banking and financial services company headquartered in London, forecast China's GDP would further decelerate to 7.1 percent in 2015, from an expected 7.3 percent in 2014. That's in line with the People's Bank of China prediction that the country's GDP growth would "slow modestly" in 2015 to 7.1 percent.

The antidote is boldness, Li said. "Be bold enough to try. Those trials, successful or failed, are acceptable to governments and are part of our market economy," he told the Guangdong officials.

Luo Bixiong, head of Guangdong Electric Power Design Institute of China, said the company has expanded its business to include design, construction and equipment supply.

Luo said it would be easier to bid on international projects with such packaged services. For a coal-fired power plant in Vietnam, the company supplied Chinese-manufactured cargo ships and power generation equipment, as well as cement and steel to construct the buildings, he said.

The company signed deals with overseas clients worth 6.42 billion yuan ($1.03 billion) in 2014, more than half its annual contracts, a surge from 2012 when its international contracts represented only 5 percent.

zhaoyinan@chinadaily.com.cn

 

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