March 16, 2017 3:30 am JST

China's Li steers clear of friction with Washington

Premier stresses diplomatic, economic stability ahead of leadership reshuffle

ISSAKU HARADA, Nikkei staff writer

President Xi Jinping, left, and Premier Li Keqiang attend the closing ceremony of the National People's Congress in Beijing on March 15.

BEIJING -- Premier Li Keqiang's measured words on China-U.S. relations after the closing of the annual congressional session suggest Beijing seeks to avoid rocking the boat ahead of a change in party leadership this year.

Common interests

"China-U.S. relations have been going forward in spite of various twists and turns in the past several decades, so I'm optimistic about the future of this relationship," Li said at a news conference after the National People's Congress, responding to a question from American outlet CNN. He reiterated that the "One China" policy, under which the U.S. regards Taiwan and mainland China as parts of the same country, constitutes the "political foundation" of ties between Beijing and Washington.

The premier called for greater bilateral cooperation, saying Chinese and Americans "have the wisdom to properly manage differences" and stressing the need to "expand our common interests."

President Xi Jinping is weighing an early meeting with President Donald Trump. American media have reported that Trump intends to host Xi at his Florida resort next month. A wide array of topics will be on the agenda, including North Korea's nuclear and ballistic missile development and the U.S. trade deficit with China.

Li expressed concern about the hard line coming out of Washington regarding Pyongyang -- particularly given China's proximity to North Korea -- and urged efforts to resolve the issue through dialogue. "Tensions may lead to conflicts, which will bring harm to all parties involved," he said, adding that "no one wants to see chaos at his doorstep."

Avoiding touchy issues

The premier did not touch on the advanced missile defense system that the U.S. plans to install in South Korea, which has met with strong backlash from Beijing. He rejected U.S. meddling in the South China Sea, holding that "specific disputes should be addressed and resolved through dialogue among the parties directly concerned," but did not advance any arguments to justify Beijing's military buildup in the region.

Li sought to counter the Trump administration's protectionist tilt on trade policy, arguing that despite China's trade surplus with the U.S., much of the resulting profit goes to American businesses. "Should a trade war break out between China and the U.S., it would be foreign-[funded] companies, in particular U.S. firms, that would bear the brunt of it," he warned.

Sino-Japanese relations were not addressed. Though this year marks the 45th anniversary of the normalization of diplomatic ties between the two countries, tensions still smolder over historical issues and the Japan-administered Senkaku Islands, which are claimed by China as the Diaoyu. The premier may have sought to avoid sensitive topics ahead of the Communist Party congress this fall.

Rosy outlook

As for China's economy, Li acknowledged that Beijing lowered its growth target to around 6.5% but expressed confidence that medium to high growth will continue over the long run. "We believe that China's economy will continue to be a strong driving force in the face of a sluggish global economic recovery," he said.

"China's economic performance in the past few years should suffice to put predictions of a hard landing to a full stop," he added.

The government work report delivered by Li at the start of the National People's Congress warned that "we must be fully alert to the buildup of risks" in the financial system.

The premier returned to this point Wednesday, stating that such risks cannot be ignored and that the government will "take prompt and targeted measures to prevent them from further spreading." At the same time, he stressed that the Chinese financial system is "generally safe."

Asked about China's foreign-exchange reserves, which dipped below $3 trillion at one point amid intervention to prop up the yuan, Li noted that they remain the largest in the world. The country has "ample foreign exchange reserves for meeting relevant needs like paying for imports or [repaying] short-term external debt," he said.

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