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China People's Congress

China seeks to calm markets with pledge to keep growth on target

Premier Li stresses 'job first' policy as foreign investment law passes

Chinese Premier Li Keqiang said the actions of the Chinese government "sent a message of stability to the market." (Photo by Taro Yokosawa)

BEIJING -- Chinese Premier Li Keqiang on Friday insisted economic growth would be kept within the government's target range.

"It is true that the Chinese economy has encountered new downward pressure against the larger backdrop of slower global economic growth," Li told reporters in Beijing at the end of the 11-day National People's Congress.

Li said the new target of 6% to 6.5% was consistent with the government's determination to "not allow major economic indicators to slide out of their proper range."

"This way we have sent a message of stability to the market," he added.

"We will continue to cut taxes and fees, streamline our administration, foster new drivers for growth, broaden market access and level the playing field for all market players," Li said, adding that stronger measures are needed to cope with rising uncertainties this year.

China's economic slump is showing no signs of bottoming out, with unemployment rising and industrial output expanding at the weakest pace in a decade. China set the new target last week, as the nation grapples with a crackdown on financial leverage and the trade conflict with the U.S.

In an attempt to boost the private sector, Li last week announced tax cuts worth 2 trillion yuan (nearly $300 billion). For manufacturers, the value-added tax rate will be cut to 13% from 16%, with the levy for transport and construction dropping to 9% from 10%.

Amid accelerating overseas relocation of factories, Li also highlighted "tremendous employment pressure." He noted that the government has, for the first time, put a "job first" policy on par with fiscal and monetary policy, elevating the employment issue.

"Keeping our major economic indicators within the proper range is first and foremost about ensuring employment, preventing a surge in unemployment," he said, adding college graduates, demobilized soldiers, laid-off workers and migrant workers are the keys to stabilizing employment this year.

Li said Friday there would be no "lip service" and market players would test the actual effects of policies.

But he also warned that the Chinese government has to tighten its belt to pay for a series of tax and fee cuts to benefit private enterprises, as the world's second largest economy seeks to stem its economic slowdown.

"The central government will ask designated financial institutions and some enterprises directly under the central government to turn a larger share to the state treasury," Li said. "Our determination is to dip into existing interests, and this would be like turning the blade of the knife into government itself."

In a news conference that lasted more than two hours, Li also took questions on issues ranging from the trade war with Washington, to North Korea and China's new foreign investment law.

A foreign investment law, one of the most important issues at the NPC this year, passed parliament Friday morning. It aims to promote investment by foreign companies and protect their intellectual property rights, responding to criticism from the U.S. Li said the "law regulates the government's activity and asks it to administrate by law."

Li emphasized more industries will be opened to foreign companies and noted, "We hope foreign governments treat voluntary cooperation between Chinese companies and foreign companies fairly."

He downplayed the dispute with the U.S., saying that while there had been "twists and turns," it was not realistic to decouple the relationship between the world's two largest economies. He expressed hope that the trade talks would produce results.

U.S. Treasury Secretary Steven Mnuchin said Thursday that a summit to seal a trade deal between the presidents of the U.S. and China would not happen by the end of March because more negotiations were needed.

And Li took a hard line on allegations that Beijing asks Chinese companies to spy on other countries.

"Let me tell you explicitly that this is not consistent with Chinese law, this is not how China behaved," Li said. "We did not do that, and will not do that in future."

As Li was speaking, reports came in from Russia that North Korea was considering suspending nuclear talks with Washington, and leader Kim Jong Un may rethink a moratorium on missile testing.

While it is unclear whether Li was aware of this news, he told reporters in Beijing that it was important for all parties involved to stay engaged. He said "issues are long-standing and complicated, and cannot be solved overnight."

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