Keeping people in jobs my main concern: Premier

Economic growth must be balanced with other needs, says Li

China's Premier Li Keqiang has said that safeguarding and creating jobs is his main focus when he considers whether economic stimulus measures are necessary.

Li made the remarks at a news conference in Beijing on March 13 when asked about the lowest annual GDP growth the government can accept. The news conference was given at the end of the annual sessions of the National People's Congress and the Chinese People's Political Consultative Conference.

The main reason for setting the target at about 7.5 percent this year was "to safeguard jobs, improve people's lives and increase incomes, urban and rural", he said.

"What we care about is the lives of people that lie behind figures, and the employment behind growth."

His comments are likely to ease concerns of some economists that the government is overly preoccupied with high GDP growth and is willing to pump-prime the economy as it did more than five years ago when the global financial crisis hit China hard.

Even though that stimulus lifted the economy in the short term, it has left many after-effects, including overcapacity in some industries, high leveraging in the corporate sector and mounting local government debt.

A Xinhua News Agency article said that while the 7.5 percent growth target is the same as in previous years, its importance is fading because many believe the government does not deem it necessary to stick to it as rigidly as it has in the past.

At various times senior leaders and officials have spoken in favor of a strategy of macro-economic control featuring a proper range - a lower limit to ensure steady growth and job creation and an upper limit to avert inflation, which Li advocated last July.

Finance minister Lou Jiwei joined the debate on March 6, calling for more comprehensive understanding of the country's growth target and not being obsessed with the figure 7.5.

GDP growth, inflation and employment are all key factors that should be considered when assessing economic conditions, Lou told a news conference, adding that growth of 7.3 percent or 7.2 percent "still counts".

However, Li also argued that reasonable growth was necessary because of the correlation between it and job generation.

"I have visited some families in which none of the member was employed," he said. "The entire family is listless and hopeless. Each year we have to deliver 10 million urban jobs while leaving room for the six to seven million migrant workers to seek employment in cities. So an appropriate rate of growth is necessary."

But the government has allowed a degree of flexibility on GDP, and the "lower threshold" the government can tolerate relates to maintaining "sufficient employment, and increasing household incomes".

"We are not preoccupied with GDP growth. The growth that we want is one that brings real benefits to the people, helps raise the quality and efficiency of economic development, and contributes to energy conservation and environmental protection."

Sun Xuegong, a researcher with the Institute of Economic Research under the National Development and Reform Commission, said that while some economists worry that the pursuit of growth may undermine the need for structural reform, structural reform and growth are not necessarily mutually exclusive.

"There is a lot of talk that when growth is too fast it is not a good time for reform; but what has not been discussed much is when growth slows too much it is not good for reform either, because slower growth and stagnating living standards will curb the need for industrial upgrading."

Sun also argued that when GDP growth slows sharply, the government has the right to adjust monetary and fiscal policy, and the adjustment is not necessarily tantamount to stimulus.

"Simplistically calling any adjustment 'stimulus' is misleading," he said.

zhengyangpeng@chinadaily.com.cn

(China Daily Africa Weekly 03/14/2014 page4)