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Li Signals Reluctance on Stimulus to Boost China Growth




China

Chinese Premier Li Keqiang signaled policy makers are reluctant to use stimulus to counter a slowdown in the world’s second-largest economy because the risks outweigh the benefits. “To achieve this year’s targets, the room to rely on stimulus policies or government direct investment is not big — we must rely on market mechanisms,” Li said in a May 13 speech broadcast to officials around the country, according to a transcript published last night on the central government’s website . Relying on government-led investment for growth “is not only difficult to sustain but also creates new problems and risks,” he said. Li’s most extensive economic comments in almost two months indicate China may be unlikely to boost government spending or follow central banks across Asia in cutting interest rates as he tries to pare the state’s role in the economy.



Bank of America Corp. and JPMorgan Chase & Co. this week lowered 2013 growth estimates to 7.6 percent after April industrial production and investment trailed forecasts. “The comment suggests that there won’t be any large-scale stimulus, but that doesn’t mean the government won’t try at all to boost growth,” said Dariusz Kowalczyk, senior economist and strategist at Credit Agricole CIB in Hong Kong. “The growth in the first first four months is too weak for the government to be fully relaxed.” Last year China cut interest rates twice and accelerated investment approvals in response to slowing growth. Government Role Li made the remarks at a nationwide teleconference on reducing’s the government’s role in economic development. The government will cut unnecessary checks and approvals to boost private investment, Li said. The country’s growth is under “relatively large” downward pressure, he said. The remarks don’t necessarily mean China will pay less attention to expansion. The nation needs to “make the cake bigger” […]



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  • EUR/USD Gold CorrelationLi Signals Reluctance on Stimulus to Boost China Growth
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  • Li Signals Reluctance on Stimulus to Boost China Growth
  • Li Signals Reluctance on Stimulus to Boost China Growth
  • Li Signals Reluctance on Stimulus to Boost China Growth
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