In a speech delivered at the China Development Forum, Chinese Premier Li Qiang expressed confidence in the country's economic prospects and reassured investors that Beijing is ramping up policy support to bolster growth. Addressing concerns surrounding the economy, Li emphasized that there is still ample room for expansion in macroeconomic policies. He pointed out that low consumer price growth and a moderate level of central government debt provide a favorable backdrop for further policy measures. According to Li, China's overall demand remains insufficient, necessitating additional support to drive economic growth.
While acknowledging worries about challenges in the property sector and local government debt, Li sought to allay fears by noting that certain difficulties are not as severe as perceived. The Premier highlighted the progress made in addressing risks in these areas, suggesting that measures taken have yielded positive outcomes. Despite these challenges, China has witnessed a strong start to 2024, with robust growth in exports, industrial production, and investment exceeding expectations.
Although the short-term economic performance appears promising, the longer-term outlook presents various hurdles, including a deflationary trend reminiscent of the 1990s, a prolonged property market downturn, and waning confidence among foreign investors. Notably, foreign direct investment into China hit a three-decade low in 2023 amid mounting geopolitical tensions and rising interest rates globally. To counteract this trend, top officials have pledged to prioritize efforts to attract foreign investments this year.
In his address, Premier Li outlined key initiatives aimed at stimulating domestic demand, such as streamlining the domestic market, facilitating urban residency for rural migrants, and promoting the replacement of outdated goods and equipment by consumers and businesses. He underscored the importance of advancing advanced manufacturing and technology sectors, noting the growth of new drivers in the economy and the increased contribution of strategic industries over the past decade. Additionally, Li emphasized that China remains dedicated to sustainable growth, avoiding short-term gains that could lead to long-term risks.
While Li did not provide specific details on how policies would be reinforced, he alluded to measures announced during the recent parliamentary sessions, including a slight uptick in fiscal stimulus. The Premier reiterated the government's commitment to driving overall borrowing costs lower, following directives to reduce mortgage rates. As China navigates its economic landscape, the assurance of increased policy support and a focus on sustainable development signal the country's determination to overcome challenges and achieve its growth targets.