China promises economic stability as G20, parliament loom

BEIJING: Chinese policymakers emerged from the Lunar New Year hiatus with one collective message for nervous investors at home and abroad - Beijing will put a floor under the slowing economy, keep its currency steady and ensure employment remains stable even as bloated industries undergo restructuring.

The string of assurances comes ahead of two high-profile political events for China: a meeting of G20 finance chiefs in Shanghai later this month and next month´s annual gathering of China´s legislature - where the next five-year economic development plan will be finalised.

A rout in Chinese stocks last summer and its unexpected devaluation of the yuan in August have rattled global markets, raising concerns about the health of the world´s second-largest economy and Beijing´s ability to steer it simultaneously through both a protracted slowdown and radical restructuring.

"China´s economic fundamentals have not changed," Zhao Chenxin, a spokesman for the National Development and Reform Commission (NDRC), the country´s top economic planner, told reporters in Beijing on Wednesday. "The economy will maintain a medium- to high-rate growth."

"China´s status as the world´s largest holder of foreign exchange reserves has not changed, the large-scale trade surplus has not changed and the steady progress in the yuan internationalisation has not changed," Zhao said.

Still, gross domestic product expanded 6.9 percent in 2015, the slowest in a quarter of a century, and economists see a further cooling this year even if the government expands its year-long stimulus campaign.

"We think growth could be 6.7-6.8 percent this year," said Xu Gao, chief economist of China Everbright Securities in Beijing.

"The risk of a hard landing is not big. The risk of a hard landing may come from improper government policies. If policies are right, the risk of a hard landing is very small."

The NDRC plans to allocate 400 billion yuan ($61.3 billion) to fund local governments´ infrastructure projects, a local branch of the economic planner said in a statement before the long Lunar New Year break.  The economic planner said on Wednesday that it had okayed 54.1 billion yuan of investments in January - following approval of 2.52 trillion yuan worth of projects in 2015 - to help support growth.