The nations share extensive common interests on issues like jobs, foreign exchange and security, and it’s important for both sides to keep talking to build trust, Li said Wednesday at a press conference in Beijing after the close of the annual National People’s Congress. There are bright prospects for cooperation with the U.S. after President Donald Trump backed the One China policy on Taiwan that has underpinned relations for decades, Li said.
"We don’t want to see a trade war," Li said, adding that China will keep opening its door. Bilateral trade and investment created nearly 1 million jobs in the U.S. last year, he said.
According to Bloomberg, China has championed free trade and globalization, and while there have been issues with the process, the country is ready to work with other nations to improve the international governance system, Li said. President Xi Jinping preached "openness" and economic liberalization to global elites in a January speech at the World Economic Forum in Davos.
The yuan has depreciated as the dollar appreciated and China doesn’t want to reduce the value of its currency to promote exports, Li said. Keeping the yuan stable at a reasonable and equilibrium level is an important contribution to the global financial system, he added.
Li said domestic risks must be taken seriously, especially in the financial sector, and that authorities will take targeted measures to keep them from spreading. The financial system is generally stable and there are no systemic risks, while policy makers still have a number of tools available to deploy if needed, he said.
‘Seat Belt’
China will fasten its "seat belt" and rein in risks as it pursues a mid- to high- speed growth, the premier told a group of about 1,000 journalists at the Great Hall of the People. While China is the engine for global economic growth, it faces big external risks, Li said.
Outstanding credit at the end of 2016 was equal to about 258 percent of total economic output, up from 160 percent in 2008, according Bloomberg Intelligence estimates.
Li’s report to the NPC set a 2017 growth target of "around 6.5 percent, or higher if possible" -- less ambitious than last year’s 6.5 percent to 7 percent target range. Economic data Tuesday showed growth on a firm footing that gives policy makers more space to prioritize curbing excessive leverage and deflating asset bubbles.
A 6.5 percent expansion isn’t low speed, and is not easy to meet, Li said.
Every year there are predictions of a hard landing, but the economic performance in the past few years despite slowing global growth and trade should put those prophesies to a full stop, Li said. China has maintained steady growth without resorting to strong stimulus, and the economy will continue to enjoy medium to high growth, he said.
With growth steady, the central bank is seen moving toward a tightening bias by boosting money-market rates to contain company leverage. With the Federal Reserve poised to continue raising interest rates this year, keeping China’s policy in line with the U.S. could help support the yuan and reduce capital outflow pressure.
‘Relatively Large’
The labor market faces “relatively large” employment pressure this year with a record 7.95 million college graduates and another 5 million graduating from secondary vocational schools, Li said. With "several hundred thousand" workers losing jobs amid the drive to cut excess capacity, the government’s job is to ensure ample opportunities and policy makers won’t allow massive unemployment in a particular group of people, Li said.
Li, 61, replaced Wen Jiabao in 2013 as chief of China’s cabinet, the State Council. With a master’s degree in law and doctorate in economics, he’s known for a command of English that gives him greater opportunity to interact freely with foreign leaders at global events.
Top cadres now are working to ensure political and economic stability before they gather in the fourth quarter for a twice-a-decade leadership transition.