China's premier says can use rates, other policy steps to support economy

BEIJING - China can use reserve requirements and interest rates to support economic growth, Premier Li Keqiang said, promising broad policy steps to prevent a sharper deceleration as the world’s second-biggest economy expands at the slowest pace in nearly three decades.

China is targeting a GDP growth range of 6 to 6.5 percent this year, down from 6.6 percent in 2018 - the slowest pace in 28 years. The support measures rolled out so far are taking time to kick in and most analysts believe activity may not convincingly stabilise until the middle of the year. Sources told Reuters in February that the central bank is not yet ready to cut benchmark interest rates to spur the slowing economy, but is likely to cut market-based rates.

Li also sought to soothe concerns that the tax cuts soon rolled out by the government will weigh on local finances, promising the central government will offer support to provinces in central and western China via payment transfers. “Not allowing the economy to slip out of a reasonable range, that is to say we will not allow waves of layoffs,” said Li, adding the government will provide support to firms that create most jobs.

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