MercoPress. South Atlantic News Agency

China in ‘crucial’ restructuring stage, ‘much needed to sustain economic growth’

Premier Li Keqiang is concerned with local governments’ debt, equivalent to 25% of annual economic output

China's economy is going through a “crucial” stage of restructuring, says the country's Premier, Li Keqiang. Speaking at the World Economic Forum in the Chinese port city of Dalian, Mr Li pledged to improve relations with foreign firms.

Li stressed that multinationals would get “equal treatment” with state-owned enterprises. He added that China was well-placed to hit a growth target of 7.5% this year, despite a “complex” economic climate.

China posted its lowest growth in two decades for the second quarter of 2013, and there had been some concerns that the world's second-largest economy might be headed for a so-called “hard landing”.

However, Premier Li sought to allay those fears by saying the Chinese economy was stable and had strong fundamentals.

“The foundation for an economic rebound is still fragile with many uncertainties ahead,” Mr Li said in comments carried by the Associated Press news agency.

“China is now at such a crucial stage that without structural transformation and upgrading, we will not be able to sustain economic growth” Premier Li added.

The government has been undertaking key structural reforms, such as liberalising interest rates, allowing its currency to strengthen, and taking steps to reduce its dependency on exports.

Recent economic data showed a sharp rise in growth of exports and imports, as well as improvement in manufacturing figures.

These better-than-expected numbers were taken as a sign that China's growth is stabilizing.

“We are determined to further stimulate domestic demand and consumer spending. At the same time, we want to improve our investment structure and make it more efficient,” Mr Li said.

Premier Li also addressed the issue of local government debts, which an audit last year found to be 10.7 trillion Yuan (1.6tn dollars) or about one-quarter of China's annual economic output.

“This has become a source of concern” Mr Li said. ”We are taking relevant measures to address it in an orderly fashion. Here I can say with certainty that the situation is, on the whole, safe and manageable”.