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Chinese Premier will sacrifice Power to Help Economy

Chinese premier believes Beijing has the capability to improve the slow economy. Adding that he can even limit the power of the government if that will help the economy grow.

At his only scheduled news conference of the year, Premier Li Keqiang struck a reassuring tone about his government’s policies for managing the slowdown, deflation and other economic challenges. He also played down tensions with the U.S. and friction with the Chinese territory of Hong Kong, where Beijing is trying to root out a pro-democracy movement.

On the economy, Mr. Li said that the government is trying to strike a balance between keeping growth at a relatively high rate and pushing structural reforms. Growth, he said, faces downward pressure but if it begins to affect jobs and income, then the government would take more forceful measures.

“The good news is that in the past couple of years we did not resort to massive stimulus measures for economic growth,” Mr. Li said during the two-hour-long televised news conference. “We still have more tools in our toolbox.”

Mr. Li didn’t elaborate on options the government might select if growth falls below the target of about 7%-down from the 7.4% rate the economy hit last year. In the past four months, as growth has moderated, the central bank has cut interest rates and reduced the amount of reserves banks are required to hold, and economists expect more rounds of easing in the months ahead.

Though the news conference isn’t an unfiltered exchange-questions are generally screened-it is one of the few times Chinese people see a leader interact with the media. Mr. Li has come across as low-key and plain-spoken, unlike his predecessor who liked to quote classical poetry and used theatrical flourishes.

As he has done at the same event over the past two years, Mr. Li spoke of limiting the powers of government to make it easier for businesses to operate and generate jobs. Mr. Li said reductions in approvals required to open a business have worked, with more than 10,000 new businesses registering every day-a 50% increase over the year before.

Mr. Li talked about visiting makerspaces-usually community workshops where people go to tinker and create-and meeting a woman who was starting a matchmaking service. He said taxes would be lowered on small business, and promised the government would do more to cut red tape and encourage entrepreneurship.

Still, left unaddressed by Mr. Li is how to reduce the role of state-owned companies, which have become more dominant in the economy over the past decade. Plans to reform the state firms are expected to be introduced in coming weeks, though the changes are intended to maximize returns and don’t embrace privatization.

On international issues, Mr. Li walked a fine line on the Ukraine crisis, saying that Beijing supports the European country’s territorial integrity, but that the question of the Crimea region remains complex. He never mentioned Russia-whom Beijing has drawn close to in recent years-nor Moscow’s role in Crimea’s secession from Ukraine and ongoing fighting in eastern Ukraine.

He was more direct on recent tensions along China’s border with Myanmar, after a bomb killed four Chinese farmers and injured nine others on Friday, when fighting between the Myanmar government and rebels spilled over into Yunnan province.

“We have the responsibility and the capacity to firmly safeguard stability” and will protect “lives and property” in the border area, Mr. Li said.

On relations with Washington, Mr. Li said improved trade would help stabilize overall relations between China and the U.S. He said negotiations on a long-awaited investment treaty are making progress.

Once concluded, the treaty will “open up more new dimensions for the further growth of China-U.S. ties,” he said.

About Robert Nicholls

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