July 2, 2014 / 2:31 PM / 5 years ago

Premier Li says downward pressure still exists for Chinese economy

BEIJING (Reuters) - China’s Premier Li Keqiang said on Wednesday downward pressure still existed in its economy despite it operating within a reasonable range and some leading indicators demonstrating a positive trend.

China’s factory activity hit multi-month highs in June, official and private surveys showed on Monday, reinforcing signs that the world’s second-largest economy is steadying as the government steps up policy support.

Li gave no figures or details and few direct quotes in the comments on the Chinese government’s official website, but also addressed the disconnect between government finances and the difficulty of business getting financing.

“Our local and central governments have amassed a large amount of funds,” Li said. “Some have been idle for a long time and must be used ... to promote economic development and improve people’s lives.”

It has been getting harder and more expensive to finance firms in the real economy, Li said. These costs must be decreased, especially for small and medium enterprises, he added.

The government has unveiled a series of modest stimulus measures in recent months to give a lift to economic growth, which dipped to an 18-month low of 7.4 percent in the first quarter, China’s slowest annual growth since the third quarter of 2012.

Such measures have included targeted reserve requirement cuts for some banks to encourage more lending, quicker fiscal disbursements and hastening construction of railways and public housing projects.

China is targeting a 2014 GDP growth rate of 7.5 percent.

Analysts believe the worst for the economy is over as the stimulus measures kick in, but have said Beijing may have to announce more stimulus measures in the coming months to offset the increasing drag from the cooling property sector.

Reporting by Paul Carsten; Editing by Alison Williams

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