TIANJIN, China (Reuters) - China’s Premier Li Qiang said on Wednesday he was confident the world’s second-largest economy could maintain a “relatively fast” growth rate as it shifts from a manufacturing-led to a consumer-driven model, a shift analysts say is key to securing its future. Li’s speech, delivered at a meeting of the World Economic Forum in Tianjin, comes as Chinese officials seek to cushion the economic damage from a trade war with the United States through political support - a particularly daunting challenge for authorities grappling with the urgent need to undertake painful structural reforms. Most analysts believe China’s $19 trillion economy faces two paths: It can sustain relatively high, if slowing, growth driven by strong exports — a trend that is likely to fade as trade tensions with the West escalate — or it can endure several years of slower growth while implementing reforms aimed at unlocking long-term gains from its vast consumer market.

But China’s second-highest official said he was optimistic that Beijing could do both.

“We are confident in our ability to maintain a relatively fast growth rate for China’s economy,” Li said.

“China’s economy showed steady improvement in the second quarter,” he added. “Regardless of how the international environment evolves, China’s economy has consistently maintained strong growth momentum.”

Beijing has set an ambitious 2025 growth target of “around 5 percent,” though most analysts expect China to struggle to maintain that rate of expansion in the coming years unless it can secure a lasting truce with Washington.

Oxford Economics predicts that average annual GDP growth this decade will halve its 1999-2019 average, to 4.5%, and slow to 3% in the following decade. Economists say that greater support for households could ease the transition to consumption-led growth, but the shift remains politically sensitive for the Communist Party, which has long tied its legitimacy to high growth — a key reason why authorities have seriously delayed pursuing such growth for more than a decade. Last year, the International Monetary Fund said that deeper reforms are needed to convert China’s economy to a consumption-led economy, including pension reforms and the creation of a social safety net to reduce the need for massive savings. “Our goal is to help China transition from a major manufacturing powerhouse to a major consumer market,” Li said. “This will open up vast and untapped markets for companies from many countries.”

Source: Notícias Agrícolas