China's new premier pledges reform, sees risks

Chinese Premier Li Keqiang said ensuring economic growth was the top priority for his government, pledging to fight graft, tackle vested interests and calling for an end to a cyber-hacking row with the United States.

Li's first news conference as premier, at the close of the annual meeting of China's rubber-stamp parliament that confirmed his appointment, covered topics that have been the principal focus of recent government rhetoric, with a strong emphasis on the necessity of reform to deliver long-term economic stability.

"The highest priority will be to maintain sustainable economic growth," Li said at the start of the conference that lasted almost two hours and in which he repeatedly stressed the need for economic, social and government reform.

"The key is to have economic transformation. We need to combine the dividends of reform, the potential of domestic demand and the vitality of creativity so that these together will form new drivers of economic growth," he added.

"We said that in pursing reform we now have to navigate uncharted waters. We may also have to confront some protracted problems. This is because we will have to shake up vested interests," said Li, looking relaxed and repeatedly gesturing with his hands.

"Sometimes stirring vested interests may be more difficult that stirring the soul, but however deep the water may be, we will wade into the water. This is because we have no alternative. Reform concerns the destiny of our country and the future of our nation."

Ting Lu, chief China economist at Bank of America/Merrill Lynch in Hong Kong, said in a note to clients that the pro-reform tone of the speech would go down well with investors.

"He understood very well that key barriers for reforms are vested interests rather than ideology," Lu said.

But beyond a specific pledge to cut administrative red tape on some 1,700 processes needing government approval by at least a third, Li's answers to the 11 pre-arranged questions he took from journalists offered no new policy initiatives.

However, he said that planned reform of the controversial system of forced labor camps would come by the end of the year.