China's economy will not suffer hard landing: Li Keqiang

Allaying global concerns over the possibility of China's struggling economy heading for a "hard landing", Premier Li Keqiang said on Wednesday that the world's second largest economy has the ability to withstand financial risks.

"China's economy will not suffer a hard landing and there are more hopes than difficulties for the world's second largest economy," Chinese Premier Li Keqiang said in his annual press conference here on Wednesday answering questions about the growing domestic and global concerns over China's economic slowdown.

Hard landing refers to the state of economy rapidly shifting from growth to slow growth to flat as it approaches a recession.

"As long as we stay on the course of reform and opening-up, China's economy will not suffer a hard landing," Li, 60, who is second in the leadership hierarchy to President Xi Jinping said in his press conference telecast live all over the country.

On the sliding path since 2011 ending about the three decades of double-digit growth, China's gross domestic product (GDP) last year slipped to 6.9% with forecasts by the International Monetary Fund (IMF) and World Bank that the slowdown will continue in the next two years.

Earlier this month, Keqiang in his work report of legislature the National People's Congress (NPC) proposed to cut down the GDP target for the next five years 6.5% to 7%.

About the status of the economy, Keqiang said global economic growth is sluggish and China has been affected by the weak performance.

China is also going through a transition and some deep-seated problems, which have built up over the years, have become more acute, he admitted.

"All these have added to downward pressure on China's economic growth," Keqiang said.

He also played down concerns over financial risks faced by China, spiralling debts of the local government as well as falling profits of the Chinese banks. Local government debts along were stated to be over $1.20 trillion.

Keqiang said China is in a good position to defuse financial risks adding that the non-performing loan ratios of some financial institutions increased in China because of the difficulties in some enterprises and some sectors.

But capital adequacy ratio of China's commercial banks exceeded 13%, below the international warning line, and banks' provision coverage ratio was above 180%, higher than the level of 150% set by the government, Keqiang said.

The fairly high corporate debt ratio is no new problem in the country, Keqiang said, as Chinese companies still raise capital mostly indirectly.

But "we also have other market-based tools at our disposal to help bring down corporate debt ratio," Keqiang said.

"We have a good reserve of policy instruments in our tool kit" to deal with the slowdown, Keqiang said.