By Jason Subler and Kevin Yao
BEIJING (Reuters) - China's Premier Li Keqiang defended the government's economic policies on Wednesday, vowing there would be no mass layoffs and no hard landing for the world's second-largest economy even as the government presses ahead with painful reforms.
While conceding that downward pressure is increasing, Li and other top officials at the annual meeting of parliament this month have repeatedly tried to reassure jittery financial markets and China's major trading partners that Beijing is able to manage the slowing economy.
"We are confident that as long as we continue to reform and open up, China's economy will not suffer a hard landing," Li said at a news conference at the end of the parliament meeting.
"Economic productivity is being held back by unnecessary government interference and we need to create a more level playing field and more oversight," he said, adding that China plans to cut red tape for businesses, devise ways to reduce corporate debt and improve financial regulation.
The country's top economic planner made a similar attempt to calm investors' jangled nerves earlier in the 12-day parliamentary session, saying that authorities had ample policy tools to ensure growth remains within a "reasonable range", remarks which were repeated by Li on Wednesday.
China's "supply-side reforms", which include tax cuts, will unleash fresh economic growth drivers, Li added, at his one news conference of the year, a staged event where journalists are often pre-selected to ask questions.
"Instead of resorting to massive stimulus measures, we have chosen a more sustainable but more painful economic path, pursuing structural reforms," he said.
Similarly, central bank Governor Zhou Xiaochuan took pains to expand on its views in the face of international criticism that China needs to communicate better about its policies, particularly after its surprise currency devaluation last year.
Zhou on Saturday appeared to rule out excessive stimulus to bolster the economy, but said China would keep policy flexible to counter any shocks.
China is already in the midst of its most aggressive economic stimulus campaign since the global financial crisis, but Beijing is wary of unleashing massive spending as it did in 2008/2009, which left a legacy of high debt and excess capacity.
Some analysts argue China wants too many things - economic growth but no painful reforms and no mass layoffs.
"Premier Li signaled that China would continue to implement reforms this year including cutting red tape (and) improving the portability of social welfare...," Julian Evans-Pritchard, China economist at Capital Economics wrote in a research note.
"But the government still shows little willingness to tolerate the pain associated with significant change. It says that cutting oversupply and restructuring the inefficient state sector is a priority for this year but appears determined to avoid major job losses."
HOW TO AVOID MASS LAYOFFS?
Indeed, while the government insists it will press on with structural reforms despite the slowing economy, there has been a lack of talk at this year's parliament about how millions of people could be thrown out of work as authorities try to reduce overcapacity in "rust belt" heavy industries such as coal and steel and restructure bloated, loss-making state enterprises.
Sources have told Reuters that China is expecting to lay off 5-6 million state workers in the next two to three years as part of efforts to curb excess capacity and pollution.
Even as parliament was in session, thousands of coal mine workers in a depressed part of northeastern China protested against unpaid wages over the weekend.
Li said the government will try to avoid mass layoffs, and comments from other policymakers over the last two weeks appear to indicate that Beijing will focus first on a slower but less politically sensitive approach: persuading companies to merge or restructure rather than forcing them to quickly downsize.
There have been few specific details from officials about how China will deal with those who lose their jobs.
But Li said on Wednesday that the government could offer more aid for laid-off workers if necessary, in addition to a 100 billion yuan ($15.3 billion) fund announced in February aimed at relocating workers who lose their jobs.
Weighed down by sluggish demand at home and abroad, faltering investment and massive industrial overcapacity, China's economy expanded by 6.9 percent last year, its weakest pace in a quarter of a century.
The government has set a growth target of 6.5-7 percent for 2016 and is widely expected to continue a year-long stimulus blitz to spur activity, ranging from higher spending on infrastructure projects to more interest rate cuts.
Some China watchers, however, believe real growth levels are already much lower than official data suggests.
(Additional reporting by Xiaoyi Shao and Meng Meng; Writing by Sue-Lin Wong; Editing by Kim Coghill)