However, the country needed to enhance agricultural productivity so as to increase farmers' income and to put both rural and urban residents under the umbrella of the social security network before the domestic demand could take off, Li said.
"Farmers' contribution to the economy could be huge if their income are raised to a higher level, given the large number of farmers," he said.
Of China's total 1.3 billion population, more than 900 million are farmers.
"Reforms of the pension system, education and medical insurance should keep up with the economic growth to increase people's willingness to spend," Li added.
He said the public should have faith in the government's ability to stimulate the economy. "There is no doubt about that."
The 79-year-old economist said the fundamentals of the economy remained unchanged, and difficulties of exporters are results of a crisis originated outside the country.
"The country needed to promote innovation, industrial upgrade and economic restructuring in its efforts to bolstering the economy, and these measures could not only ensure the economic growth, but also improve the growth quality." he advised.
The professor with the Peking University said employment should be the country's top priority. The recovery of job creation is usually behind that of economic growth, he warned.
China said it aimed to create jobs for nine million people this year. "It is not an easy target, but the country is actively finding ways to make it happen," he said.
About 20 million of China's migrant workers have returned home after losing their jobs as the global financial crisis takes its toll on the economy.
Li also said the most important reform at the moment is the integration of rural and urban areas in order to solve pressing issues such as jobless migrant workers and rural development.
(Xinhua News Agency March 3, 2009)