Below are excerpts from Chinese Premier Li Keqiang’s speech to
participants at the World Economic Forum’s Annual Meeting in Davos,
Switzerland.
"Global
economic recovery lacks speed and momentum.
Major economies are
performing unevenly.
Commodity prices are
going through frequent fluctuations. And signs of deflation have made the
situation even worse.
The Chinese economy has entered a state of new
normal. The gear of growth is shifting from high speed to medium-to-high speed,
and development needs to move from low-to-medium level to medium-to-high level.
This has made it all the more necessary for us to press ahead with structural
reform.
It must be noted
that the moderation of growth speed in China reflects both profound adjustments
in the world economy as well as the law of economics. The Chinese economy is
now the second largest in the world. With a larger base figure, a growth even
at 7 percent will produce an annual increase of more than 800 billion US
dollars at current price, larger than a 10 percent growth five years ago.
With the economy
performing within the reasonable range and the speed of growth no longer taken
as the sole yardstick, the strained supply-demand relationship will be eased,
the pressure on resources and the environment will be lowered, and more time
and energy will be devoted to push forward structural reform. That means, the
economy will enter a more advanced stage of development, with more
sophisticated division of labor and a more optimized structure. If I could
compare the Chinese economy to a running train. What I want you to know is that
this train will not lose speed or momentum. It will only be powered by stronger
dynamo and run with greater steadiness, bringing along new opportunities and
new momentum of growth.
GDP grew by 7.4
percent for the whole year, the best among major economies in the world. Over
13 million new jobs were created in cities, with both registered and surveyed
unemployment rates lower than the previous year. That is, we achieved growth in
employment despite the economic slowdown. CPI was kept at 2 percent, lower than
the target set at the beginning of the year. These outcomes prove that the host
of macro-regulation measures China adopted have been right and effective. More
importantly, new progress has been made in advancing structural reform.
Needless to say, the
Chinese economy will continue to face substantial downward pressure in 2015.
We are taking
effective measures to fend off debt, financial and other potential risks.
China’ s high savings rate, which now stands at 50 percent, generates
sufficient funds for sustaining economic growth. Besides, China’ s local debt,
over 70 percent of which was incurred for infrastructure development, is backed
by assets. And reform of the financial system is making progress. What I want
to emphasize is that regional or systemic financial crisis will not happen in
China, and the Chinese economy will not head for a hard landing.
It must be pointed
out that China is still a developing country and still has a long way to go
before achieving modernization. While peace is the basic condition for China’ s
development, reform and opening-up along with our people’ s desire for a happy
life constitute the strongest impetus propelling development. The space of
development in China’ s rural and urban areas and various regions is enormous,
and the country’ s domestic demand will simply generate great potential of
growth. Development at medium-to-high speed for another ten to twenty years
will bring even bigger changes to China and create more development
opportunities for the world.
To ensure long-term
and steady growth of the Chinese economy, we need to comprehensively deepen
reforms. We need to properly use both the hand of the government and the hand
of the market, and rely on both the traditional and new engines of growth. We
will let the market play a decisive role in resource allocation to foster a new
engine of growth. At the same time, we will give better scope to the role of
the government to transform and upgrade the traditional engine of growth.
To foster a new
engine of growth, we will encourage mass entrepreneurship and innovation. China
has 1.3 billion people, a 900-million workforce, and over 70 million enterprises
and self-employed businesses. Our people are hard-working and talented. If we
could activate every cell in society, the economy of China as a whole will brim
with more vigor and gather stronger power for growth. Mass entrepreneurship and
innovation, in our eyes, is a “gold mine” that provides constant source of
creativity and wealth.
This year, we have identified some key areas
for investment, including building railways in central and western provinces,
constructing water conservancy projects, rebuilding rundown urban areas and old
houses in cities and villages, and preventing and controlling pollutions. The
government will increase investment in these areas, and it will not act alone.
Efforts will be made to break monopoly and reform the investment and financing
systems to encourage the participation of private and foreign capitals. The
model of public-private partnership (PPP), Sino-foreign cooperatives and
government purchase of services will be adopted to better leverage various investment
sources.
Moving forward, we
will deepen fiscal and taxation reform, reduce the tax and fees charged to
businesses, particularly those in the service sector, and take new steps to
support SMEs. We will deepen reform of the financial system, continue to
promote liberalization of interest and exchange rates, and accelerate the
development of small- and medium-sized financial institutions, private banks in
particular, with a view to developing a multi-tiered capital market. We will
speed up reform of the pricing system, substantially reduce the types and items
for which the government sets the prices, and liberate price regulation to the
maximum extent possible. More emphasis will be given to the government’ s role
in creating a favorable “soft environment” . That means better market
regulation, a world-class business environment established on market principles
and the rule of law. In this way, we will be able to provide efficient and
quality public services to all market players.
China will explore
new approaches to investment cooperation with other countries. China’ s
high-speed railway, nuclear power, aviation, telecommunications and other
sophisticated manufacturing capacities are gradually being introduced to other
countries. They could meet market demand of the recipient country, and stand
the test of competition on the international market. Their export will also
help open up third-country markets, as many of such products are made by joint
ventures between China and a foreign country. China has put forward the
initiatives to build the Silk Road Economic Belt and the 21st Century Maritime
Silk Road. China hopes to work with other countries to advance these
initiatives and ensure that they are brought forward in ways that meet the
actual needs of countries concerned."
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