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Li Keqiang: China will stay the course on sustainable growth

Updated: 2013-09-09 19:45
( Xinhua)

BEIJING - On Sept 9 2013, Premier Li Keqiang's article "China Will Stay The Course On Sustainable Growth" was published on Financial Times (UK). The full text is as followings:

China Will Stay The Course On Sustainable Growth

By Li Keqiang

Five years on from the start of the financial crisis, many countries now face new challenges as the world economy slowly recovers.

The Summer Davos Forum, which opens this week in Dalian, will be closely watched for signs of the state and strength of the Chinese economy, which finds itself at a crucial stage of transformation.

Observers ask whether China's economic slowdown will lead to a sharp decline – or even a hard landing – and whether our reform programme will be derailed by complex social problems. My answer is that our economy will maintain its sustained and healthy growth and China will stay on the path of reform and opening up.

Shortly after it took office in March, the new Chinese government made clear its policy was to sustain economic growth, improve people's wellbeing and promote social equity. We can no longer afford to continue with the old model of high consumption and high investment. Instead, we must take a holistic approach in pursuing steady growth, structural readjustment and further reform.

Reform remains the driving force. We will continue to streamline government and delegate power, press ahead with structural changes and grow economic sectors under diverse ownership. Government will leave to the market and society what they can do well while concentrating on those matters within its purview.

We will advance reforms of administrative management, fiscal and tax systems, financial sectors and pricing. The theme of this year's Summer Davos Forum is "Meeting the Innovation Imperative". To me this means not only technological but more importantly institutional innovation, and reform is also a way of innovation.

Opening up at a faster pace gives impetus to development. We will continue to support the Doha round of World Trade Organisation talks, work for the signing of bilateral free trade agreements, upgrade the China-ASEAN Free Trade Area, and provide a level playing field and a better legal environment for foreign investors. We will explore new ways to open China to the outside world, and Shanghai's pilot free-trade zone is a case in point.

A key focus is the expansion of domestic demand. Here China enjoys one great advantage: its 1.3bn people are keen to work hard in pursuit of a better life and make up a huge domestic market. We will expand consumer demand through initiatives such as the promotion of the IT sector through the expansion of broadband and 4G licences.

While focusing on consumption, we will keep a reasonable scale of investment with priority given to energy conservation, environmental protection, railway projects in the central and western regions, and municipal facilities.

Urbanisation also offers huge potential for long-term domestic demand. Of the people living in the countryside, more than 100m are set to be absorbed into cities over the next decade or so. This will be an extremely complex process of economic and social change, requiring a new policy approach aimed at balanced development. There will be many difficulties, but it is what we must accomplish in order to narrow the urban-rural gap.

The service sector will be an increasingly important pillar of our economy. As the biggest job provider, the sector helps ease employment pressure in economic transformation. The government will improve public services. This year, we have suspended value added tax and sales tax on many small businesses, the majority of which are in the service sector.

Our government has defined the "upper and lower limits" of the reasonable range of economic performance with a view to avoiding excessive fluctuations. With a gross domestic product growth rate of around 7.5 per cent, the "lower limit" is intended to ensure steady growth and employment. The moderation of economic growth from double-digit figures in the past to 9.3 per cent in 2011, 7.7 per cent in 2012 and then to around 7.5 per cent this year, is the result of both natural economics and our readjustment initiatives.

With the consumer price index at around 3.5 per cent, the "upper limit" is meant to prevent inflation. If our economy is kept within this reasonable range and financial risks are effectively forestalled, markets and society will have stable expectations. This year there has also been steady economic progress. In the first half of this year, GDP grew by 7.6 per cent year-on-year. Surveyed unemployment at around 5 per cent and inflation at 2.4 per cent are both within the reasonable and manageable range. However, global uncertainties remain.

The anticipation of the withdrawal of quantitative easing by some major developed countries has led to a massive influx of capital back to developed markets and big fluctuations on the stock and currency markets in many Asian countries.

Some observers even worry about a repeat of the Asian financial turmoil of the late 1990s.

In my view, Asian countries have learnt the lessons from the past and significantly enhanced their capabilities to fend off risks. Thanks to more flexible exchange rate regimes, stronger foreign exchange reserves, the Chiang Mai Initiative Multilateralisation agreement – a currency swap arrangement – and various bilateral financial arrangements, China is confident that Asian countries are now better placed to cope.

China is still a developing country with a myriad of tasks and challenges. Yet as China's national strength grows steadily, it will assume greater responsibilities and obligations in international affairs commensurate with its own conditions. We will work with other countries to promote global peace and development. I look forward to the day when the world economy returns to good health. In the meantime, the upgrading of the Chinese economy will give fresh impetus to the global economy.

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