China will pull through cur­rent chal­lenges

Business Standard - - DEMOCRACY AT WORK - LI KE­QIANG Edited ex­cerpts from an ad­dress by Li Ke­qiang, Premier of the State Coun­cil of the Peo­ple's Repub­lic of China at the open­ing cer­e­mony of The An­nual Meet­ing of the New Cham­pi­ons 2018, Sum­mer Davos at Tian­jin China, Septem­ber 19

China is con­fronted with a host of dif­fi­cul­ties and chal­lenges in eco­nomic de­vel­op­ment. Deeply in­te­grated into the world econ­omy, the Chi­nese econ­omy is in­evitably af­fected by notable changes in the global eco­nomic and trade con­text. The mod­er­a­tion of growth in do­mes­tic in­vest­ment and con­sump­tion has added to the dif­fi­cul­ties of some com­pa­nies and weighed on the sta­ble per­for­mance of the econ­omy. Nev­er­the­less, China’s de­vel­op­ment has al­ways been achieved through over­com­ing all sorts of dif­fi­cul­ties and chal­lenges, which have never been in­sur­mount­able. There were nu­mer­ous oc­ca­sions when we faced se­vere chal­lenges, yet each time we man­aged to pull through and only emerged stronger than ever be­fore.

To­day’s China boasts a more solid ma­te­rial and tech­no­log­i­cal foun­da­tion, a fairly com­plete in­dus­trial sys­tem, and broad space for ur­ban-ru­ral and re­gional de­vel­op­ment. It also en­joys huge new mar­ket de­mand gen­er­ated by the up­grad­ing of con­sump­tion and eco­nomic re­struc­tur­ing, abun­dant and in­creas­ingly com­pe­tent hu­man re­sources, vi­brant en­trepreneur­ship and in­no­va­tion ac­tiv­i­ties across the so­ci­ety, and a re­serve of in­no­va­tive mea­sures and pol­icy tools for macro reg­u­la­tion. All this gives our econ­omy suf­fi­cient re­silience, po­ten­tial and space for ma­neu­ver. We have the con­fi­dence, abil­ity and means to cope with the cur­rent dif­fi­cul­ties and chal­lenges. The ex­press train of China’s econ­omy will not lose speed but stay on a steady course.

Cre­at­ing a sta­ble and pre­dictable macro-en­vi­ron­ment is an im­por­tant pre­con­di­tion for steady eco­nomic per­for­mance. China did not re­sort to mas­sive stim­u­lus in the past; there is no rea­son why we should do it now. To make sure the econ­omy op­er­ates within a proper range, we will con­tinue to de­velop new and bet­ter ways of macro reg­u­la­tion, and keep to the fun­da­men­tal goals of our macro poli­cies while giv­ing more at­ten­tion to pre-emp­tive mea­sures and fine-tun­ing. Sta­ble em­ploy­ment is al­ways a top pri­or­ity for a pop­u­lous coun­try like China; it must be en­sured as part of the key pa­ram­e­ters de­lin­eat­ing the proper range of eco­nomic oper­a­tion. In this con­nec­tion, we will im­prove the pol­icy sys­tem to put em­ploy­ment first, de­velop full-fledged job pro­mo­tion and se­cu­rity mech­a­nisms, strengthen all types of pub­lic em­ploy­ment ser­vices to at­tain fairer and more ad­e­quate em­ploy­ment.

We will more proac­tively lever­age the fis­cal pol­icy in boost­ing do­mes­tic de­mand and re­struc­tur­ing, and will im­ple­ment fur­ther cuts in taxes and fees. We will pur­sue a pru­dent mon­e­tary pol­icy with ap­pro­pri­ate in­ten­sity to keep the macro lever­age ra­tio sta­ble and liq­uid­ity rea­son­ably am­ple. We will see to it that the mon­e­tary pol­icy trans­mis­sion mech­a­nisms are smoothed out in order to chan­nel more fund­ing into the real econ­omy and make fi­nanc­ing more ac­ces­si­ble and af­ford­able for mi­cro busi­nesses and SMEs.

The re­cent fluc­tu­a­tions in the RMB ex­change rate have been seen by some as an in­ten­tional mea­sure on the part of China. This is sim­ply not true. Per­sis­tent de­pre­ci­a­tion of the RMB will only do more harm than good to our coun­try. China is stead­fast in its com­mit­ment to a mar­ket-ori­ented ex­change rate re­form.

The Chi­nese econ­omy is now at a cru­cial stage of shift­ing from tra­di­tional driv­ers of growth to new ones. We will ad­here to the gen­eral prin­ci­ple of seek­ing progress while main­tain­ing a sta­ble per­for­mance, and fo­cus on sup­ply-side struc­tural re­forms to in­vig­o­rate the mar­ket, bol­ster self-driven de­vel­op­ment and un­leash the po­ten­tial of China’s do­mes­tic de­mand.

First, China will work even harder to ad­vance re­form and open­ing-up. We will deepen re­forms in all re­spects, es­pe­cially re­form in fun­da­men­tal and key ar­eas. By fur­ther stream­lin­ing ad­min­is­tra­tion, del­e­gat­ing pow­ers, strength­en­ing com­pli­ance over­sight and im­prov­ing gov­ern­ment ser­vices, we will fur­ther widen mar­ket ac­cess, raise pol­icy trans­parency, and ex­er­cise fair and im­par­tial reg­u­la­tion to cre­ate a mar­ket en­vi­ron­ment in which com­pa­nies of all own­er­ships, be they Chi­nese or for­eignowned, are treated as equals and com­pete on a level play­ing field.

This year, we have taken steps to sig­nif­i­cantly ease mar­ket ac­cess for for­eign in­vestors in ser­vices sec­tors, par­tic­u­larly the fi­nan­cial sec­tor, and low­ered tar­iffs on some im­ported goods. This is a vol­un­tary choice China has made in light of its own de­vel­op­ment needs. Go­ing for­ward, we will open up fur­ther to en­hance con­ver­gence with in­ter­na­tional eco­nomic and trade rules, and foster a world-class busi­ness en­vi­ron­ment. We will en­cour­age more Chi­nese com­pa­nies to go global in an or­derly way and to pur­sue third-party co­op­er­a­tion with full sen­si­tiv­ity to lo­cal con­di­tions. China’s eco­nomic growth now ac­counts for about 30 per cent of the world’s to­tal.

Sec­ond, China will work even harder on re­struc­tur­ing. Our coun­try is still at the lower end of the in­dus­trial chain. We will con­tinue to en­cour­age busi­nesses to trans­form and up­grade tra­di­tional man­u­fac­tur­ing by har­ness­ing new tech­nolo­gies and new busi­ness models. At the same time, we will give strong sup­port to emerg­ing in­dus­tries and ser­vices sec­tors, phase out out­dated pro­duc­tion ca­pac­i­ties through mar­ket-driven and law-based mea­sures, and pro­mote in­te­grated de­vel­op­ment be­tween the pri­mary, sec­ondary and ter­tiary in­dus­tries to sub­stan­tially raise the qual­ity of made–in­China goods and ser­vices. Given that con­sump­tion has now be­come the pri­mary driver of China’s eco­nomic growth, we need to in­crease house­hold in­comes through mul­ti­ple chan­nels to ex­pand the spend­ing power of our con­sumers.

Third, China will work even harder to stim­u­late in­no­va­tion. Rais­ing China’s in­no­va­tive ca­pac­ity re­quires a multi-pronged ap­proach. We will foster an in­no­va­tion-friendly en­vi­ron­ment in which ba­sic re­search and ap­plied ba­sic re­search are sup­ported, more cor­po­rate R&D spend­ing is en­cour­aged, and in­no­va­tion out­comes are com­mer­cialised at a faster pace. We will in­tro­duce more ef­fec­tive poli­cies and new mech­a­nisms to make in­no­va­tion plat­forms such as maker spa­ces and in­cu­ba­tors more mar­ket­based and pro­fes­sional, and achieve in­te­grated and syn­er­gized de­vel­op­ment of in­dus­tries, uni­ver­si­ties, re­search in­sti­tutes and end users in both on­line and off­line ac­tiv­i­ties.

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