China will pull through current challenges, says Chinese Premier Li Keqiang

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 manoeuvre. 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 foreign-owned, 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-in-China 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 market-based and professional, and achieve integrated and synergized development of industries, universities, research institutes and end users in both online and offline activities. 

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.