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Li Keqiang on China's economy


Now world economic recovery remains slow and global trade is sluggish. Meanwhile, the idea of “de-globalization” is emerging, as represented by protectionism and isolationism; geopolitical risks are increasing; and Britain’s exit from the EU has brought new complexities to the world situation.


Being the first collective dialogue between the Chinese government and major international economic and financial institutions, the roundtable demonstrates China’s readiness to strengthen communication with the international community. We hope that all sides will have a correct reading of the development trend in the world, put forth good policies to spur world economic growth, and work together to promote economic recovery, stabilize the financial sector and guide market expectations. Premier Li raised the following five proposals at the roundtable:


First, step up macro-economic policy coordination. Under the current situation, all parties need to focus their policies on promoting strong, sustainable and balanced growth, developing the economy and improving people’s lives. It is important to strengthen coordination and make efforts to jointly promote world economic recovery.


Second, strike a balance between addressing the cyclical issues and structural problems, and between short-term and medium-to-long term challenges. We need to expand aggregate demand as appropriate, give priority to structural reform, and implement fiscal and monetary policies that help boost domestic demand and adjust economic structure. We need to ensure that consumption and the service sectors play a bigger role in driving economic growth, develop the new economy, and foster new drivers of growth.


Third, advance global trade and investment liberalization and facilitation. We are now faced with a sluggish global economy and weak global demand. Trade-restrictive measures will only aggravate the situation and slow down global recovery. They will in no way help solve problems or facilitate structural reform. We need to firmly support economic globalization, oppose protectionism in all forms, and uphold the dominant role of the multilateral trading system.


Fourth, promote inclusive growth. We need to promote deregulation, enhance competition and encourage innovation. We need to advance fiscal, financial and labor market reforms, improve infrastructure, and create more and better jobs. Implementation of the 2030 Agenda for Sustainable Development and efforts to promote inclusive growth should become the direction and important driving force for world economic recovery.


Fifth, give better play to the role of the financial sector in supporting economic recovery. We need to strengthen macro-prudential regulation, improve supervision of cross-border capital flows, and prevent systemic financial risks. We also need to strengthen coordination and stabilize expectation in the financial sector, so as to create an enabling environment for economic recovery.


Facing the many tough challenges at home and abroad as well as downward economic pressure, the Chinese government has managed to sustain steady economic growth and accelerate economic transformation. Efforts were made to keep the direction of macroeconomic policy stable, focusing on structural reform - that on the supply side in particular, and to grow the new economy and foster new drivers of growth while upgrading traditional ones. China has remained one of the fastest growing major economies, and made good gains in upgrading its economic structure.


In the past three years, the service sector as a share of GDP rose by 8.6 percentage points and the contribution of final consumption to GDP growth was up by 16.9 percentage points. Fast development of the new economy has helped to transform and revitalize the traditional industries and strongly boosted employment. Over 13 million urban jobs were created on an average annual basis in the past three years.


China’s economy has maintained steady performance and made positive advances. The new drivers of growth are rising, traditional drivers of growth are adapting, and the overall economy is undergoing a structural shift. All these have been made possible by reform and innovation. The Chinese government has made tremendous efforts to streamline administration, delegate power, enhance regulation where necessary, and provide better services. Thanks to the strategy of innovation-driven development, mass entrepreneurship and mass innovation are booming, and new forms of business, including economy based on crowd business and crowd innovation and sharing economy, are thriving. All these are what underpin China’s economic growth, structural transition and upgrading and job creation.


We will fully leverage China’s human capital advantage, advance the new type of urbanization and deepen all-round reform and opening-up to bolster the new sources of growth. China welcomes the ideas and suggestions on its economic development, especially ways to create and upgrade the sources of growth and transform the economic structure.


China will maintain the continuity, stability and focus of its macroeconomic policy, continue to pursue a proactive fiscal policy and a prudent monetary policy, enhance discretionary macro-regulation and undertake preemptive adjustment and fine-tuning as the changing dynamics require. China will expand aggregate demand as appropriate, focus on supply-side structural reform and take multi-pronged steps to bring down the leverage ratio of non-financial enterprises in an active yet prudent manner. While addressing overcapacity, China will take measures to protect the rights and interests of employees and help them get re-employed by boosting mass entrepreneurship and innovation.


China now enjoys steady economic performance, a surplus in its international balance of payments, ample foreign exchange reserves and a sturdy fiscal and financial system. There is no basis for continuous depreciation of the RMB. China will stay on the course of market-oriented reform of the exchange rate, give greater play to the decisive role of the market, and keep RMB exchange rate basically stable at an adaptable and equilibrium level.


Despite the growing factors of instability and uncertainty in the global economy, the international market has the potential to grow and humanity has the wisdom to overcome difficulties. All parties must strengthen confidence, give priority to growing the economy and improving people’s lives, and work toward the goal of strong, sustainable and balanced growth.


The stable recovery of the world economy requires a holistic approach to address both symptoms and root causes and to balance short-term and medium-to-long-term problems. We need to expand aggregate demand as appropriate and advance structural reform in the direction of easing regulation, supporting innovation, improving employment and promoting inclusive growth. We need to maintain flexibility of the fiscal policy and leverage the supporting role of monetary policy in growing the real economy.


To ensure the stable recovery of the world economy is the responsibility of all parties. We must doubly cherish and endeavor to uphold a peaceful and stable international environment. We must firmly support the globalization process and the dominant role of the multilateral trading system, oppose protectionism of all manifestations and exercise caution with the use of restrictive trade measures.


Major economies need to enhance macroeconomic policy coordination, increase policy transparency and predictability and take into full account the spillover effect of their policies. The international organizations need to play a greater steering and coordinating role in this regard. China is ready to work with all parties to ensure the success of the G20 Hangzhou Summit in order to promote strong, sustainable and balanced growth of the world economy.


Despite some ups and downs, the performance of the Chinese economy remains stable and continues to move in a positive direction. China is expanding aggregate demand as appropriate and focusing on supply-side structural reform to generate new drivers of growth, transform traditional drivers and shift the economic structure. That said, we are also aware of the grim and complex economic situation in the world as well as considerable downward pressure and multiple challenges facing the Chinese economy.


We will continue to overcome difficulties, deepen reform in all respects, and further streamline administrative procedures to unleash public creativity and market vitality. We will reinforce new growth drivers and transform and upgrade traditional drivers through the implementation of the innovation-driven development strategy and the initiative to encourage mass entrepreneurship and innovation, all for the purpose of ensuring steady economic performance and improving economic structure. The Chinese economy is a “stability anchor” for the world economy. Running our own affairs well is in itself a contribution to world development.

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