Trade, Taxes and Other Takeaways from Li Keqiang's Speech to the World Economic Forum
Ross Chainey picks through Li Keqiang's recent speech.
The basic principles of free trade should be maintained and unilateral trade actions will not solve any problems, Chinese Premier Li Keqiang said in a speech at the World Economic Forum's Annual Meeting of the New Champions in Tianjin.
Hot on the heels of news that China had been plunged deeper into a trade war with the US, Premier Li also said that, though flawed, the trend of globalization is unstoppable and China's process of opening up will only quicken in the years to come.
The premier also said that maintaining a rate of steady growth in the world's second-largest economy is getting more difficult, that intellectual property breaches and other business malpractice would be swiftly punished, and that the country would not engage in competitive currency devaluation to weaken the yuan to boost exports.
Here are some top quotes from the Premier's speech:
"We are now standing at a crossroads, a crossroads facing a choice between globalization or de-globalization. We are encouraged to see the trend of globalization continue to forge ahead at its own pace. At the same time, we recognize there are areas for further improvement in the course of globalization. In this process, we believe we need to uphold the basic international rules, and at the same time, make improvements to those that need to keep pace with the times."
"China's reform and opening up in the past four decades is also in keeping with the trend of globalization ... China will further open itself at a faster pace. Globalization has presented China, and all countries around the world, with tremendous development opportunities. In the age of globalization a new round of Industrial Revolution has come into being."
On economic growth
"We believe that new drivers of growth are being shaped in today's world. These are in keeping with the trend of globalization, and they are critical for inclusive development and growth."
"Certain problems have arisen in the course of globalization. And certain groups of people feel they have not fully benefited from it. Yet, these new drivers of growth can be inclusive. They have helped to further integrate the global industrial supply and value chains, and they help present opportunities to each individual to develop and innovate ... The internet has provided almost everyone in any part of the country with equal access to information and business opportunity."
"People with specialized skills in any particular area can collaborate with those in other fields. This is like a symphony for a big chorus of development for all mankind. In such a broader environment, it is essential that we respect each other, embrace inclusiveness, and collaborate on an equal footing."
On multilateralism and trade
"It is essential that we uphold the basic principles of multilateralism and free trade ... We believe these rules have, first and foremost, benefited the progress of all mankind and for any existing problems, they need to be worked out through consultation. No unilateralism offers a viable solution."
"We are now seeing an encouraging shift from traditional drivers of growth to new ones. These new ones have been growing at a better-than-expected pace. In this process, new industries, new forms of business and new models have played a key role in keeping China's economic performance stable ... We have written out massive measures to cut taxes and fees, to streamline administration, so that the market will be able to play its bigger role in boosting these new drivers of growth."
"We have seen the emergence of a large number of new market energies in China ... In promoting these new drivers of growth, we have adopted a regulatory approach that has facilitated the boom of new industries, emerging industries. It often happens that we only have limited knowledge of these new things."
"Our principle is that, as long as these new forms of business do not breach laws or regulations, and do not harm public interests, we will continue to encourage their innovation and leave more space for their development. Eventually, the customers will make the ultimate choice, who will survive and thrive. Otherwise, their passion for innovation may be dampened at the very start. In the meantime, it is essential for the government to ensure a level playing field on the market. For the new drivers of growth, for the new forms of industry, the government works to ensure that no bottom-line of laws or regulations will be crossed and all these malpractices of seeking illegal gains, putting lives and property in danger, or cheating and swindling, will be seriously dealt with in accordance with law."
"China has a workforce of nearly 900 million, of which over 100 million have received higher education or training in professional skills ... We are providing opportunities to not only university graduates, migrant workers and people from all walks of life to take part in innovation and entrepreneurship, so that they will all have more job opportunities, generate wealth, and realize their potential."
"New forms of consumption, such as information consumption, are also expanding much faster than GDP growth. Consumption is now contributing over 60% to China's economic growth. It is fair to say a major shift has taken place in China's economic structure and growth pattern."
On the Chinese economy
"In the first half of this year, China's economy expanded by 6.8%, staying within the medium high-growth range of 6.7 to 6.9% for 12 quarters in a row."
"In the first eight months of this year, over 10 million urban jobs were created and the urban unemployment rate was kept at a relatively low level of around 5%. Corporate profits of large industrial companies have maintained double-digit growth. On the whole, the Chinese economy has stayed on a track of steady progress ... Having said that, China is confronted with a host of difficulties and challenges in economic development ... The Chinese economy is inevitably affected by notable changes in the global economic and trade context."
"We are aware that China remains a developing country. We still rank at the lower end of the world in terms of per capita GDP. But there is huge space for development in China's urban and rural areas ... There is huge potential for boosting consumption and industrial upgrading. China's human resources are in abundant supply and becoming more and more competent."
"Going forward, we will keep to the fundamental goals of our macro-policies. While giving more attention to pre-emptive measures and fine-tuning. We will make greater efforts to pursue the policy of putting employment first ... We will more proactively leverage fiscal policy by further cutting taxes and fees in order to reduce the burden on companies and stimulate the market."
"We will also create a better business environment and expand market access to foreign-owned companies that by streamlining processes so they can compete on a level playing field in the Chinese market."
"We will work even harder to make financing more accessible and affordable for the real economy. We will stick to prudent monetary policy and continue to keep macro-rates stable and liquidity reasonably ample ... not just to meet the needs of the Chinese economy, but also to respond to the changes in the international environment."
On currency manipulation
"The recent fluctuations in the exchange rate have been seen by some as an intentional measure on the part of China. This is simply not true. Persistent appreciation will only do more harm than good to our country."
"Instead of engaging in competitive devaluation, we will stick to market-oriented foreign exchange rate reform."
"Efforts will be made to clear the obstacles to private investment. The Chinese government has taken a host of measures to deliver equal services involving tax and fee cuts for all sizes of businesses, in particular, providing easier access to capital for micro- and small-businesses. Most of them are privately owned and they are the biggest provider of jobs in China."
"We have lowered the tariffs on consumer goods and we will introduce further measures to lower the import tariffs on some goods into China. The average tariff level will be further lowered and all these undue and unwarranted charges in the import processes will be further sorted out and cleared. This is a decision made in China for further opening up."
"China will work even harder to stimulate innovation and new drivers of growth in the new industrial revolution ... We need to ensure that we can fully unlock the passion for innovation. In this process we need to make it easier for institutions of higher learning and research institutes to innovate, encourage businesses to increase R&D spending."
"We will work to promote upward social mobility and social equity and justice."
On Chinese debt
"China's macro-leverage ratio is not low, and in the global context but it's not the highest either. It's much lower than other east Asian countries and about the same level as some European countries. One important reason is the high savings rate in China, and because there are not many direct financing channels here in China."
"In the past few years the leverage ratio might have increased at a relatively fast pace ... For sustainable development in the long-run we have implemented policies to achieve stability in the leverage ratio ... We have seen that in some sectors there have been the decrease of the ratio and we will continue to uphold the policy of stability in leverage ratio for our future development."
"In this process some micro- and small-sized enterprises may find it difficult to access affordable financing. In theory this may not be directly related to the government's policies ... but the fact is China is such a big country ... We are promoting the development of the real economy to address these issues and we will help micro- and small-businesses to access affordable financing in an easier environment. We will also work hard to expand direct financing channels."
Ross Chainey, Digital Media Specialist, World Economic Forum.
This post first appeared on the World Economic Forum's Agenda blog.
Image credit: Αλέξης Τσίπρας Πρωθυπουργός της Ελλάδας via Flickr (CC BY-SA 2.0)