Premier Li talks with WEF chief and business leaders at 2016 Summer Davos Forum (1)

Chinese Premier Li Keqiang answered questions from Executive Chairman of the World Economic Forum Klaus Schwab and had a dialogue with some business leaders at the 2016 Summer Davos Forum.

Transcript of Premier Li Keqiang Answering Questions After Delivering Special Address at the Opening Ceremony And Meeting with Business Community During 2016 Summer Davos Forum

On 27 June 2016, Premier of the State Council Li Keqiang answered questions from Executive Chairman of the World Economic Forum Klaus Schwab after delivering a special address at the opening ceremony of the 2016 Summer Davos Forum at Tianjin Meijiang Conference and Exhibition Center. On 28 June, Premier Li Keqiang had a dialogue with some business leaders attending the Forum at Tianjin Meijiang Conference and Exhibition Center. Below is a transcript of the two events:

Klaus Schwab: Premier Li Keqiang, thank you for sharing with us such a comprehensive and integrated vision of China's economy. We should not underestimate the challenge related to leading such a large economy. You have graciously agreed to answer one or two questions. You described China's structural reforms and economic adjustment in your special address. And I think it is remarkable to achieve 6.7% growth. And you also shared with us this growth rate is quite stable, but there are still very substantial downward pressures. Now, my question would be: are there any special measures which the Chinese government will take to secure healthy and sustainable economic development?

Li Keqiang: In the first quarter of this year, China's economy grew at 6.7%. And entering Q2, we have maintained a steady momentum of economic development. I should point out that neither has come easily. Such a growth has been achieved when the size of the Chinese economy has reached 10 trillion US dollars. So, the 6.7% growth has generated more additional output than a double digit growth several years ago. Moreover, we have achieved such growth at a time of sluggish global economic recovery. I can also tell you that since last year, growth of Chinese exports has on the whole been in the negative territory. We have relied on our internal drivers to spur growth and our domestic market to provide the room for development. And we have achieved such growth while tackling the longstanding problems in China's development.

When the size of China's economy has become so big, if we still blindly pursue a high growth speed, it will only put more pressure on our resources and the environment, and such growth is unsustainable. The truth is, a medium-high growth is good enough for us in adding jobs, increasing personal income and improving the environment. Recent years have not seen China resort to massive stimulus measures in boosting growth. We have strived for progress while maintaining stable economic performance. We have adhered to pursuing a proactive fiscal policy and prudent monetary policy. And we have focused on advancing structural reforms and succeeded in sustaining medium-high growth. Growth has remained within its proper range and been consistent with our anticipation. Going forward, we will maintain the stability of our policy direction.

In the meantime, we will not underestimate the "variables" in the global economy, nor the potential risks and challenges in China's economy. We have a good reserve of policy instruments to help us meet various challenges. As I said in the special address, the central government debt ratio is pretty low and there is room for us to do more in implementing the proactive fiscal policy. We have a high savings rate in China. That means there is still more that we can do to pursue financial reform, harness existing funds and enhance the transmission mechanism for the financial sector to better serve the real economy. In a word, we are prepared with a good "toolbox" of macro policy instruments to deal with greater challenges. I wish to emphasize that the market should view those short-term fluctuations in China's economy in a calm way. When viewed in the whole of the year and in the long run, China's economy will stay within the proper range and maintain steady growth, and we will be able to strike a balance between steady growth and structural adjustment and, by pursing structural reforms especially supply-side structural reforms, achieve more sustainable development.

We have confidence in a long-term, positive trend of China's economy. I hope that all the business people present here will be long-term investors in China's market and a force for boosting such a trend. We will use fine-tuning measures to address short-term problems, just as I was fine-tuning my earplug to see if the audio services at the meeting venue have satisfied your need. (Laughter)

Klaus Schwab: Maybe with the industrial revolution, in five to ten years, we will have implanted microphones. Would you allow me another question? Your mentioned the importance of the fourth industrialization for the future of China's economy. Now what policies will the Chinese government introduce to fully leverage the potential of this fourth industrial revolution?

Li Keqiang: As I said in the special address, to crack the hard nut of the sluggish global economic recovery, we must address the issue at its root. Hence the imperative to advance structural reforms. This new round of industrial revolution, however one may call it, is now booming and it is a force that no one can afford to overlook. Yesterday evening, I had a meeting with Professor Schwab and a number of forum delegates. It seems that we share such an impression among us that if you go to a place dominated by traditional companies or industries, you may see a lot of problems and find the situation disheartening, but if you go to a place or a company which has seized the opportunity of the new round of industrial revolution and where new industries are booming, you feel that the new economy and new drivers are bringing not just hope but powerful strength.

Mankind has the wisdom of embracing such new hope, hope of the new round of industrial revolution. The Chinese government has made a strong call for innovation-driven development, including both technological innovation and institutional innovation to create more room for everyone to be an innovator. We are championing mass entrepreneurship and innovation in a bid to bring out as much potential of each individual as possible. We have seen such examples in our real world that even an intellectually challenged person may demonstrate a genius' talent in certain areas. So we must cherish the creativity of each individual. This is the first point I want to make.

Second, we need to implement fiscal and tax incentives to support innovation and development of new industries. The central government has adopted a series of preferential tax measures and provided financial support. Yesterday I was briefed by the Tianjin local officials and learned that the Tianjin municipal government has provided guarantee support and risk compensation for the financing extended to innovation-oriented companies. This way, the financial institutions, venture capital and angel capital can provide stronger support for developing new industries and upgrading traditional industries.

Third, we will implement differentiated industrial policies to support the new round of scientific revolution and industrial transformation. We will upgrade traditional industries, enforce stricter environmental, safety and product quality standards to cut overcapacity and eliminate backward capacity. We will introduce supportive measures to boost the growth of new industries and provide new forms of business reasonable space for growth.

To conclude, I want to emphasize that next time when we meet again, whether you are engaged in transforming a traditional industry or developing a new one, you are all the new champions. (mo