Premier Li talks with WEF chief and business leaders at 2016 Summer Davos Forum (3)

Marc Benioff, Chairman and CEO of Salesforce: Premier Li, it's nice to see you again. Thank you for the tremendous commitment of time you've made to the conference. China has an incredible economic success and you have depicted China's future economic blueprint on many occasions. I would like to know what are the most urgent challenges or obstacles in China's economy. As CEOs like myself and others being here, is there a way that we can partner with you and how can we help you eliminate these obstacles and challenges?

Li Keqiang: It is hard to describe the biggest challenge China's economy faces in one sentence. We now face, at the minimum, two major challenges. One is the sluggish global economic recovery, which means China's economy, one that is deeply integrated into the world economy, now confronts an uncertain and unstable external environment. The other challenge is the entwining of our own longstanding problems, the historical extensive mode of development and institutional barriers. We will focus on tackling our domestic issues and managing our own affairs well.p China needs to use reform and innovation to achieve economic transformation and sustainable, healthy development. Participation of foreign companies is needed in this process. China's reform and opening-up have been developing side by side. In many cases, opening-up could propel reform. The involvement of foreign companies will introduce new technologies and managerial experience, which can be of help to Chinese companies and industrial upgrading. Meanwhile, to heed and adopt the views of companies will help us improve our institutions and provide them with better services.

During China's economic transformation, the new economy is developing, the service sector is growing and traditional industries are going through upgrading. All these will generate tremendous market demand. We welcome more foreign companies to invest in China and will further ease market access and level the playing field. Whether making investment or working in partnership with local companies, the overwhelming majority of the foreign investors would have had reasonable or even fairly high returns when they tally the total scores. China is still the most promising investment market in the world and should be the world's most attractive investment destination.

John B. Veihmeyer, Chairman of KPMG: Premier Li, thank you for your very open, clear and direct answers to the questions. It means a lot to us. Thank you very much for that. My question relates to the capital markets. As we all know, our capital markets are very interconnected around the world. We've seen a latest example of that this past week in the aftermath of the Brexit vote in the UK, just how dependent and interconnected our capital markets are. So there is tremendous interest outside of China in the strength and continued development of China's capital markets. What can the Chinese government continue to do to strengthen and further develop capital markets and the financial system here in China?

Li Keqiang: It is true that the result of the Brexit vote has sent jitters across global financial markets. As I said in my special address yesterday, now is the time for all of us to work together to strengthen confidence, to prevent the spread of panic and to maintain stability of the global capital markets.

On China's part, it will do its best to maintain the stability of its domestic capital and financial markets. This is how China can contribute to the global financial stability. China will continue to enforce financial reforms to develop its multi-tiered capital markets, because on the whole capital markets in China are not yet well-developed, some markets are not yet mature, and the capital markets and direct financing each only takes up a small percentage in China's financial system and in total social financing. For companies, direct financing only accounts for about 15% of their access to finance. Hence, we need to develop multi-tiered capital markets.

The Chinese people have a longstanding propensity to save, and savings in China account for nearly half of the GDP. That is one cause of the high leverage ratio of non-financial companies in China. We have taken steps to gradually bring down the high ratio by developing multi-tiered capital markets, market-based debt restructuring, merging and bankruptcy. I want to emphasize that in the first five months this year, Chinese corporate profits in the industrial sector rose by 6.4%. That means there is the basis and room for us to bring down the leverage ratio of non-financial companies and raise their efficiency.

In developing capital markets, we will guard against systemic and regional financial risks and prevent cross infection of different financial markets. We will also reform and improve the regulatory regime. This should be a market-driven and law-based process. Just as China's economy, capital markets in China may also experience short-term fluctuations, which are hardly avoidable. But we will not allow rollercoaster rides of capital markets. We will follow market principles and international practices, and deal with the isolated default cases in accordance with the law. All in all, we will continue to develop the capital markets to make them more mature and better play their role in underpinning economic development.

Klaus Schwab: I would like to acknowledge the presence of such high-level government delegation, the esteemed members of government that have accompanied you. Thank you very much for your presence. Your Excellency Premier Li, when I was teaching business policy, I said a successful future has to be based on a grand vision. You presented to us yesterday your grand concept and vision. But it has also to be operationalized in the details. I think we are all impressed by the picture of China's economy you showed us yesterday and how much it is operationalized. I am personally impressed with the detailed knowledge and facts. So to summarize, I can only say there are very often, in the world, particularly in the media, doubts and questions. But I think you have given great answers to all the questions and I think we will all act as ambassadors for what we have heard here and support the development of China in any way we can. We support China's role as a very responsible actor. I think we all are living in a global community, interdependent. So it is in our interest to carry the message which you shared with us in the last two days. Thank you very much.

Li Keqiang: I want to thank you, Professor Schwab and all present for your tremendous effort in making the Summer Davos Forum this year a success. The relationship between our two sides is indeed an interesting one: you could be said to be the host of the Forum and so could we, as the Forum is held on Chinese soil. I agree with you, Professor Schwab, that we have presented both a grand vision for China's development and concrete details supporting the operationalization of this vision. I hope all the business representatives here may try the reverse way: to use the details in your respective industries to prove that China's vision can become a reality. I believe we will all emerge as winners in this process. Endi