Following is the translated version of the full text of Chinese Premier Wen Jiabao's speech delivered in Dalian on Thursday at the opening ceremony of the Annual Meeting of the New Champions 2009, or Summer Davos:
Chinese Premier Wen Jiabao addresses the opening plenary of the Annual Meeting of the New Champions 2009, or the Summer Davos, in Dalian, northeast China's Liaoning Province, Sept. 10, 2009. (Xinhua/Xie Huanchi)
Build up in an All-round Way the Internal Dynamism of China's Economic Development
Speech by H.E. Wen Jiabao
Premier of the State Council of the People's Republic of China
At the World Economic Forum Annual Meeting of New Champions 2009
Dalian, 10 September, 2009
Professor Klaus Schwab, Executive Chairman of the World Economic Forum,
Ladies and Gentlemen,
Let me begin by extending warm congratulations on the opening of the third Annual Meeting of the New Champions, or the Summer Davos, and a sincere welcome to you all.
Over the past year, the world economy has experienced the most severe challenge since the Great Depression. We may recall the worries voiced by many people early this year when we gathered in Davos for the World Economic Forum annual meeting. Since then, thanks to the concerted efforts and active measures of the entire international community, some positive changes have taken place. The world economy is beginning to recover, although the process is slow and tortuous. We can now see the light of dawn on the horizon.This is a critical juncture and it is highly significant for political leaders, entrepreneurs, experts and scholars of various countries to gather together here and discuss how to "Relaunch Growth" of the world economy. I sincerely wish this meeting a great success!
This unprecedented global financial crisis has taken a heavy toll on the Chinese economy. Yet, we have risen up to challenges and dealt with the difficulties with full confidence. And we have achieved initial results in our endeavor.
We have arrested the downturn in economic growth. In the first half of this year, China's GDP grew by 7.1 percent, investment expanded at a faster pace, and consumption maintained fast and steady growth. Domestic demand played a stronger role in driving the economy forward. From January to July, 6.66 million new urban jobs were created, income of urban and rural residents increased, and overall social stability was maintained. We effectively managed fiscal and financial risks and kept budget deficit and government debt at around 3 percent and 20 percent of the GDP respectively. Banks' asset quality and ability to fend off risks were improved. At the end of June, the NPL ratio of commercial banks was 1.8 percent, down by 0.64 percentage point from the beginning of the year, and capital adequacy ratio stood at 11.1 percent.
With the world economy still mired in recession, it is by no means easy for us to have come this far. The achievements we have made are not something that dropped into our lap. Rather, they are the results of the proactive fiscal policy and moderately easy monetary policy and the stimulus package that the Chinese government and people have pursued in line with the national conditions. Some people take a simplistic view and believe that China's stimulus package means only the four trillion RMB yuan investment. This is a total misunderstanding.
China's stimulus package focuses on expanding domestic demand and is aimed at driving economic growth through both consumption and investment. Of the total four trillion yuan in the two-year investment program, 1.18 trillion yuan will come from the central government, and it will mainly be used to generate greater investment by local governments and the non-public sector. We have made vigorous efforts to stimulate consumption and make domestic demand, particularly consumer spending the primary driver of economic growth. We have increased subsidies for farmers, raised the minimum purchasing price of grains, introduced performance-based salaries for primary and middle school teachers, and increased the basic cost of living allowances for urban and rural residents so that the people will be able to spend more. In order to boost consumption, we have offered subsidies for the program of bringing home appliances, agricultural machinery, automobiles and motorcycles to the countryside and the program of exchanging used automobiles and home appliances for new ones. Purchase taxes on small-engine and energy conserving and environment friendly cars have been cut by half. In the first seven months, a total of 7.31 million cars were sold and total retail sales of consumer goods rose by 15 percent.
China's stimulus package aims to address both immediate problems and long-term needs, and achieve economic growth in the course of restructuring. By the end of July, 52.4 percent of the investment made by the central government had gone to government-subsidized housing, projects for better rural livelihood and social programs. Another 24.7 percent had been channeled into areas such as independent innovation, economic restructuring, energy conservation, emission reduction and ecological enhancement. Only 22.9 percent of the investment had been used for major infrastructure projects. This shows that the central government has a clear vision in expanding investment, that is, the money should focus on shoring up the weak links in economic and social development, help remove the bottlenecks in the national economy, and contribute to structural readjustment and transformation in the development model while giving a strong push to domestic demand. We have formulated and carried out plans to adjust and reinvigorate ten key industries, with a view to both addressing their immediate difficulties and ensuring their long- term development. In particular, we want to strengthen technical upgrading and innovation, rein in excess capacity and support the development of new industries of strategic significance so that the Chinese economy will be put on a more sustainable path.
China's stimulus package seeks to coordinate the role of the government and the market and enable development and reform to advance in a mutually reinforcing way. The bulk of government funds will go into public services and serve as a guide for the flow of non-public funds. The structural tax cuts involving 550 billion yuan are aimed at raising corporate capacity to invest and people's ability to spend. The government-funded interest discount and tax tools are designed to encourage the restructuring, merger and reorganization of enterprises. And the cut in interest rate and the required reserve ratio has ensured reasonably adequate liquidity in the banking system. All the key reform measures that we have taken this year are intended to eliminate the institutional and structural barriers in the economy and strengthen the vitality and dynamism of economic growth.
China's stimulus package is designed to both sustain economic growth and improve people's livelihood. We give priority to projects affecting people's well-being in allocating public resources. We have introduced, on a trial basis, a new rural old-age insurance program in 10% of the counties across the country, with a total coverage of 90 million people. We are pressing ahead with comprehensive reform in the pharmaceutical and health care system. Within a period of three years, governments at all levels will invest an additional 850 billion yuan to make medical services more accessible and affordable for both urban and rural residents. The central government has set aside 42.9 billion yuan to provide medical insurance for all retirees of the closed or bankrupt state owned enterprises. We are taking all possible steps to expand employment, particularly jobs for college graduates and rural migrant workers. For the year of 2009, the central budget for education, medical and health care, social security, employment, government-subsidized housing and other programs related to people's well-being will be 29.4% higher than that of last year.
China's macro-economic policy and the stimulus package are on the whole in keeping with the country's reality and have proven to be timely, forceful and effective. However, the stabilization and recovery of the Chinese economy is not yet steady, solid and balanced. With many uncertainties remaining in the prospects of the world economy, we still face tremendous pressure of the decline in external demand. And we are under various constraints in expanding domestic demand in the short term. Some industries and businesses remain in a difficult situation, and the task of economic restructuring is a daunting one. Some of the stimulus measures will see their effect wane, and it will take time before those long-term policies show effect. Given such a state of affairs, we cannot and will not change our policy direction in the absence of proper conditions. We will continue to take maintaining steady and relatively fast economic growth as our primary task. We will unswervingly follow the proactive fiscal policy and moderately easy monetary policy, and fully implement and continuously enrich and improve the stimulus package. We will promptly identify and address new developments and new problems in the economy, make our policies more targeted, effective and sustainable, and guard against and fend off various potential risks, including inflation, so that the Chinese economy will achieve fast and steady growth and the country will enjoy social stability and harmony.
Ladies and Gentlemen,
The international financial crisis has inflicted far-reaching impact on the world economy, and China's economy has not been immune. To counter the global financial crisis is a long-term and arduous task. Our policies should not only focus on overcoming the short-term difficulties, but also, and more importantly, ensure long-term development. They should seek to bring a fundamental solution to the institutional and structural problems constraining the sound growth of China's economy, boost the internal dynamism of economic growth in an all-round way, and raise the overall quality of economic and social progress and the capacity for sustainable development. This way, we will lay a more solid foundation for building a moderately prosperous society at a higher level to the benefit of the more than one billion population.
We should focus on restructuring the economy, and make greater effort to enhance the role of domestic demand, especially final consumption in spurring growth. To boost domestic demand is a long-term strategic policy for China's economic growth and the way for us to tackle the financial crisis and stave off external risks. We must take forceful measures to adjust the structures of domestic and external demands and strengthen the role of domestic demand in fuelling economic growth. In particular, we must increase the share of consumption in domestic demand, raise urban and rural income, improve consumer expectations, and enhance people's willingness and capacity to spend. We will maintain rational growth of investment, optimize the investment structure, increase investment returns, shut down backward production facilities, encourage corporate merger and reorganization and avert redundant construction. We will speed up the development of the service sector and make it a key link in our restructuring effort, a priority task in boosting domestic demand, and an important factor in promoting balanced growth of supply and demand. Development of the service sector must be pursued in the broader context of adjusting the demand structure, encouraging the growth of the non-public sector of the economy and expanding employment. We will increase the share of the service sector in the GDP on a continuous basis, and put in place a market-based service industry with the participation of multiple service providers.
We should deepen reform and opening-up, the fundamental force in driving development, and make greater effort to build vibrant institutions and mechanisms. Reform and opening-up are essential to strengthening the dynamism and momentum of China's economic growth. Our major tasks in this connection are as follows: deepen the reform of income distribution system, adjust the structure of national income distribution, increase the share of people's income, and narrow the gap in income distribution. We will speed up the establishment of pricing mechanisms for resources and factors of production that are responsive to market changes and reflect the scarcity level of the resources and environmental cost, and push forward the reform in resource products price and environmental protection charge. We will deepen reform of fiscal, taxation and financial systems, upgrade the capital market and banking system, and improve the RMB exchange rate regime. We will unswervingly reinforce and develop the public sector of the economy and encourage, support and guide the development of the non-public sector. While pressing ahead with the comprehensive economic restructuring, we will advance political restructuring in an active and steady way. We will firmly implement the win-win strategy of opening-up and work hard to raise the level of the open economy.
We should see scientific and technological innovation as an important pillar and make greater effort to develop new industries of strategic importance. Science and technology is a powerful engine of economic growth. To overcome the severe international financial crisis, we must rely more on science and technology in making breakthroughs and boosting development. We will make China a country of innovation. We will seek breakthroughs in key technologies that are vital to industrial transformation and upgrading, speed up the development of new industries of strategic importance, and give priority to research, development, and industrial application of technologies in new energy, new materials, bio-medicine, third generation mobile communications, and the integration of telecommunications networks, cable TV networks and the Internet. We will accelerate the development of a low carbon economy and green economy so as to gain an advantageous position in the international industrial competition. We will, at the same time, speed up the upgrading of traditional industries through new and high technologies and advanced applicable technologies and substantially increase the level of modernization in agriculture, manufacturing and the traditional service sector.
We should take it as a strategic priority to pursue balanced development between urban and rural areas and among various regions and promote urbanization, and make greater effort to expand new areas of growth. To balance urban and rural development and development among regions provides a strong internal force that supports China's long-term fast economic growth. This is a primary and also tough task for us as we endeavor to build a moderately prosperous society in all respects. It offers us much leeway in tackling the global financial crisis and represents a great undertaking in the self-improvement of China's economy and society. We must do a good job in work related to agriculture, the rural areas and farmers, and solidify the foundation of agriculture. We will advance urbanization and the building of a new countryside in a coordinated manner. We will take active and steady measures to promote industrialization and urbanization on the basis of balanced consideration of such factors as population density, land use efficiency, industrial development and public services, raise the overall carrying capacity of cities, and open up new space for sustained economic growth. We will continue with our effort to pursue a holistic strategy on regional development and foster new regional growth areas at a faster pace.
We should make better livelihood for the people the supreme goal of our work and make greater efforts to improve the social safety net and develop social programs. Our ultimate goal in overcoming the global financial crisis is to build a strong country while improving the livelihood of the people, meet the people's ever-growing material and cultural needs and bring about a better life for the people. We will implement a more proactive employment policy and take all possible measures to create jobs. We will put in place a sound social safety net that covers more people, improve the old-age pension, medical care and unemployment benefit programs, raise the pooling level and increase the welfare benefits. We will develop a wide range of social programs covering education, medicine, health, arts and sports and promote equal access to basic public services. We will do all we can to ensure that all our people enjoy their rights to education, employment, medical and old-age care, and housing.
Ladies and Gentlemen,
The world economy is undergoing profound changes and transition. The future and destiny of all countries are more closely interconnected than at any time in history. We should be more forward-looking and more broad-minded. To promote world harmony and prosperity, I propose that we make concerted efforts in the following areas:
First, tackle climate change. Climate change is a common challenge confronting the entire mankind. Each and every country, enterprise and individual should assume a due share of responsibility in meeting the challenge. China takes this issue very seriously. We have developed the national program on tackling climate change, increased resources for scientific research and taken aggressive steps to adjust the industrial structure with a view to saving energy and reducing pollutants. Through three years of hard work, our energy consumption per unit of GDP has dropped by 10%, and SO2 and COD emissions declined by 9% and 6.6%. Further steps are being taken to cut greenhouse gas emissions. Stronger international cooperation is crucial for addressing climate change. It is important for us to conduct extensive dialogue and practical cooperation in line with the principles and provisions of the United Nations Framework Convention on Climate Change and its Kyoto Protocol. We should take into full account the basic national conditions, stage of development, historical responsibility and percapita emission of different countries in carrying out such cooperation and uphold the framework of sustainable development and the principle of "common but differentiated responsibilities". Developed countries should recognize their historical responsibility as well as their high per capita emissions, substantially cut greenhouse gas emissions, and extend financial, technological and capacity-building support to developing countries in their effort to tackle climate change. Developing countries, on their part, should exert themselves and make positive contributions to the fight against climate change.
Second, oppose trade and investment protectionism. Protectionism will only delay world economic recovery and ultimately hurt the interests of the businesses and people of all countries. With the shadow of the global financial crisis still lingering, the international community must not waver in its resolve or slacken its efforts against protectionism. It is all the more inadmissible to say one thing while doing just the opposite. We must guard against and redress all forms of covert protectionist activities. As an active participant in economic globalization, China will never engage in trade or investment protectionism. We mean what we say and we honor our word with real action. For example, we sent several trade and investment promotion missions to Europe and the United States in the raging times of the financial crisis to purchase goods and boost investment cooperation. We have kept our commitment and we look forward to joint actions from all other countries.
Third, promote sustainable recovery of the world economy. The impact of the crisis is as strong as ever and is unlikely to disappear anytime soon. A nascent economic recovery needs our care, just as a green shoot needs sunshine and water. Countries should increase consensus, strengthen coordination of macro-economic policies, pursue responsible fiscal and monetary policies that fit their national conditions and maintain the consistency of the macro-economic policies. We should accelerate reform of the international financial system, intensify international cooperation on financial regulation, establish an effective early-warning and crisis management system, increase transparency of financial markets and raise the capacity to fend off and respond to potential risks so as to bolster financial stability and sustainable economic growth.
Fourth, protect intellectual property rights (IPR). IPR protection is vital to driving innovation and development. To safeguard IPR is to safeguard the source strength of innovation. It is important for the international community to jointly improve capacities for IPR creation, application, protection and management and build a balanced and effective IPR protection system on the basis of respecting the national conditions of all countries and accommodating the interests of all parties, especially those of developing countries, and through dialogue and cooperation under the principle of equality and mutual benefit. China stands firm on IPR protection. We will continue to implement our national IPR strategy, take strong measures to foster a legal, market and cultural environment for IPR protection, see to it that all fruits of innovation be respected and rewarded and translate inventions and discoveries of all kinds into real forces of production.
Ladies and Gentlemen,
At the early stage of the global financial crisis, I called for confidence, as confidence is more important than gold and currency. At the most difficult stage of fighting the financial crisis, I called for hope, as hope is the source of strength. At this critical juncture of countering the financial crisis, I called for perseverance, as perseverance will lead us to final victory. The dark cloud of the financial crisis will disperse. Let us work together for a more splendid future.