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Premier Li: government should not issue too many orders to market

Updated: Jan 29,2015 4:11 PM     english.gov.cn

Premier Li Keqiang presided over a State Council meeting on Jan 26 to gather opinions and suggestions from experts, scholars and entrepreneurs for the upcoming Government Work Report. Li said that the government should focus on its work and the tasks it faces and not issue too many instructions to the market.

The Premier started the meeting by telling those assembled to “please give your valuable advice to the Government Work Report’’.

Wu Jinglian, economist and researcher at the Development Research Center of the State Council, suggested that China should push forward reform and change the economic growth pattern without incurring systematic risk.

Wu Xiaoling, vice chairman of the Financial and Economic Committee of the National People’s Congress, said that the government should minimize regulation and improve supervision as well as provide a stable currency environment for economic transformation.

The Premier said that Wu Xiaoling’s suggestion was “inspiring’’.

“We always say we should, on one hand, expand market access, while on the other hand enhance supervision. But in fact, we have too much supervision that is neither necessary nor reasonable. If supervision over those aspects is strengthened, it will hinder efforts to expand market access, Li said.

Chi Fulin, president of the China Institute for Reform and Development (Hainan), said the government should push forward reform of administrative power structures on the basis of reducing administrative approval requirements.

Li highlighted the concept of “power structure’’ that Chi raised.

“The government should do what it ought to do. If the government gives orders to the market and makes plans for enterprises without knowing the power structure, it is a job that the government ought not to do. In many cases the job becomes meaningless talk,” Li said.

Li asked Chi and the institute to conduct a thorough study of the economic and social management structure of governments at various levels.

The Premier stressed that the government should focus on what it ought to do and do it well.

Li Yanhong, chairman and CEO of Baidu, talked about how the Internet can improve the efficiency of social resources and create more jobs.

“Do you provide online medical services?” the Premier asked.

“We are not helping patients find the well-known doctors. Instead, we hope to help them find the right ones, to improve the efficiency of social resources,” Li Yanhong said of their developing medical services.

The Premier said medical services fall into the category of public services. The government can cooperate with companies through buying their services, in order to provide better services to the public.

Song Zhiping, chairman of China National Building Material Group, admitted the pressure of excess capacity last year made him give up any illusion of another government bailout.

He suggested that government should continue to support the iron, steel, cement and glass sectors in seeking global markets.

This approach came to fruition during a recent visit by Li to Kazakhstan where he was accompanied by an economic and trade delegation, including Song.

Song signed a contract with Kazakhstan to build the first glass production facility in the country. He said thanks to the Premier’s efforts in supporting enterprises to go abroad, his company has sold more producing capacity overseas and is competing in the global market.

In summing up, Li welcomed the opinions of the experts and entrepreneurs. He said the opinions offered basically covered three aspects: continuing to stabilize macro policy, properly dealing with the relationship between the government and the market, and pushing enterprises to engage in the global market.

Li said in the current global economic downturn many developed economies have adopted quantitative easing. China, however, maintains a steady macro policy — keeping the financial deficit under 2.5 percent and the growth rate of broad money supply (M2) between 12 percent and 13 percent.

Li stressed, while stabilizing macro policy, the government should implement adjustment and control in a certain direction and at certain intervals. The upper limit of the interval should keep price increases within a reasonable range without affecting people’s livelihood, and the lower limit should ensure basic employment.

“Employment, concerning people’s incomes, fairness in distribution and social stability, has been the most important index for the government in recent years,” Li said.

“The GDP growth rate has reached 7.4 percent this year. The most gratifying point is that employment increased by 13 million and the unemployment rate was lower than last year. Meanwhile, the income growth rate reached 8 percent, ‘running faster’ than GDP growth.”

Li said the government will continue to stabilize macro policy next year. “The government must pay special attention to reform, especially to structural reform, while stabilizing macro policy.”

The Premier said the nation has been dealing with the relationship between the government and the market. When we did well, we developed “sound and fast”; when we did not do too well, side effects became clear.

“The first 30 years of China’s development mostly relied on diligence, and the future development will rely more on intelligence. China’s labor force has reached 900 million. If 200 million of them start businesses and innovate, how will it influence the whole economic structure?” Li asked.

“We should motivate millions of ‘brains’ to promote pioneering and innovation, which will be the new ‘engine’ of China’s economy.”

Li urged further promotion of government reform to realize potential.

On one hand, we should streamline administration, delegate power and lower the threshold for market access; on the other hand, we should strengthen supervision and make a comprehensive list of power and responsibility to create clear expectations for the market, he said.

“Stabilizing macro policy will create stable expectations for the macro economy,’’ while clearly defining areas of responsibility will stabilize the micro economy, he said.

Li stressed that promoting a pioneering and innovative spirit among the public requires not only further government reform, but also reform of fiscal, taxation and financial systems. At the same time, the government will increase investment and draw capital from society in order to overcome the “shortcomings” in public goods and public services. The two will be the “double-engines” for China’s future economic growth.

“In order to improve China’s economy from lower-end to medium and high-end, we should participate more in international competition to improve the product quality and operating principles of our enterprises. Opening up will push forward reform,’’ Li said.

He was inspired by the opinions of the experts and entrepreneurs and asked officials to include their suggestions when drafting the Government Work Report.

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