A new blueprint for global growth

(China Daily) Updated: 2015-09-12 08:27

The Chinese economy is in the state of a new normal. It is going through a transition with traditional drivers being replaced by new ones. The extensive model of growth in the manufacturing sector is giving way to more intensive production. And overreliance on investment is abandoned for greater balance between consumption and investment. This is a painful and challenging process. Ups and downs in growth are hardly avoidable, as they are natural in a period of adjustment and transition. To borrow a concept from traditional Chinese medicine, they are the "pulse" that shows the health of the economy.

Over the last two months, we have seen a slip or fluctuation in certain indicators. Yet, the policies and measures adopted in the previous stage are starting to pay off, and positive factors are building up in the economy, hence the upward trend in certain indicators. The fundamentals underpinning a stable Chinese economy have not changed. The ups and downs in the economy may have formed the shape of a curving wave, but the underlying trend remains to be positive.

We will not be swayed by short-term fluctuations in economic performance, nor will we take them lightly. We are taking necessary measures of targeted, discretionary and precision macro regulation, mainly to mitigate short-term volatility and prevent its spillover or magnifying effect. We will be fully capable to deal with the situation once signs indicate that the economy is sliding out of the reasonable range.

I'm not making an empty promise when I say that the Chinese economy will not head for a "hard landing". In fact, withstanding considerable downward pressure on the economy in recent years, China did not turn on the money-printing machine or resort to massive stimulus. Instead, we invigorated the economy mainly through deepening reform. This has ensured stability in economic performance and allowed room for future adjustment.

The fiscal deficit ratio of the central government is relatively low compared with other major economies. There are still many tools at our disposal for innovative macro regulation. We need to take targeted measures to overcome downward economic pressure, so as to lay the foundation for sustainable and healthy growth in the future. It is like playing Chinese chess. We need to be careful with every move we make and also keep up the momentum for the long run.

Ladies and gentlemen, we believe that the Chinese economy is on the right track and its future will be even brighter. This is not unrealistic optimism. Our confidence is based on the sound foundation, condition and momentum of economic growth.

The Chinese economy is resilient and full of potential. China is going through the process of a new type of industrialization, IT application, urbanization and agricultural modernization, which all serve to generate strong domestic demand. China has a vast territory and diverse industries. That means, the Chinese economy is supported not by a single pillar but multiple pillars. It is highly resilient and shock-resistant.

The Chinese people are now working toward the goal of completing the building of a moderately prosperous society in all respects by 2020. This will mobilize the whole society and generate a strong force driving development.

Meanwhile, the ongoing structural reform is constantly delivering benefits. China remains the biggest developing country in the world. Development is of overriding importance. It holds the key to resolving all issues in China. What we aim for is development that is scientific, quality-based, efficient and sustainable.

To achieve such development, further reform and opening-up is required. We are comprehensively deepening reform, accelerating structural reform and pursuing an innovation-driven development strategy to fully unleash the potential of economic growth. We want to make sure that the economy maintains medium-high speed of growth and moves to medium-high level of development.

Since the beginning of the year, we have deepened market reform in finance, taxation, investment, financing and prices. We adopted a host of measures to lift restrictions on market access and promote fair competition. We also strengthened reform on structural adjustment. Reform in the financial sector has been advanced in accordance with market principles and rule of law. An open and transparent capital market that enjoys long-term, steady and sound development is being fostered.

Meanwhile, we are stepping up risk management to make sure that no regional or systemic financial risk will occur. The high savings rate and large foreign exchange reserves mean China has ample financial resources. There is plenty of water in the pool, so to speak. What is important is to get the water flowing and channel financial resources into the real economy.

We will continue with structural reform to tap the full potential of existing resources, and improve the allocation of resources and put them to more efficient use. Recently, we have taken a number of reform measures as we cut the interest rate and required reserve ratio. Going forward, we will continue to ease restrictions on the access of private capital to the financial sector, and actively develop private banks, financing guarantees and financial leasing to better support the real economy. We have improved the quotation regime of the RMB central parity to make the exchange rate more market-based.

We will continue to keep the RMB basically stable at an adaptive and equilibrium level, and gradually make the RMB convertible under the capital account. By the end of the year, the China International Payment System will be launched to support the further development of the offshore RMB market and the "going global" strategy of Chinese equipment. Let me repeat, we will make sure that no regional or systemic financial risk will occur.

For China to advance structural reform, it is important to unleash the infinite creativity of the people. At last year's Summer Davos, I raised the idea of mass entrepreneurship and innovation. This in fact makes up a major part of China's ongoing structural reform and adjustment. Measures have been taken to streamline administration, delegate government power, strengthen regulation and improve services. Steps have also been taken to cut taxes and fees for small and micro enterprises, establish investment funds to guide entrepreneurship, and promote the "Internet +" and "Made in China 2025" strategies.

Consequently, the people's creativity and entrepreneurial passion have been unlocked, and a massive wave of entrepreneurship and innovation is sweeping across the country. Those involved include both people at the grassroots and high-caliber professionals, from college graduates, migrant workers and returned overseas students to researchers, technical experts and senior managers. There are various platforms for entrepreneurship and innovation, which attracts both small and micro companies as well as big corporations.

Platforms such as crowd innovation, crowd outsourcing, crowd support and crowd funding have been set up, changing the way of production and management. It allows employees within the company to get rewards in addition to their salary by sharing their creative ideas online. It also gives opportunity to manufacturers outside the company to take part in innovation and share the benefits. As a result, a large group of micro businesses have been incubated, and collaboration among research institutions through the Internet have made their innovations more efficient.

Mass entrepreneurship and innovation is a strong power driving development. Creativity of the people is the greatest asset for development. China has a labor force of 900 million and over 7 million people graduate from college every year, with more and more of them joining the ranks of entrepreneurship and innovation. This has led to new supply and demand, and could well count as a major factor in keeping growth stable.

Mass entrepreneurship and innovation means more employment. Though growth is moderating, more jobs are being created because new market entities keep emerging. Measures to streamline administration, delegate government power and reform the business system have enabled new businesses to get started. For the past one and a half year, over 10,000 new businesses have been registered on a daily basis in China, and the momentum is still growing, creating a lot of jobs in the process.