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Quality before growth speed

(China Daily)
Updated: 2009-09-14 07:30

Premier Wen Jiabao of the State Council addressed the opening ceremony of the third Annual Meeting of the New Champions of the World Economic Forum (WEF) and met with business representatives on the afternoon of Sept 10. Premier Wen answered questions from WEF Executive Chairman Claus Schwab and business representatives. Following are the questions and answers:

Q: China set specific targets on tackling climate change both in the 11th Five-Year Plan and the National Program on Tackling Climate Change formulated and released by the Chinese Government in 2008, and progress is being made in meeting these targets. What will be the tasks and goals of the Chinese Government on addressing climate change in its 12th Five-Year Plan, and what constraining factors will China face in achieving these targets?

A: In the 11th Five-Year Plan, we set the target of reducing energy intensity by 20 percent and, based on the progress made so far, we may achieve this target in 2010 as scheduled. We have intensified our efforts to bring down energy intensity, including shutting down small coal-fired power plants with total capacity of over 50 million kilowatts. Energy conservation and emission reduction will continue to be our long-term goal in pursuing sustainable economic growth during the 12th Five-Year Plan period and beyond. And there will be a major drop in China's energy intensity by 2020.

China and Western developed countries are at different stages of development. Since the industrial revolution, Western countries have gone through 250 years of industrialization, while in China industrialization on a large scale only started several decades ago. We need to advance development, and at the same time keep up our efforts for energy conservation and emissions reduction. We need to strike a balance between these two and the ultimate goal of doing so is to achieve sustainable development. Without development, we will not have the capacity to save energy and reduce emissions.

Let me give you an example. China's per capita power consumption is 2,580 kWh. It is only one fifth of the United States and one third of Japan. But China is a country with 1.3 billion population and its industrialization and urbanization are picking up speed. It will be more challenging and more difficult for China to develop a green economy, and save energy and reduce emissions.

Tackling climate change is the responsibility of the whole world. Both developed countries and developing ones should pursue the path of green development - green investment, green consumption and green growth. Yet it will be a process, and during this process, developing countries, including China, and developed countries should enhance cooperation to jointly respond to climate change.

The principles and provisions of the UN Framework Convention on Climate Change and its Kyoto Protocol should be upheld and the principle of common but differentiated responsibilities should be adhered to.

First, developed countries should redouble their efforts in energy conservation and emissions reduction and meet the emissions cut standards set in the Kyoto Protocol as scheduled.

Second, developed countries should extend technical, financial and capacity-building support to developing countries.

Third, developing countries, on their part, should take energy conservation and emissions reduction measures, pursue green growth and extensively apply new technologies to reduce CO2 emissions in light of their realities. China will play a positive and constructive role at the Copenhagen conference and we hope the conference will achieve substantial results.

Q: At the World Economic Forum annual meeting in Davos last January, you outlined China's 4 trillion yuan ($586 billion) stimulus package. You mentioned that the package included substantial increase in government investment and stressed that the market should also play its role, encouraging participation of private and foreign capital in the implementation of the stimulus package. Will the Chinese government consider inviting international investors to make investment in China's private equity funds?

A: First of all, I want to make some explanation on the 4 trillion yuan investment program. The central government plans to invest 1.18 trillion yuan within two years and it is designed to generate greater investment from the non-public sector and local governments. By the end of July, 52.4 percent of the investment made by the central government had gone to government-subsidized housing, social programs and projects relating to people's well-being.

Another 24.7 percent of the investment was made in independent innovation, energy conservation and emissions reduction, technological upgrading and environmental protection. Only 22.9 percent of the money went to infrastructure development, including railway, road, and airports.

Although China has over $2 trillion in foreign exchange reserves, we are still open to foreign funds with a focus on attracting advanced technologies and managerial expertise. Foreign investment now takes two forms - direct investment and investment in the capital market. We will attract more foreign investment while maintaining stability of the capital market.

Q: The RMB is becoming an international currency and China has started the pilot program of RMB settlement in cross-border trade. Does the Chinese Government have any timetable for the RMB to become a global currency? What challenges and opportunities does China face?

A: The scale of RMB's cross-border movement is expanding, and RMB's status on the international market has been rising. However, the RMB is now only convertible under the current account, not the capital account. We need to have a correct self-assessment in the course of making the RMB a global currency.

First, whether the currency of a country can be internationally recognized as a major circulation currency is determined mainly by the economic strength of this country. It is a market-driven process. No one can rush it through when necessary conditions are not yet in place. Nor can any one hold it back when the time has come. We have introduced the pilot program of RMB settlement in cross-border trade in the five cities of Shanghai, Guangzhou, Shenzhen, Zhuhai and Dongguan, and have reached agreements with some countries on local currency swap totaling 650 billion yuan ($95.18 billion). They represent the progress in RMB's internationalization, yet it will take quite some time before the RMB truly becomes an international currency.

Q: Could you say a few words about China's soft power? While many Western countries, particularly the United States, focus their attention on issues like Iran, Iraq and Afghanistan, China is turning its eyes to other areas, including Latin America, Africa and the Middle East. Some of China's actions and activities in these regions may be misunderstood. Could you shed some light on the objective of China's foreign policy?

A: Many people don't know that China's relations with Africa did not start just from yesterday. We started providing aid to Africa shortly after the People's Republic was founded. China and Africa share similar historical experiences, and we respect the sovereignty, territorial integrity and independence of African countries. Even in our most difficult days, we continued to help African countries build railways and send medical teams to Africa.

The assistance has been mutual. African countries support China as brothers, and it is on the shoulders of our African brothers that China was carried into the United Nations. As an old Chinese saying goes, "Forget the favor you did others, but remember always the favor others did you". In my view, China's soft power lies in its respect for all countries, particularly developing countries and the least developed countries.

It means that we should do what we can to help others while pursuing our own development. I hope that developed countries, when coping with the financial crisis, will not forget these poorest countries, and the World Economic Forum will one day be known for its reputation of being not just a club of the rich, but also one for the poor, and that it not only takes interest in the growth of developed countries and the Fortune 500, but also works for attaining the Millennium Development Goals and meeting the global challenges of hunger, poverty and major diseases.

Q: With the Chinese economy growing at 7.1 percent in the first half of this year, will China achieve the growth target it set at the beginning of the year?

A: Based on where we stand now, the growth target we set for the Chinese economy is within reach. As a matter of fact, the GDP growth rate is not what I solely focus on. I have on my mind several more important indicators.

The first one is the employment rate. We have planned to generate nine million new jobs this year. In the first seven months, 6.66 million new jobs were created.

The second one is the quality and efficiency of economic growth. We should not only meet the growth target, but also advance structural adjustment. In particular, we must intensify our efforts in merger and reorganization, shutting down backward production facilities and restructuring. This way, we will put China's economic growth on a concrete and reliable basis.

The third one is energy conservation and emissions reduction. We must change the growth model that relies heavily on resources and pursues growth at the expense of resources and the environment. We need to meet the targets set out in the 11th Five-Year Plan and put the Chinese economy on a sustainable path.

I also keep in mind a number of other objectives related to people's well-being. From this year on, we will push ahead the reform in the pharmaceutical and health care system within three years. An additional 850 billion yuan will be channeled into the reform with 330 billion yuan from the central government.

From the second half of this year, we will introduce, on a trial basis, a new rural old-age insurance program in 10 percent counties across the country. We are also advancing reform of the performance-based salaries for teachers, medical staff and employees of government-affiliated institutions. There is much we can do to ensure China's continued development and the Chinese economy holds great potential. We should not only endeavor to achieve the various targets set for this year, but also work to ensure China's steady and fast economic growth in the years to come.

Q: Over 1,000 business representatives have come to listen to your speech. They come from both private enterprises and State-owned enterprises. What message do you have for the CEOs of these enterprises and how can they help you achieve China's development goals?

A: Enterprises form an important part of a country's economy. Corporate taxes are a major source of fiscal revenues. Enterprises need to raise their profitability and help lay a foundation for the recovery of the entire economy. Only when the enterprises are doing well with their profits increased will the government enjoy larger fiscal revenues and set aside more money to do more things for the people.

The most acute problem we face now is excess production capacity in some sectors, when external demand is drastically falling. This has brought new difficulties to some enterprises. They must speed up restructuring and phase out backward production facilities. They must strive for technological innovation and this is the only way to stand tall and firm on the international market.

I also wish to offer two suggestions to the World Economic Forum. The Davos Forum, with its forward-looking and strategic vision on international economic studies, has been a great success internationally and attracted worldwide attention. It is my hope that the forum, building on its past successes, will pay closer attention to the following two areas.

First, attach importance to under-developed countries, the least developed ones in particular, and incorporate the achievement of the Millennium Development Goals into the agenda of the Forum.

Second, while focusing on economic development, the Forum should also have its eyes on social development, and take an integrated approach in promoting economic development and development of medical and health care, science and technology, education and other social programs. This way, the Davos Forum will be even more successful.

(China Daily 09/14/2009 page4)