Opinion / Op-Ed Contributors

Reshaping the world economy through reform, opening-up and cooperation

By Li Keqiang (China Daily) Updated: 2014-01-24 07:13

First, we started by reforming and opening-up. We focused on properly handling relations between the government and the market. We vigorously streamlined governance and delegated power so as to release the dividends of reform. We slashed the number of items to be approved by government at various levels and pushed forward financial reform to make the interest rates of loans more market-based. We established the China (Shanghai) Pilot Free Trade Zone, instituted a "negative list" management model and relaxed market access. These measures fuelled market vitality and the internal driving force for economic growth and stimulated the enthusiasm of private investment. Last year, the number of newly registered private enterprises reached 2.33 million, up by 30 percent from the previous year.

Second, we defined a reasonable range of economic operation. The floor we set was a growth rate of about 7.5 percent and the creation of over 9 million urban jobs. The ceiling was to cap CPI growth at around 3.5 percent. As long as the economy operates within this reasonable range, we will be able to maintain stability of macroeconomic policies and achieve steady growth by mainly relying on structural reform and market forces. This has significantly boosted market confidence and stabilized people's expectations. Since the second half of last year, China's purchasing manager's index has climbed steadily above the tipping point of 50 percent.

Third, we readjusted the structure with intensive efforts. We introduced measures to tap the huge market potential and address "weak links" where development is needed. We stepped up development of the service industry by introducing policy measures to promote growth in information, finance, old-age care and health services. We also promoted energy-saving, environmentally friendly and other emerging industries. We persisted in our effort to drive domestic demand and improve supply through structural readjustment and to boost domestic demand through greater openness. And we continued to allow domestic demand to act as the main driver of growth. These measures do not just serve immediate interests. More importantly, they will generate long-term benefits. Last year, the share of services in China's GDP rose to 46.1 percent, surpassing that of the secondary sector for the first time. And energy intensity per unit of GDP was reduced by 3.7 percent from the previous year.

China's innovative ideas and approaches and new experience in macro-regulation will help ensure that the economy continues to perform well this year and beyond. Moreover, given the numerous uncertainties in the global economy and the unusual sensitivities of the international market to macro-policy developments in major economies, the stable fiscal and monetary policy and reasonable liquidity in China have combined to send a clear signal that stabilizes the international market's expectations. This is also an act of responsibility by China in the interest of world economic development.

The keynote of China's economic policy this year is to seek steady progress through reform and innovation. In my view, this is consistent with international expectations for reshaping the world economy. We will follow the arrangements made at the Third Plenum of the 18th Communist Party of China Central Committee, comprehensively deepen reform, continue to open up, maintain the continuity and consistency of macro-policies, actively boost domestic demand, and promote steady economic growth. When readjusting the structure, we will focus more on quality, efficiency and upgrading. We will work even harder to narrow the two major gaps between urban and rural areas and among different regions. We will take more effective measures to create more jobs, reduce poverty and help those in need. This will lead to greater social equity and enable the entire population to share in the benefits of development. The sustained and sound development of the Chinese economy will also offer new opportunities and inject new impetus to development of the world.

The international financial crisis that started in 2008 and the difficulties facing world economic recovery in the following years have raised many new tasks for the adjustment and improvement of the world economic system and architecture. Some economies have shown clear signs of recovery. But there remain uncertainties and factors that are not conducive to stability. All these cry out for in-depth adjustment and change. I therefore find it most fitting and relevant that the Forum convenes its Annual Meeting with "the reshaping of the world" as its theme.

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