Li Keqiang answers questions at forum

Feike Sijbesma, Chairman and CEO of Royal DSM: Premier Li, in recent years, the Chinese government has made vigorous efforts to pursue structural reform, including reforms of the SOEs and functions in the government, and cut in taxes and fees, etc. Could you share with us the priorities in those structural reforms and the progress China is making?

Li Keqiang: Before answering your question, I want to first express my high appreciation to the World Economic Forum for forging such a close partnership with the Chinese side. I'm also very happy to meet friends here, both old and new.

In recent years, the Chinese government has made hard efforts in advancing all-around reform to create the necessary conditions for structural reforms and use structural reform in return to underpin sustained and steady economic growth. We want to maintain balance between steady growth and structural adjustment. What happened in the past couple of years has shown that the Chinese government has not resorted to massive stimulus measures. Instead, we have focused on structural reforms, especially supply-side structural reforms to bring out the creativity of each and every individual and potential of the market. These efforts have improved China's economic structure and supported a medium-high growth of the economy.

In pursuing structural reforms, especially supply-side structural reforms, we have focused on streamlining administration, delegating government power and lifting the undue restrictions on companies and the market. In particular, we have reformed the corporate registration system and investment review system. As a result, in the last couple of years, as many as 40,000 new market entities get registered on an average daily basis. They have given strong boost to employment. Over 13 million urban jobs are added annually. All efforts for maintaining steady economic growth are aimed at ensuring employment.

The endeavor of streamlining administration and delegating power and encouragement of mass entrepreneurship and innovation have also contributed to the improvement of the economic structure. In this process, micro businesses and SMEs have been the largest contributor of new jobs, and made the service sector the biggest sector in the economy. Consumption has been on the rise, fast yet steady, and it has exceeded investment in terms of contribution to GDP growth. All these have made positive impacts on China's economic structure.

Second, we have introduced significant tax cuts and eliminated the undue administrative fees. This has opened up broad space for companies, especially emerging companies, to grow. The activity rate of newly registered companies this year is higher than last year, standing at above 70%. Our policies have paid off.

Third, we have continued to reform SOEs, including large SOEs, to make them leaner but healthier and to ensure that they focus on main businesses, cut the excessive tiers of management and introduce mixed ownership in order to enhance their core competitiveness. We are creating conditions and the environment for SOEs and private companies to compete as equals on a level playing field. This in itself is an effort of structural reform.

In one word, reform is the fundamental driving force for China's economic development, and we will stay firm on this course.

Matthew Prince, CEO of CloudFlare: Premier Li, thank you for meeting with us today. My company is investing in cloud computing infrastructure across China with our partner Baidu. I appreciate your statement in the special address on the importance of cloud to China. My question is about China's strategy to upgrade its manufacturing industry and boost its internet development, specifically the Made in China 2025 and internet+ initiatives. What will be the impact of these initiatives? What will be the Chinese government's next priorities in these areas?

Li Keqiang: China is the world's largest developing country and a country that is still in the process of industrialization. The manufacturing sector is still of fundamental importance to China's development. The priority now is to transform and upgrade the manufacturing sector from low-medium to medium-high level. Hence we introduced the Made in China 2025 and internet+ action plan, which have much commonality with the theme of this year's forum－the fourth industrial revolution.

First, the Made in China 2025 and internet+ initiatives are inseparable. To upgrade China's manufacturing sector and elevate China's 200+ industrial products, the output of which is the largest in the world, to a new level, we need to rely on the internet, cloud computing, big data and other technologies to make China's manufacturing smarter and more digitized.

Second, in upgrading China's manufacturing sector, we need to use the internet+ to pool intellect and resources globally to offer solutions to various problems. In my special address yesterday, I gave the example of a local Tianjin company of cloud computing which serves the manufacturing sector. I hope that CloudFlare will not just work with big companies like Baidu, but also consider partnering with new growth cloud computing companies in China.

Third, in upgrading the manufacturing sector, we must be highly responsive to the market changes. China is already a middle-income country. The middle-income class has diverse needs, so we must ensure that the manufacturing sector is customized and suited to customers' individual needs. We need to use the internet to get a better feeling of their needs and make our products accordingly. There is also need for interactions with customers, and this will open up a broader market for the manufacturing sector and integrate products with services. We live at a time of fast changing market demands and a time when the potential of each individual can be brought out through mass entrepreneurship and innovation and internet+. This presents a challenge to the manufacturing sector, but more importantly, an opportunity.

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