On 14 September 2011, Premier Wen Jiabao of the State Council attended the opening plenary session and business dialogue of the World Economic Forum Annual Meeting of New Champions 2011 in Dalian and answered questions raised by Executive Chairman Klaus Schwab of the World Economic Forum and entrepreneurs. The text of the questions and answers is as follows:
Q: Mr. Premier, you mentioned in your speech the challenges facing many countries in the world, especially in the financial sector. My question is: what measures can China take to help the international community, especially relevant European countries and the United States, to cope with these financial challenges?
A: If we take a look at the current international and financial situation, we will see that as the world economy slowly recovers, uncertainties and destabilizing factors are also growing. Some major economies are experiencing sluggish growth and high unemployment. The United States now faces three tasks: controlling debt, cutting budget deficit and creating jobs by growing the economy. Some countries in Europe are in a sovereign debt crisis, and what’s most important is to stem the spread of the crisis. The volatility of the US dollar has destabilized international commodity prices and brought emerging economies under inflationary pressure.
Under these circumstances, China has become inextricably linked with the development of the world. We must first put our own house in order, and at the same time, play our part in reforming the international economic and financial systems, maintaining world economic stability and development and promoting robust, sustainable and balanced economic growth. Being the largest developed country in the world, the United States has a strong economy, a solid scientific and technological foundation and a rich talent pool. We are confident that the United States will be able to overcome difficulties and achieve sustained economic recovery. We hope that the United States will pursue the right economic policies, maintain fiscal and financial stability and uphold the interests and confidence of global investors.
When I met President Obama last year, I proposed to him that China and the United States engage in large-scale financial and economic cooperation. This proposal has two key components: First, the United States needs to open its market to investment by Chinese enterprises to turn debt into investment and enhance US employment. Second, the United States needs to export more to China. The United States now holds the key to this problem, and it should relax its export restrictions. Former US Commerce Secretary Gary Locke once said that every 1% increase in US exports to East Asia will create 100,000 new jobs in the United States. My proposal was appreciated by President Obama, and I hope that China and the United States will adopt such a positive approach to address their trade imbalance and enhance business cooperation.
Europe is China’s comprehensive strategic partner, and we have followed closely the economic development and difficulties in Europe. When some European countries run into sovereign debt crisis and economic distress, we have said on many occasions that we are ready to help and will continue to invest in Europe. In a recent phone call with President Barroso of the European Commission, I once again told him clearly that China believes in Europe’s ability to overcome the difficulties and is willing to invest more in Europe. At the same time, I hope that leaders of the EU and some European countries will also view China-EU relations from a strategic perspective. For instance, they should recognize China’s full market economy status. As a matter of fact, according to the agreed terms of China’s WTO membership, China will be recognized as a full market economy in 2016 internationally. To show a goodwill a few years earlier is the way how friends should treat each other. Next month, I will meet with the EU leaders and I hope breakthroughs can be made on this issue during that meeting.
Japan is a close neighbor of China. China and Japan have a lot to offer each other economically and a large bilateral trade. The challenges confronting Japan now are caused by the recent tsunami and nuclear leak. But we believe that post-disaster recovery and reconstruction will bring the Japanese economy back on the track of fairly rapid growth. When Japan was in the most difficult situation, we also offered help in trade, tourism and other fields.
Last but not least, we must not forget developing countries. They are the ones that suffered most in the financial crisis. They face unprecedented challenges in growing the economy and tackling inflation. We need to extend them a helping hand. China has recently provided two tranches of food aid to African countries and offered humanitarian assistance to countries experiencing turbulence in the Middle East and North Africa. The world must unite and act as one in times of crisis and difficulty. This is the principle that China will continue to uphold in the future. Thank you, Mr. Schwab. Thank you all.
Q: My question is about political structural reform that you mentioned in your speech. In previous speeches, you set out the vision of building China into an open, inclusive, culturally advanced and harmonious country, and you also said that only an open and inclusive country can be strong and prosperous. What concrete measures will China take to meet this goal?
A: I appreciate Mr. Schwab’s kind words about my speech this morning. I think this afternoon dialogue is also an interactive session, an opportunity for me to interact with not just the participants here, but also the people of my country. Therefore, I feel a strong sense of responsibility to present my views on various issues in an accurate and candid manner. I have talked about political structural reform on many occasions in recent years, and these views, if put together, are fairly comprehensive.
Mr. Schwab asked me what we need to do now and in the future. Let me share with you the following observations. First, we must govern the country by law. The most important mission of a ruling party is to abide by and act in strict accordance with the Constitution and the laws. The Party should not replace the government in governance, and problems of absolute power and over-concentration of power should be redressed. To achieve this, we must reform the leadership system of the Party and the state. This task was first set out by Mr. Deng Xiaoping more than 30 years ago, and has become even more urgent today. Second, we need to promote social equity and justice. That means we need to grow the economy through reform, tackle the inequality in income distribution and bridge the widening income gap so that our people can all live a life with dignity and share the fruits of reform and development. I know full well that the majority of the 1.3 billion people in this big country still live on a middle and low income and even in poverty. Social equity reflects whether the government is truly committed to serving the people and is crucial to sustainable economic development and social stability and harmony.
Therefore, we need to pay high attention to the following two aspects: first, we need to raise the income of middle- and low-income population at a faster pace and adjust the income of high-income groups; second, we need to enhance all social security schemes including unemployment, old-age, medical care and other benefits to put in place a complete social safety net. Third, we need to uphold judicial justice. Procuratorial and judicial authorities should keep their due independence and be free from interference by any administrative organ, social group or individual. Judicial justice is an embodiment of social equity and justice, and is what we must always adhere to. In fact, this was also first proposed more than 30 years ago at the Third Plenary Session of the 11th CPC Central Committee. We should earnestly follow it through. Fourth, we need to guarantee people’s democratic rights. People’s democratic rights and interests prescribed in the Constitution must be protected. The most important ones are their rights to vote and to stay informed about, participate in and oversee government affairs. Here, I want to say a few more words about the right to vote. We will increase the forms of democracy and enhance self-governance at the village level. We should believe that if the people can manage village affairs well, they can also manage those of a town and even a county. Some localities are summarizing experience and preparing the ground for elevating election at the village level to the township level on a trial basis.
And on expanding democracy, we may first start within the Party and gradually introduce it to beyond the Party. This is a prudent and realistic approach. Fifth, we need to resolutely fight corruption. To fight corruption and promote integrity is a major task for governments at all levels. For the current stage, we may focus on the following areas: First, oppose abuse of power. Officials in leading positions must not abuse their office and intervene in tendering activities for personal gains. This should be a priority in our fight against corruption on the economic front; second, gradually introduce the system of assets declaration and publication of the declared information. We have formulated some rules in recent years. For example, leading officials are now requested to declare their personal assets and report what their spouses and children do and whether they live abroad. These rules need to be further improved. And we will gradually move from assets declaration to making the declared information public. This is the most important means to supervise the exercise of power; third, release the government budgets for travel abroad, the purchase and operating costs of motor vehicles and official entertainment. Ninety-eight departments have begun this practice this year and it has been welcomed by the public. But they feel it is not enough. Therefore, we will gradually expand the scope of the practice as necessary and specify each item in the published information. We will resolutely prosecute those who commit corruption, and corruptionists will be punished in strict accordance with the law. In those five areas that I just mentioned, the most important and most difficult ones are to expand socialist democracy in an orderly manner, unswervingly advance social equity and justice, and resolutely fight corruption. If we can accomplish these tasks, we will be able to calm the hearts of the people, make them feel safe and secure, ensure care for the vulnerable groups, and give people confidence in the future of the country. Thank you.
Q: According to the Chinese philosophy, crises often co-exist with opportunities. The current financial situation is not an optimistic one. Premier Wen, given the situation, what are the strategic opportunities for Chinese companies to pursue innovation and expand their global reach?
A: The current international economic situation is highly complicated, and companies face tough competition. Let me put your question in a broader context. Companies and the whole economy face similar challenges. The theme of this year’s Summer Davos, “Mastering Quality Growth”, actually answers your question.
What is quality growth? In my view, first, it is comprehensive, coordinated and sustainable growth. As far as China is concerned, it means we need to address uneven urban-rural and regional development, and strive for coordinated economic and social development. Second, quality growth should be driven by scientific and technological advances. This calls for institutional reform to turn enterprises into main players in R&D and innovation activities. Third, quality growth should be low-carbon, green and environment-friendly. We will take more forceful measures to meet all the environmental targets set out in the 12th Five-Year Plan, including cutting CO2 emission intensity to relieve the constraints of population, resources and the environment on economic development. Fourth, quality growth should be one that benefits the people. In other words, the fruits of growth should be shared by the overwhelming majority of the population. We pursue not only economic growth, but also all-round human development and social progress.
Moreover, quality growth should be sustainable growth that has both a certain growth pace and low inflation. It means that there are no major fluctuations in the economy and inflation is within control. This is particularly important now as we face fairly large inflationary pressure. I often say, inflation, if combined with corruption, will undermine social stability and people’s support. We should view inflation from such a perspective. My answer may have gone beyond what concerns an individual enterprise. Thank you.
Q: My question is about African development. Countries in Africa are working hard to speed up their economic growth, though it may take time for them to achieve this goal. They regard China as an important model for rapid and sustainable growth. What do you think are the core areas for Africa to achieve fast economic development? What strategic role can China play in this process in terms of giving back to the local community?
A: China’s friendship with Africa dates back to the 1950s and 60s. China was very poor then, yet we offered Africa selfless assistance. We will never forget the staunch support of African countries in restoring the lawful seat of the People’s Republic of China in the United Nations. It is our African friends who carried China into the UN. An old Chinese saying goes: forget not the help you have received, but forget the help you have given. We will never forget the profound friendship and strong support of the African people to the Chinese people. I also believe that although Africa is home to the largest number of underdeveloped countries, it has rich natural resources and hard-working people. African countries will achieve development and prosperity with their own efforts. Assistance to Africa should aim at enhancing Africa’s self-development capacity and improving people’s well-being, and ensure that the African people can gain real benefits. Some people are critical about China’s assistance to and relations with Africa. To them, I want to say that China made friends with the African people and provided assistance to them when China was in its poorest days, and we did not take a single drop of oil or a single ton of mineral from Africa.
Today’s China is stronger, but we continue to provide selfless assistance to Africa. Those who have checked data should know that China is in no way the one who gets a lion’s share of resources and oil from Africa. Countries need to learn from each other. At the same time, they all need to find development paths that fit their own national conditions. We need to respect the sovereignty, territorial integrity and choice of development path of African countries. Our support should center on the weakest links in Africa’s development. A sustainable relationship and broad assistance should be based on the principle that the government provides guidance, enterprises act as the main players and market rules are observed. In developing economic relations with Africa, first we need to respect and consult with each other; second, the sovereignty and territorial integrity of African countries and the development paths chosen by their people should be respected; and third, we should treat each other as equals and pursue win-win results. I believe these are the basic principles we need to follow in developing economic and trade relations with and providing assistance to Africa. I have not gone into details about China’s policy measures on assistance to Africa. We have introduced a host of measures in this regard under the Forum on China-Africa Cooperation, such as debt relief and exemption, providing interest-free loans and preferential buyer’s credit, supporting agricultural and infrastructure development and sending medical teams and volunteers. We will continue with these efforts. As long as we move along the right track, no force can stop the friendship and cooperation between China and Africa. Let me add that when cooperating with Africa, we must also pay attention to the reasonable and efficient use of resources, environmental protection and cultural preservation. Thank you.
Q: Premier Wen, my question is about made-in-China products. Many Chinese companies are producing world-class products, but still some others are hurting the image of made-in-China products with their sub-standard goods. In this globalized world, it is important to enhance the international competitiveness and global image of made-in-China products. If the 100,000 Chinese companies that meet the GMC standard can join forces and speak for the excellence of made-in-China products, then in five years our products will be on a par with made-in-Japan and made-in-Germany products. Mr. Premier, how long do you think it will take for made-in-China products to stand as a symbol of quality?
A: The question from this Chinese entrepreneur stirs up inside me a courage to exert myself for the prosperity of the country. Though I am approaching 70, this moment I feel like a young man. I hope we have not only made-in-China products, but also created-in-China ones, not just Chinese goods, but Chinese IPR and Chinese brands that stand for quality, safety and reliability. This requires the hard effort of several generations of Chinese for up to a hundred years. True, we face many challenges and difficulties, but we Chinese must not lose heart. We must rely on our diligence and intelligence to develop our country. Leaders should pay close attention to two crucial fields, namely science and technology and education.
To advance progress in these two areas, we must do the following: First, we must meet the investment targets we set for these two areas. In 2012, government spending on education will reach 4% of GDP and R&D spending as a percentage of GDP will rise to 2.2%. Challenging as it is, I am determined that these goals must be met, even if we have to tighten our belts. Second, we must advance reforms in these two areas. We need to resolve the problem of science and technology not fully meeting the need of economic development. We need to integrate the industry, academia and research institutions with enterprises playing the main role. In educational reform, what’s most important is to cultivate creative talents. We must ensure that our children will not only think independently and creatively to picture a colorful world in their mind, but also draw a beautiful blueprint with their hands. Third, we must advance corporate reform. We need to establish a modern corporate system to fully harness the initiative of both corporate executives and employees. Entrepreneurs should have their eyes on not just profits but also R&D. I believe a major financial crisis will bring about a major science and technology revolution. And the nation that can seize the opportunity will lead the way and succeed.
Q: You mentioned in your speech the challenges facing Europe, some West European countries in particular. But I am afraid that the real challenge for the international community may not come from Europe, but the United States, especially as the US enters the presidential election in November next year. How and when do you think the United States can resolve its deficit and debt?
A: I have fully addressed this topic when answering the question about the international economic situation this morning. Some say that the danger of the world economy mainly lies with the United States, and some say it lies with Europe. I am neither the president of the United States nor the prime minister of any European country. So, it’s really hard for me to make a judgment. But I have clearly stated China’s view. As the two largest advanced economies in the world, the EU and the US should adopt promptly and resolutely responsible fiscal and financial policies, and push forward policy adjustment and institutional reform as soon as possible so as to cut budget deficit and ease the debt pressure.
Both Europe and the United States have strong economic foundation and advanced managerial experience and technologies. I believe with the right policies, they will tide over the difficulties and achieve economic recovery. We hope to see early recovery of the two economies as this is in the interest of not only Europe and the United States but also the world at large. China is ready to step up cooperation with them to this end. Thank you.