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China's Economy: New Normal and New Engines
2015-05-09 04:23

Honorable Dean Blount,

Distinguished Guests, Ladies and Gentlemen,

Good morning.

It’s my third time to attend the Greater China Business Conference at the prestigious Kellogg School of Management, and I feel deeply honored to have the opportunity of delivering opening remarks for three consecutive years.

Some of you may still remember that every time I spoke here, I emphasized my confidence in China’s economy. As you can guess, today, I will share with you my confidence again.

When I stood at this podium two years ago, many people worried about a possible hard landing of the Chinese economy. As a matter of fact, such a hard landing didn’t happen. Although still many people are worrying about China’s economy, I believe in the foreseeable future there will never be such a hard landing.

As the Chinese government officially announced, China’s economy has entered a state of “new normal”. “New normal” means a shift of gear of economic growth from high speed to medium high speed by appearance, but in essence it’s a transformation of the growth mode. The term “new normal” is not only a description of the current status of China’s economy, but also a reaffirmation of the Chinese government’s commitment to improving the quality and efficiency of China’s growth model.

In line with the “new normal”, the goal of the Chinese government is to keep China’s economy operating within a proper range. The upper limit is to prevent inflation running high while the lower limit is to ensure steady growth and employment. The annual GDP target this year was set at around 7 %, slightly lower than the previous three years, which was around 7.5%. It’s hard for me to predict whether there will be a further dropping in the coming years, but I do believe there will be a bottom line, and the Chinese government has the confidence and ability to prevent the economy from slipping out of control.

As Premier Li Keqiang pointed out, the Chinese government still has a host of policy instruments at its disposal. All the disrupting factors which may cause further difficult problems to the Chinese economy have been closely monitored by the government and relevant measures will be taken timely when necessary.

Thanks to the unique system of the socialist market economy as well as the large population and huge domestic market, China’s economy has strong tenacity which may not have been realized by many people.

There are still many powerful engines China’s economy can rely on in the state of “new normal”. In order to ensure a long-term and steady growth of the national economy, China will not only transform the traditional engines, but also foster new engines.

By transforming the traditional engines, it means focusing on increasing supply of public goods and services. There is still great potential to be tapped in infrastructural building and urbanization. This year, we have identified some key areas for investment, including building railways in central and western provinces, constructing water conservancy projects, rebuilding rundown urban areas and old houses in cities and villages, and preventing and controlling pollutions.

Recently, during my annual leave in China, I joined a study tour organized by the Ministry of Foreign Affairs to Henan Province. I was deeply impressed with many things I saw and heard there. Especially I was overwhelmed by so many economic activities and infrastructure construction going on there. I was told many Chinese companies have moved their production facilities from coastal area to Henan thanks to the relatively lower costs of the province. This is a good example that uneven development among different regions of China is itself a potential driving force for China’s future economic growth.

By fostering new engines, it means encouraging mass entrepreneurship and innovation. China will deepen reform of the administrative system in a continuous attempt to reduce by large margin items which originally require government approval, so as to make doing business easier. China will further increase its investments in science and technology research, and plan to create a 6.54 billion US dollars capital fund which aims to attract social capital investment to spur innovation. China will also strengthen the protection of intellectual property rights and do its best to foster an environment that encourage entrepreneurship and tolerates failure.

In my opinion, the most powerful engine driving China’s economy remains the further deepening of the reform and opening up to the outside world. China’s economy will continue to benefit from the dividends of reform and opening up for many years to come.

The determination of the Chinese government in pushing forward the reform and opening up has exceeded the expectation of many people. At the end of 2013, China announced more than 330 reform items in the political, economic and social fields. Last year, the Chinese government adopted a decision for the first time in history to comprehensively advance the rule of law in China. In the short period of time since September 2013, four pilot free trade zones have been established in Shanghai, Guangdong, Tianjin and Fujian.

Recently, Chinese stock market has been booming again. There are many explanations regarding the reason for the comeback of the bull. I think at least it’s an indication of investors’ confidence in the reforms being carried out by the Chinese government.

It’s certainly helpful for any China observer to pay attention to the ambitious reform programs of the Chinese government as well as its firm determination in implementing specific reform measures rather than only focusing on the challenges and problems China faces, if he wants to acquire an accurate understanding of the country. The extraordinary reform spirit of the Chinese people has made China’s economic miracle in the past three decades a reality, and will for sure guide the Chinese economy through all the difficulties and challenges ahead.

In closing, I wish this wonderful conference a complete success, and I hope to join you again next year.

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