Speech at the crucial moment: Li Keqiang Davos delivers four major policy signals

On September 19, Premier Li Keqiang delivered an opening speech at the Tianjin Dover Forum in Summer 2018. Li Keqiang has been attending the summer Davos for five consecutive years and delivered an opening speech. At the moment when Sino-US trade frictions escalated and market sentiment was generally worried, the signals conveyed by the Prime Minister’s speech received much attention.

For the current general situation of the domestic economy, Li Keqiang judged that "the fundamentals are healthy." He pointed out that China's economy grew by 6.8% in the first half of this year, and it has been operating stably in the medium-to-high speed range of 6.7% to 6.9% for 12 consecutive quarters. The overall economy of China continues to maintain a stable and positive development trend, and the development of new kinetic energy continues to grow.

In this situation, the general tone of the work is to adhere to the "stable and progressive" and "maintain the supply-side structural reform as the main line, further stimulate market vitality, enhance endogenous power, release domestic demand potential, and promote the economy to maintain medium- and high-speed growth. To the mid-to-high end level."

Li Keqiang said that in the past few years, the emergence of new kinetic energy exceeded expectations and played a key role in China's stable economic growth. Today, China has more than 100 million market players, and 18,000 new businesses are born every day. The number of new urban jobs is 13 million per year, making consumption the main driving force for China's economic development.

Li Keqiang said that the Chinese government will continue to adopt an inclusive and prudent regulatory policy to promote the development of new kinetic energy. As long as it does not violate the basic principles of laws and regulations and does not harm the interests of the public, it is necessary to leave room for growth for new kinetic energy, let consumers choose and let the market decide.

Recently, the RMB exchange rate has continued to fall. Some people suspect that this is intentional for China to enhance its export competitiveness. In this regard, Li Keqiang made it clear that this is not in line with reality and is unfounded. "One-way depreciation has less benefits for China." "China will never rely on the devaluation of the renminbi to stimulate exports. In that case, we are making small profits and even destroying our own ecological environment."

Li Keqiang said that China will not only engage in competitive devaluation, but also create conditions for exchange rate stability, and will continue to adhere to the market-oriented exchange reform direction. He pointed out that China's economic fundamentals remain stable, and the balance of payments is balanced, foreign exchange reserves are abundant, and the renminbi is fully capable of maintaining basic stability at a reasonable and balanced level.

Xia Qing, deputy director of the International Cooperation Department of the National Development and Reform Commission, told the 21st Century Business Herald that on the platform of the Summer Davos Forum, China hopes to release a stronger signal to the world - the Chinese government's globalization, trade liberalization, and investment convenience. There is a firm confidence in it. "2018 is the 40th anniversary of China's reform and opening up. Driven by the new international environment and new technological revolution, China will deepen reform and innovation, lay out the future, and promote high-quality economic development. At the same time, we will firmly support globalization and continue to expand openness. The party maintains an open and inclusive economic system."

Signal 1: To reduce tax and reduce expenses for enterprises with greater intensity

Li Keqiang reiterated that China will unswervingly adhere to the "two unshakable", further implement and improve the policies and measures to support the development of the private economy, resolutely eliminate all kinds of unreasonable obstacles that hinder the development of the private economy, and relax the commitment of the government to relax private enterprises. Into the field, we must increase efforts to promote progress.

"In recent years, the Chinese government has taken measures to solve the problems of financing difficulties and financing for small and medium-sized enterprises, and most of the small and medium-sized enterprises are private enterprises. Private enterprises not only contribute more than 50% of the tax to the country, but also support China’s largest employment.” Li Keqiang’s words won warm applause from the audience.

Li Keqiang said that it will use more efforts to alleviate the difficulty of financing and financing in the real economy. We will adhere to a prudent monetary policy, continue to stabilize macro leverage, and maintain a reasonable liquidity. "There is not a lot of water in the pool now. The question is how to open a diversion mechanism to allow funds to flow to the real economy."

Li Keqiang also said that the active fiscal policy should be more active, and it is necessary to reduce the burden of tax reduction and reduction for enterprises to intensify the burden and stimulate the vitality of the market. It is necessary not only to resolutely implement the tax reduction and fee reduction measures that have been introduced, but also to resolutely stop adding new burdens to enterprises, and to study policies that significantly reduce the burden of corporate taxes and fees.

"Currently, China is in a very critical process of economic transformation and upgrading, both to deal with internal contradictions and to deal with external challenges." Zhang Jianping, director of the Center for Regional Economic Research of the International Trade and Economic Cooperation Research Institute of the Ministry of Commerce, pointed out to the 21st Century Business Herald. In the face of the increasingly complex internal and external environment, only through simple decentralization, deepening reform, tax reduction and fee reduction, can we inspire the innovation and enthusiasm of enterprises, thus forming new development momentum and nurturing new international competitive advantages to effectively cope with The trade war initiated by the United States has brought challenges to the Chinese economy.

He Dayong, a global partner of Boston, pointed out to the 21st Century Business Herald that from the international experience, supply-side reform needs to make good use of five major policy instruments: one is to reduce government intervention; the other is to reduce taxes and reduce burdens; the third is human capital investment; the fourth is control Money supply; fifth is to break financial constraints. In these five aspects, China's supply-side reforms have been exerted, but there is still room for improvement, especially in terms of tax cuts and reductions.

Signal 2: Accelerate the implementation of the policy of expanding market access

"Expanding openness" has been emphasized in Li Keqiang's speech.

Li Keqiang stressed that "both Chinese and foreign companies registered in China are treated equally", and must not be empty talk, and there must be no loopholes. Foreign policies should be allowed to compete on an equal footing in the Chinese market through policies such as decentralization and fair supervision. He promised to foreign entrepreneurs under the stage that if there are problems in the process of doing business, they can complain to all levels of government in China; any unit that does not make legitimate and reasonable corrective actions after receiving a complaint will be punished.

"China will expand its opening up with greater efforts. This is our independent choice: it can promote the transformation and upgrading of domestic industries, and it can also give more opportunities to domestic consumers. At the same time, it is also to maintain economic globalization through practical actions. The rules of trade liberalization," Li Keqiang said.

Li Keqiang pointed out that since the beginning of this year, China has greatly relaxed market access, including the service industry, especially the financial industry. These policies are being accelerated. At the same time, unreasonable charges for importing links are being cleared. On the basis of reducing import tariffs on drugs and some consumer goods in batches in the previous period, it is necessary to further reduce import tariffs on some commodities.

Timothy P. Stratford, a former US assistant trade representative and co-founder of Covington & Burling, pointed out to the 21st Century Business Herald that Li Keqiang’s signal was “very positive,” although it did not fully respond to industries that the US government cares about. Policy issues, but talked about a lot of questions about foreign companies doing business in China, and look forward to seeing relevant policies in these areas.

François PROVOST, senior vice president of Reynolds Asia Pacific, told 21st Century Business Report that China has become the world's largest auto market, and industrial transformation and upgrading has entered a critical period. China will not only become the largest electric vehicle market, but also lead the development of electric vehicle technology. For Renault, the Chinese market has a lot of business opportunities.

Signal 3: Defending the rules-based multilateral trading system

On the eve of the opening of the Summer Davos Forum, the United States announced that it will impose a 10% tariff on imports of 200 billion US dollars from China from September 24, and further increase the tariff to 25% in January next year. US President Trump also claimed that if China takes countermeasures, it will increase the tariff on another 276 billion US dollars of Chinese products. The Chinese government immediately announced that it would impose a 10% or 5% tariff on approximately $60 billion of goods originating in the United States.

Li Keqiang emphasized the position of maintaining the multilateral trading system. He said that the rules-based multilateral trading system is the cornerstone of economic globalization and free trade, and its authority and effectiveness should be respected and maintained. The unilateralist approach cannot solve the problem. All parties should complement each other's strengths and work together to accelerate the new industrial revolution. Achieve a broader and more inclusive development.

New Zealand's Minister of Research, Science and Innovation, Megan Woods, told 21st Century Business Herald that New Zealand is a trade-dependent country and is very worried about the rising protectionism. To this end, New Zealand hopes to work with other countries to consolidate a rules-based trading system, especially to maintain a reliable and effective World Trade Organization.

Wood said that we should face up to the problems of globalization. “As we all know, one of the reasons for the rise of protectionism is that many people are worried about even the impact of technological change and globalization on work, region, equality and the environment. Therefore, we need to discuss how to use the fourth industrial revolution to promote High-yield, sustainable and inclusive growth."

Signal 4: Promote the level of “double creation”

From "The Fourth Industrial Revolution - The Power of Transformation" to "Inclusive Growth in the Fourth Industrial Revolution" to "Building an Innovative Society in the Fourth Industrial Revolution", Summer Davos Forum The theme of the annual meeting has been locked into the fourth industrial revolution for three consecutive years. In response, the founder and executive chairman of the World Economic Forum, Schwab, responded to the 21st Century Business Herald and will continue to discuss the fourth industrial revolution in the future, as this is a huge driving force for change.

"China is showing the world a powerful ability to lead the fourth industrial revolution. The secret of success in this new era is 'mass entrepreneurship and innovation.'" Schwab said that the World Economic Forum Beijing Representative Office will set up a special The fourth industrial revolution center will strengthen cooperation with China, establish common principles, and promote the development of new technologies.

In his speech, Premier Li Keqiang also passed the signal of “incentive innovation” with greater intensity. He pointed out that the Chinese government will improve policies and innovation mechanisms and promote the "double innovation" level. "We will implement a stricter intellectual property protection system and resolutely crack down on the violation of intellectual property rights of Chinese and foreign companies and double the punishment."

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