Editor's note: Premier Li Keqiang responded to questions from reporters at a news conference at the Great Hall of the People in
Reuters: The recent volatility in
Li Keqiang: You've had the first opportunity to ask a question, and you made your questions all about the financial sector. That is understandable, as many economic problems first manifest themselves in financial markets. The top priority of the financial sector is to support the development of the real economy. The truth is, the dysfunctional real economy presents the largest risk to the financial markets. Last year, we took a series of steps, including cutting interest rates, and targeted reductions of banks required reserve ratio; these were not quantitative easing measures. At the same time, we also took care to insure that there is appropriate money supply. All these steps will aim at bringing down the cost of financing and enhance the development of the real economy, so I believe the job of financial institutions is to provide better services to the real economy, especially micro and small businesses.
The financial sector also operates according to its own laws, and one should always look out for possible financial risks. Last year, because of the difficulties of companies in some sectors, the nonperforming loan ratio of some financial institutions in China increased, but we are still in the good position to defuse the financial risks because the capital adequacy ratios of commercial banks is still about 13 percent, which is below the international warning line. Those bank's provision coverage ratio is also about 180 percent, which is above the 150 percent level that we set. We also have other market-based tools at our disposal to help bring down the corporate debt ratio. A very high corporate debt ratio is not new in
Last year, due to multiple factors, there were some unusual fluctuations in
Here, I want to emphasize that it will be a process for us to put in place a fully fledged financial regulatory regime, and in this process the various government departments and local authorities must continue to do a diligent job in performing their assigned responsibilities. Well, it is important, but we watch out for possible risks to ensure that the lawful rights and interests of investors and consumers will be upheld. I want to remind the various departments and local authorities that they must to do their job properly, otherwise they will be held accountable. Thank you.
Xinhua News Agency: Some people are worried that
Li Keqiang: You raised a big question. But it is impossible for me to agree that
The other day I read a foreign media report saying that one visit to a heavy industry left the impression of depression, while the next stop to a technology park left the impression that the economy is growing at a double-digit rate. This is in line with my last year's field trip conclusion: hope and challenges coexist. If we look at the "fundamental" and "big trend", hope outweighs challenges.
We are fully confident about
The deregulation and tax cuts of the past few years will unleash the vitality of the market. Meanwhile, new forces of economic growth drivers are taking shape in a way that beats expectations. Despite the slowdown over the past few years, the employment condition is not bad. Last year we created more than 13 million jobs in the urban area. In the first two months of this year, the service sector grew 8.1 percent. Among them, there is high-tech research development, which is giving a push to the upgrade of traditional industries, an area where there is so much work we can do. We are in the midst of pushing ahead with deindustrialization and urbanization. New-style urbanization is the large domestic demand, especially in central and western regions, where there is enormous room for effective investment. If we combine the "fostering of new drivers" and "upgrading of old engines" and make them the "double-engines" of the Chinese economy, it will go through the pass of difficulties and leap to the plateau of hope.
Under uncertain world economic prospects, instability is adding. But we have ample reserves of policy instruments. Last year, despite a six-year low in world growth, we managed to reach our previous target. We realized that in the absence of all-out stimulus measures, instead we have chosen the path of structural reform, which is tough but sustainable. There will be small and short-term volatility down the road, but in case there is any sign that the economy will slide beyond an appropriate range, we have the reserves of innovative macro-adjustment measures to stabilize expectations.
The "stress test" we have been through, in another way, is a precious experience. I believe that under the leadership of the CPC central committee with Xi Jinping as general secretary, as long as the new vision we have deployed unites the people's efforts, we will be able to deliver a good start to the 13th five-year plan, which will bring a warm breeze to the world.
Reuters: Will the Shenzhen-Hong Kong Stock Connect be launched within this year?
Li Keqiang: I just want to add one thing to part of the question raised by the Reuters journalist regarding when the Shenzhen-Hong Kong stock connect will be launched. We have already launched the Shanghai-Hong Kong stock connect and a lot of experience has already been gained from its operation. That stock exchange connection has brought real benefits to both cities. Currently, authorities in the mainland and in
NBC: I'm with NBC. Respected Premier Li, your work report has outlined steps to
Li Keqiang: There are broad interests between
As for how to ensure the healthy development of China-US ties, I believe both countries need to act in keeping with the principles of equality and mutual benefit. Currently the two countries have stated readiness to press ahead with Bilateral Investment Treaty negotiations.
Business cooperation between our two countries has always been mutually beneficial, something that I believe the
Li Keqiang: You raised quite a sharp question. Honestly speaking, it is true that some localities have found it hard to make pension benefits payments, but these are only isolated cases. Now the pension schemes in
One day, we will all be retired and live on pension benefits. So here's the message of reassurance. That is, nationally speaking and in the long run, there will absolutely be no problem in meeting pension payments by the Chinese government. Last year, the surplus of our pension insurance schemes was still at 340 billion yuan, and accumulative balance was 3.4 trillion yuan. Moreover, we still have the central social security fund, which is worth 1.6 trillion yuan, as a strategic reserve that has not been touched, and we can also use State-owned assets to replenish the social security fund. So, ensuring that the elderly will be provided for cannot and will not be an empty promise.
Bloomberg News: Mr Premier, in this news room last year you said China is determined to press ahead with reform that would be as painful as taking a knife to one's own flesh, and in this year's government report you talked about the need for a minimum 6.5 percent growth target, and we have also heard local officials saying there will not be layoffs as China presses ahead with overcapacity. So I am wondering how would you address concerns that the growth target and the desire to avoid potentially layoffs would bind
Li Keqiang: One thing is certain: that we are determined to push ahead with our reform agenda. Reform and development are not in conflict with pursuing structural reform. We can further release market vitality and drive economic development. It is true that in some sectors there are serious problems of overcapacity, especially in heavy industries and petrochemical industries. We have selected the steel and coal sectors to start with the effort of cutting overcapacity and at the same time we will also avoid massive layoffs. In the past two years, we have been faced with up to one hundred million tons of steel making capacity involving some one million employees, with a high priority given to protecting the interests of employees. We have taken strong steps to resettle these people and give them re-employment opportunities, and good experience have been enjoyed from the process. In a word, we will press ahead to deal with overcapacity and at the same time make sure that there will not be mass job losses. We will assign possible laid off people to new jobs and for those who still have difficulties in getting employment opportunities, the central and local government have financial resources to cover layoffs. The central government has established a 100 billion yuan fund in this respect, and if there is a need we could increase that amount. In the meantime, local governments have to do their own jobs. We hope to make it a win-win process and will strive to strike a proper balance in between. In the process we hope that by cutting overcapacity in those heavy industries, we will bring about a sustained and sound growth in these sectors.
People's Daily: Just now you said that the government will continue to streamline administration and delegate power to stimulate market vitality, so my question is about this government reform. This reform has been going on for several years, but some companies and people still feel that it's difficult for them to get some things done. In some cases, they even feel quite at a loss as to what to do. My question is, what will the government do to proceed with this reform?
Li Keqiang: Streamlining administration and delegating powers holds the key to transforming governments' functions. Three years ago, on the same occasion, I promised that this government would cut the number of items that require State Council review and approval by one-third during its term. We have already fulfilled this target. Based on third-party evaluations, most of the companies and our people are satisfied with the progress of the reform. Yet, some problems still exist, and our people expect more from the government.
At present, there are still too many items that require government approval. For those items that do need to exist, there is a lack of unified standards. A few days ago, in my discussion with some representatives of NPC deputies, one of them said that they wanted to establish a local nursing home that combines medical care with elderly care. It's a very popular idea with the local people. But many of them feel quite at a loss as to what to do, because there are different standards and they need to go through a host of government review procedures, involving market access, departments in charge of designated places for medical insurance, and how fees are going to be collected or set, etc. So all these redundant procedures have held back the development of productivity and also effective consumer demand among people.
We must make persistent efforts to forge head on this government reform and wherever there is an obstacle to this reform, the government must get right on it. The reform will cut government power but we are determined to keep doing it until our job is done, as that will deliver clear benefits to our people even if the government has to make painful adjustments. This year we are determined to further cut the number of such government approval items and leave more such items to the market.
For those items that still exist, procedures need to be simplified. We also need to further unify existing standards. In the past few years, we deepened business system reforms. We combined the requirements for business licenses and administrative permits. We have also introduced the practice of unified business licenses with the unified social credit code. All these have tremendously unleashed the creativity and entrepreneurial enthusiasm of our people. Now, on a daily basis, as many as 30,000 new market entities get registered. We will press ahead with this reform in various respects, for example, there are still too many requirements for certificates and various permits, and this year our goal is to further cut the number of such certificate requirements by half.
For government documents without solid legal grounds, and that have held back the entrepreneurship of the people, or even hurt their rights and interests, they will all be cleaned up, or abrogated. But to delegate powers does not mean the government will be hands off. Instead, it needs to do a better job in ensuring a level playing field, and it also need to redress such malpractice as arbitrary regulation. We hope that throughout this process, we will further boost this productivity, and bring more benefits to the people. So the government will provide better services to the people to ensure that they can get things done with greater ease.
Spanish News Agency EFE: Just in the last two months, actions of the Democratic People's
Li Keqiang: It seems that all your questions are related to
It is up to the efforts of regional countries to maintain regional stability and harmony in the neighborhood. It is also natural that some differences may arise between neighbors. But we believe that as long as we all treat each other with sincerity and seek peaceful settlements to differences through diplomatic means, regional stability will be maintained. As for countries from outside the region, like the
Li Keqiang: Thank you for your keen interest in the State Council's executive meetings. The preservation of cultural relics is to boost cultural development in our country, enhance our moral strength and pass over our traditional culture. It will also help us to achieve balanced economic and social development. For the many problems that have occurred in our economic domain, such as cheating, swindling of the market place, selling fake goods, or loss of the good faith. One may also try to find causes behind those problems at the cultural level and make cultural prescriptions. The market economy is an economy on the basis of the rule of law with moral principles. So to develop culture will help us enhance moral strength in the course of pursuing modernization. We should not only work hard to create rich material wealth, but also meet our people's growing cultural needs and win the respect of other countries with the strength of culture and civilization. Thank you.
Li Keqiang: Next time you get asked about this question, I suggest that you can answer that
The development of Hong Kong is needed by