Transcript of Premier Li Keqiang's Dialogue with WEF Chief and International Business Leaders at the Annual Meeting of the New Champions 2018
On 19 September 2018, following his address at the Opening Ceremony of the Annual Meeting of the New Champions 2018 held in Tianjin, Premier Li Keqiang of the State Council took a question from Executive Chairman of the World Economic Forum Klaus Schwab. On 20 September, Premier Li sat down for a dialogue with representatives of international business leaders attending the Annual Meeting. Below is a transcript of these interactions:
Professor Schwab: Premier Li Keqiang, thank you for this very comprehensive presentation of your government's policy. I also feel there are many messages in your speech which are certainly reassuring for foreign and Chinese leaders present here. I want to thank you for taking the time to develop in such a detailed way your policies and your intentions. You developed a concept on how China will keep up reform and opening-up. Now many of the business leaders are concerned about the credit situation and the financial situation, the financial risk of the country, particularly related to the issue of deleveraging. What is your response here?
Premier Li Keqiang: True, China's macro leverage ratio is not low by global standards, but it's not the highest either. An important objective factor is the high savings rate in China and the lack of smooth channels of direct financing. The past few years have indeed seen a relatively fast increase in China's leverage ratio. To ensure sustainable development in the long run, we have taken measures to stabilize the leverage ratio, which has led to a moderating increase in leverage in the first half of this year. The deleveraging we pursue is structural in nature, as the leverage ratio has become quite high in some sectors. Recent statistics have indicated the beginning of its downward trajectory in these sectors.
At the same time, though, we have taken note of the difficulties facing businesses, particularly micro and small businesses, in accessing affordable financing. We have endeavored to address this scarcity by rolling out a host of measures targeting micro and small businesses. We will also expand channels of direct financing by fostering the capital markets. For example, when we discovered inappropriate tax levies on venture capital funds recently, the State Council took swift steps to rescind these levies. We encourage the development of venture capital funds, which will offer more channels for direct financing.
Everything has both upsides and downsides. As an ancient adage cautions, one cannot have both the fish and bear's paw, which essentially means that many decisions entail difficult trade-offs. The reason we have gone thus far is that we have made enormous efforts to minimize the trade-offs and achieve simultaneous progress of sometimes conflictual objectives. Continuing to do so would be a challenge and a test of our wisdom. We do hope distinguished guests present and insightful people around the world will contribute wisdom to us in meeting the challenges. The journey ahead may be tortuous, our goals will be achieved through steadfast efforts.
Stein Eric Hagen, Chairman of Orkla: My name is Stein Eric Hagen. I'm from Orkla, Norway. Mr. Premier, under the context of China-US trade frictions, a lot of countries such as Europe, the United States and Japan have started negotiations on bilateral free trade zones. The global trade governance system based on the WTO is facing great challenges. How does the Chinese government respond to this change and what measures will be taken to safeguard China's status as a global trade power? Thank you.
Premier Li: Bilateral and multilateral trade talks are like two wheels, which should be complementary. It has been a long tradition of developed countries to engage in trade negotiations among themselves. They also have free trade talks with some developing countries. China, though being a developing country, has also been involved in bilateral FTA negotiations with some countries. We welcome any trade negotiations and wish them well so long as they are consistent with the trend of globalization and the basic principle of free trade.
Having said that, we cannot ignore the rising trend of protectionism in the world today, which has eroded the foundations of the multilateral trading regime. As we see it, the multilateral trading rules were negotiated and have been followed by the overwhelming majority of countries for many years. And at the heart of these rules is the principle of free trade. Bilateral trade negotiations in whatever form should serve to uphold this fundamental principle.
In the last few decades, mankind has come a long way in creating material wealth. We owe this, to a large measure, to a peaceful international environment and to free trade. As we live on the same planet, we should all abide by common precepts and agreed rules. Any action, which only benefits a small group of people at the cost of undercutting the rules formulated by the majority, will only end up hurting the interests of all. Our world is, after all, one of coexistence and interdependence.
I am not suggesting that the existing multilateral trading rules are above reform or improvement. In the process of globalization and free trade, problems of one kind or another have indeed cropped up and some countries may have complaints about them. In this case we need to sit down and discuss how to improve the multilateral trading rules to make them more responsive to the needs of world development and inclusive growth. Yet, this doesn't mean that we should start all over again; what we need is to make improvements to the multilateral trade rules. In this process, we need to take care of the concerns and interests of all stakeholders, particularly those of developing countries and the least developed countries. The world can hardly be a tranquil place when a considerable number of people still live in abject poverty.
China takes a positive attitude toward reform of WTO rules. At this year's China-EU Summit, the two sides agreed to set up a joint working group on WTO reform. When it comes to matters concerning all of us, the interests of all parties would be best served through discussions among all stakeholders.
The task before all countries is to both promote development and improve fairness and equity by helping those in need. The international community as a whole needs to do the same: we need to sustain the momentum of global recovery and promote development and prosperity and at the same time endeavor to narrow the North-South gap.