Transcript: Premier Li Keqiang meets the press

CCTV: Concerned about the safety of their property, some private business people are reluctant to make new investments. Some are even trying to transfer their assets overseas. We have also heard complaints from private businesses about the inaction or arbitrary behaviors on the part of some government officials. Premier Li, what will your government do to resolve this problem?  Premier Li: Since reform and opening-up, we have remained committed to unswervingly consolidating and developing the public sector and unswervingly supporting and developing the non-public sector. It is fair to say that businesses of all types of ownership, private as well as state-owned, have made important contributions to the historic progress of the Chinese economy in the past few decades. Nowadays, private businesses account for about half of the tax revenues. They also contribute 80% to employment and create 90% of new urban jobs. It’s true that private investment has been less than robust due to weak protection of property rights and some other factors. We are paying high attention to addressing this problem.  Property rights are the cornerstone of our socialist market economy. Protecting lawful property rights is like nurturing the productive forces. Hence it has been a high-priority item on the government agenda, and every effort has been made to tackle the problems our people have encountered in this area. For example, at last year’s press conference I was asked about the potential effect of the expiration of land use rights for residential homes. I responded by pledging automatic renewal of the rights and the protection of all such transactions. I also called for amending the relevant law to reflect this policy. Since then, we have also reaffirmed the extension of the current rural land contracts by another 30 years. These are examples of our efforts to protect property rights through means of law, which is a good indication of our commitment to the rule of law.  Let me emphasize that contracts must be honored and not treated as scrap paper. Continuity is essential to good governance. New officials must not be allowed to disavow obligations undertaken by their predecessors; those who have done so will be duly punished. Last year, some property rights cases which were poorly adjudicated were redressed. These actions are meant to send a signal to the society of our resolve to ensure that all property owners and investors, regardless of the type of ownership, will have peace of mind as long as they operate within the confines of the law.   Lianhe Zaobao of Singapore: With China’s economic rise, some critics have been saying that China is increasingly using its money and market as political tools to try to influence other countries’ foreign policies or make some sort of political infiltration. How would you respond to that? Should the world feel worried about China’s rise and its strategic expansion?  Premier Li: In recent years, China’s economic growth has contributed some thirty percent to global growth. This has been conducive not only to global economic recovery but also to world peace. More trade and more cooperation mean more negotiations, and that helps to keep conflicts away. The Chinese believe that one must not do to others what one does not like to be done to himself. We always value peace. We are resolute in upholding China’s territorial integrity and will never give up a single inch of our own territory. In a similar vein, we will not take or occupy an inch of others’ land. What we pursue is a road of peaceful development.  Our development so far has been achieved in a peaceful international environment. Going forward, a peaceful international environment remains what China needs for attaining modernization. Let me emphasize two points: One, China will not seek expansion. China remains a developing country who has no intention to pursue expansion. Even if it grows stronger in the future, it will continue to defy the logic which predestines a rising country to hegemony. What China wants is to develop relations with all other countries and regions on the basis of mutual respect, equality and mutual benefit. Together, we could build a community with a shared future for mankind.  China’s business cooperation with other countries follows market principles and business rules. In pursuing the Belt and Road Initiative, we have sought shared benefits through consultation and collaboration. China’s assistance within its capacity to some other developing countries, especially underdeveloped countries, has never come with political strings. It has nothing to do with political influence. In some areas, the international community may want China to assume a greater role. Well, China is ready to fulfill its due international responsibilities commensurate with its status as a major developing country. It would be a misunderstanding to see China playing such a role as seeking strategic expansion.  My second point is that we will continue to focus on managing China’s own affairs well. As Chinese Premier, I am fully aware that my country is still confronted with many difficulties and challenges, including many pressing livelihood issues. We in the government must deal with these challenges on a daily basis. We travel and make friends around the world in order to foster a peaceful and stable environment, internationally and in our neighborhood, and create more win-win opportunities for China’s development. We know clearly that this is what we should continue to do. 

People’s Daily: Mr. Premier, in your government work report you said that fairer and fuller employment should always be a highlight of high quality development in China. At the same time, however, college graduates, laid-off workers from cutting overcapacity and demobilized military personnel continue to face difficulty in getting jobs, which means daunting challenges in ensuring employment. What do you plan to do to tackle this problem?

Premier Li: Whether the government is doing a good job in employment is best judged by our people. I don’t think anyone would be able to cover it up if we fall short on job creation. Let me first address what we plan to do on the employment front this year, as this year’s performance will be a good indicator of what is to come in the next five years.

In recent years, with the Chinese economy operating within its proper range, some 60 million new urban jobs have been generated, ensuring relatively full employment in China. This has been a big achievement. Employment is of paramount importance for each and every family, and nothing is gloomier for it than zero employment of its members. A college graduate would not have a future if graduation means joblessness. Governments at all levels must fully appreciate the importance of employment, and always put job creation high on their agenda. In this year’s government work report, for the first time, we incorporated surveyed urban unemployment as a projected target, to better reflect the employment situation in both urban and rural areas. This is the government putting pressure on itself.

In urban areas, we expect to see some 15 to 16 million new entrants to the job market this year. Our minimum target is to generate another 11 million new jobs and we will work towards the goal of 13 million in actual practice. We have been able to do that in the past several years and there’s no reason for us not to hit that mark this year. Moreover, we have some 280 million rural migrant workers. They have worked hard to pave roads and build skyscrapers in the cities, making great contribution to China’s development. Getting migrant workers employed is an important part of China’s urbanization process and a big source of their income. This year, we expect to see some three to four million rural migrant workers coming to the cities, the government must endeavor to fulfill its responsibility in providing job opportunities for these people.

This year, there will be 8.2 million college graduates, another record high number, and five million graduates from secondary vocational schools. In addition, there will be some one million demobilized military personnel and workers laid off in the cutting of overcapacity. We must make every effort to ensure their employment. In particular, there should be no zero employment families. We must also explore new channels for creating jobs, not least by fostering new growth drivers, which have a proven track record of job creation in the past few years. Fairly full employment will also be a major wealth generator. Just imagine, how much wealth will be created by China’s 800 million-strong labor force out of its 1.3 billion population. This will also offer a huge opportunity for international markets.

NBC News: Premier Li, there is increasing concern that China will displace the United States as the world’s leader and a lot of talk about a trade war as punishment for what critics describe as unfair trading, industrial policies over an authoritarian, state-led economic model of China. So Mr. Premier, in your view, what measures can be taken to address America’s concerns and prevent a trade war? Do you still believe that dialogue can resolve what looks like an imminent threat? And what can China do in the event of a trade war? Would you, for example, use China’s vast foreign exchange reserves and massive holding of American debt? Thank you.

Premier Li: Indeed, there has been much talk about an emerging trade war between China and the United States recently. We believe a trade war does nobody any good. No one will emerge a winner from a trade war. War is essentially the antithesis of trade, and trade disputes should be resolved through negotiation, consultation and dialogue. What we hope is that cool heads and rational actions will prevail instead of emotions or impulses holding sway. A trade war should best be avoided.

Last year, China-US trade reached 580 billion US dollars. This is achieved through observing business rules and market principles. Otherwise, such a big volume of trade would be unthinkable. A large trade deficit, either with the United States or any other country, is not what China goes after. We want to see a basically balanced trade. Otherwise, it would not be sustainable. 

Just now I listed some further steps of opening-up China is going to take covering services, manufacturing and products. US businesses may well seize these opportunities. At the same time, we hope the United States will ease restrictions on exporting high-tech and high value-added goods to China. The associated intellectual property rights will be fully protected. We hope this important measure for balancing China-US trade will not be passed over. Otherwise a good opportunity would be missed. 

China has vast foreign exchange reserves. We have been making diversified investments of these reserves on the basis of market principles, and China will remain a responsible long-term investor. The relationship between China and the United States is one between the world’s largest developing country and largest developed country. Our economies are highly complementary. A stable China-US relationship is in the interest of both countries and the whole world. Any worry about China’s greater development is unnecessary. 

China News Service: Mr. Premier, we have noticed that recently some mandatory steps have been taken against certain Chinese insurance and financial companies. Will this happen again in the future? Does this mean that new risks are building in China? And will they set off systemic financial risks? 

Premier Li: Let me make it very clear as a person who holds responsibility in this area: China has the capability to forestall systemic financial risks and I do not foresee such risks. This is because the fundamentals of China’s economy remain strong, and its financial system is in good shape. That said, as China’s GDP exceeds 80 trillion yuan with 250 trillion yuan of assets in the banking sector, our financial system is not risk free. 

Just as a proverb goes, gathering clouds may bring rain and tall trees catch the wind. I recall that at the press conference a couple of years ago, I pointed out that both the capital adequacy ratio and provision coverage ratio of Chinese commercial banks are fairly high and above international standards. Let me add here that the required reserve ratio stands at about 15 percent, which is equivalent to us having some 20 trillion yuan stashed away against risks. 

This year, we have taken the initiative to cut the budget deficit to GDP ratio, supported by the sustained momentum of steady growth and higher than expected tax revenues. Last year, the central government had an extra fiscal revenue of 250 billion yuan above projection, and we have yet to dig into that amount of money. The first two months of this year saw a double digit increase in China's fiscal revenues. So we are confident about meeting all the major economic and social development targets this year. 

Going forward, we plan to further cut the deficit ratio. But this does not mean we will change our proactive fiscal policy, for this year will see considerable increase in the fiscal spending relative to last year. Our ability to cut the deficit ratio shows our confidence in the health of our economy and is also meant to make provisions for guarding against global uncertainties and emerging risks at home. 

True, some irregularities and evasion of regulation in the financial sector have occurred. The relevant authorities have taken resolute measures to deal with the pockets of risks to prevent them from further spreading. When a blister needs bursting, it should be burst. Otherwise, a small problem may escalate and entail moral hazards. In dealing with these cases, we have taken care to protect the lawful rights and interests of our consumers, and have gained further experience in this area. We will continue to resolutely tackle such cases should they arise in the future. 

In this round of institutional reform, we have decided to merge the insurance and banking regulatory bodies to plug possible loopholes. At the same time we do face another old problem of illegal fund raising. The government will keep up the fight against such illegal activities. I would also like to advise all investors not to buy into the lies of those illegal fundraisers who’d have you believe a bamboo basket will hold a gallon of water.