Premier Li Keqiang Meets the Press
The Third Session of the 13th National People’s Congress held a press conference at the Great Hall of the People on the afternoon of 28 May 2020. Premier Li Keqiang met with Chinese and foreign reporters and answered their questions at the invitation of Spokesperson Mr. Zhang Yesui.
In his opening remarks, Premier Li Keqiang thanked the journalists for covering China’s NPC and CPPCC Sessions at an unusual time and despite unusual circumstances. He noted that although the containment protocols require that the press conference be held via a video link, such distance would not impede their communication. In the interest of time, he went straight to questions.
Reuters: The new coronavirus outbreak has devastated economies around the world. Trillions of dollars in fiscal and monetary measures have been pushed out to deal with the fallout. In this year’s Government Work Report, China did not set a GDP growth target. But it did announce fiscal measures worth about 4% of China’s GDP in 2019 according to our calculations. That’s slightly less than some economists expected after seeing China’s economy contract for the first time in decades in the first quarter. So my question is: can we expect China to deliver more ambitious stimulus in the months to come? Does China have sufficient policy options to deal with a prolonged global pandemic and rising tensions with the United States?
Premier Li: The novel coronavirus disease has taken a heavy toll on the global economy in a way rarely seen before. Major international institutions have projected a negative 3 percent global growth or worse this year. As China’s economy has become deeply integrated into the global economy, it is simply impossible for the Chinese economy to stay immune to such impacts. This year we decided not to set a specific growth target. This is a decision informed by the realities on the ground. In the meantime, we have formulated a series of goals and tasks in six key areas which are closely connected with economic development, with a particular focus on protecting employment, people’s basic living needs, and market entities.
Not setting a specific GDP growth target does not mean that economic development is not important. Our decision is designed for economic growth to deliver more real gains to our people and promote higher quality development in China. We believe that development still holds the key and is the foundation for resolving all the problems in China today. Putting protections in place in six key areas, especially in the areas of jobs, livelihoods and businesses, will help us achieve positive and solid growth this year to the extent possible, and maintain steady economic development.
In your questions, you said our measures are seen by some as below expectations. What I heard from many quarters is that our measures are forceful. For any response to work, we must get both the timing and intensity right. When COVID-19 was still raging, some policies were introduced. But with the economy barely reopened, the situation then made it difficult for these polices to get truly delivered on the ground, as most of the people still had to stay indoors. This has been a process of gaining experience. Based on the experience in the past weeks and months and our assessment of the current situation, we have decided on new policy steps of a sizable scale as set out in the Government Work Report, and we believe these measures are forceful.
We have repeatedly said that we will not flood China’s economy with liquidity. We didn’t do it in the past; we will not do it now. But the current unusual time requires extraordinary measures. Just as water is important to fish farming, sufficient liquidity is important to economic development. But too much water will induce froth in the fishpond, whereby some people may attempt to muddy the waters and fish for arbitrage. We must ensure that measures taken are well-focused, the prescription is precise and the medicines for getting out of the hardship effective. New approaches must be employed as to where the money comes from and how it is spent.
The financing raised through policies of a sizable scale can be grouped into mainly two categories. The first covers the increase of fiscal deficits and issuance of government bonds for COVID-19 control. Together it amounts to 2 trillion RMB yuan. The other category, which is roughly twice as big, covers payment relief for enterprises of their contributions to social security schemes, also known as payroll tax in some other countries, and taps into the balance of the unemployment insurance fund, interest concessions made by state-owned commercial banks, and price reductions in natural monopoly industries to lower enterprises’ operating costs. This money will be primarily used to support jobs, people’s basic living needs and businesses, and sustain household income. It accounts for a double-digit share in the more than 40 trillion RMB yuan of total household income in China.
What’s more important is how the money is spent. Our measures of a sizable scale are designed to provide vital relief to businesses and revitalize the market. With a particular focus on supporting jobs and people’s livelihoods, our people will have money to spend and consumption will drive market vitality. This is in keeping with market-oriented reform.
Money well-spent can create new money. Money invested in the people will generate new wealth, help us protect and preserve the tax base and make public finance more sustainable. We will do our utmost to keep China’s economic growth stable and make steady progress. In other words, we will not kick up dirt and leave a trail of dust that will block the sight of those who follow. We have also reserved policy space on the fiscal, financial, social security and other fronts. And we are in a strong position to quickly introduce new measures without any hesitation should the evolving situation calls for it. It is essential that we keep China’s economic growth on a steady course.
I am confident that under the strong leadership of the CPC Central Committee with Comrade Xi Jinping at its core and with joint efforts of people across the nation, we will be able to prevail over the current difficulties, fulfill our tasks and goals for the whole year, and complete the building of a moderately prosperous society in all respects. Keeping China’s economic growth and fundamentals stable will be a contribution to the whole world. And China will remain a positive force driving global economic recovery and growth.
Bloomberg News: The origins of COVID-19 are still a mystery. Scientists think if we can find out where it came from, we could prevent future pandemics. There have been calls for an international independent inquiry into the origins. What is China’s stance on how such an inquiry should be carried out? What should such an inquiry do and what should it not do?
Premier Li: China and many countries believe that it is important to get a clear idea about the sources of the coronavirus. At the recently held World Health Assembly, a resolution was adopted, and China is one of the co-sponsors of this resolution. We believe that getting clear about the sources of the virus on the basis of science will help us better carry out containment of COVID-19, and also contribute to protecting life and health of people around the world.
The novel coronavirus disease has caught all countries by surprise. It is a completely new disease to humankind. So far, I’m afraid there is still more to the virus that we do not yet know. Viruses respect no borders, and they are the common enemy of the whole world and entire humanity. Nowadays, all countries are still working hard to contain the spread of the virus, and we are gaining experience along the way. We must work together to keep the virus in check. Research efforts need to be intensified for breakthroughs in vaccines, effective medicines and testing reagents, as they will be powerful weapons to help us succeed in checking the virus. China and many other countries are making investments into R&D of these products, and we are open to international cooperation. The deliverables of the R&D will be global public goods that we are ready to share with others. They will help the entire humankind in defeating the virus.
With painstaking efforts, the Chinese people have successfully brought the spread of the virus under control. And China has taken an active part in international cooperation against the virus. We have all along acted with openness, transparency and a sense of responsibility. We have shared information in a timely way with the rest of the international community. The virus is still spreading around the world. And in China it has not come to a complete end yet; there are still sporadic cases. Scientists have cautioned us to stay on high alert to prevent a resurgence of infections. We must continue to adopt a factual, science-based, open and transparent approach in dealing with COVID-19. Any infection, once detected, must be promptly handled, and no cover-up will ever be allowed.
Many people say that COVID-19 will not come to a stop any time soon and we may have to live with it for quite some time to come. All countries now are confronted with dual challenges. It’s like doing double exams. We have to contain the spread of the virus, and at the same time do our best to get life and work back to normal. I’m afraid there is a certain level of trade-off between these two goals. Things would be quite different if we had only one task. So we will have to do our utmost to strike a delicate balance and continue to explore our way forward. In this process, international cooperation is vitally important. Whether it’s fighting the virus or growing the economy, we must come together in a sense of partnership to eventually fight back the onslaught of the epidemic.
CCTV: In the Government Work Report, this year’s economic polices have been spelled out. What will the government do to ensure that all these funds will be truly delivered to benefit companies, instead of just circulating within the financial sector, and bring real gains to the general public?
Premier Li: In coping with the current round of unprecedented shocks, we don’t have ready experience to draw from. It’s not something we can manage with ease, and we will have to blaze a trail with hard efforts. We must be creative in crafting and delivering our policies. As I said just now, our policies, which are of a sizable scale, are designed to provide vital relief to businesses and revitalize the market, with particular focus on stabilizing employment and ensuring people’s livelihood. They are not focused on large infrastructure projects. This is because big changes have taken place in China’s economic structure, where consumption is now the primary engine driving growth, and micro, small and medium-sized companies now provide over 90 percent of all jobs in China. So under the sizable-scale policies introduced this time, some 70 percent of the funds will be used to support the increase in people’s income through direct or relatively direct means in order to spur consumption and energize the market. One big challenge we have confronted in coping with COVID-19 is that containment efforts have had a dampening effect on consumption. Hence, measures in this direction are also part of our market-oriented reform.
Second, the funds made available will all be used to support primary-level governments and businesses, and ensure people’s livelihood. The increase of budget deficits and funds raised from the issuance of government bonds for COVID-19 control will all be channeled to primary-level governments. Even provincial governments will be just passers-by to these funds. Some people may ask whether primary-level governments can ensure all the funds will be put to best use. In this respect, a special transfer payment mechanism will be established to see that companies, especially smaller firms, will truly benefit from these funds, and people who live on social security schemes, subsistence allowance, unemployment benefits, old-age support and those living in difficulties will be able to benefit. Real-name records will be established, and no cooking of books or embezzlement will ever be allowed. We will keep our eyes wide open and welcome public supervision. Eventually, the delivery of these measures will have to be recognized by businesses and our people.
The Central Government will lead by example in living on a tight budget. We will cut over 50 percent of outlays on non-essential, non-obligatory expenditures at the central government level, and the money saved will be mainly used to support primary-level governments, enterprises and people’s basic living needs. Governments at all levels must tighten their belts and reject pointless formalities and spending splurges.
Just now, I talked more about boosting consumption. That doesn’t mean investment is not important. We will also expand effective investment. There will be an increase of 1.6 trillion RMB yuan of special local government bonds this year, and some treasury bonds as well, with the total amount topping 2 trillion RMB yuan. They account for between 20 and 30 percent of the funds made available under the sizable-scale policies we introduced this year. The focus of the funds will be on new infrastructures and new-type urbanization and key projects for national development. We will rely on reforms in undertaking these programs and mobilize private sector investment. And the projects supported must generate good returns, and be well-calibrated and delivered according to economic laws to avoid undesirable results.
China Times: Because of COVID-19, the Two Sessions this year have been postponed to May, which is quite close to the date of 20 May. As the DPP continues to govern in Taiwan, what is the overall consideration of the mainland concerning its policy toward Taiwan? And what will the mainland do to promote relations across the Taiwan Strait?
Premier Li: As I said in the Government Work Report, our principles and policies toward Taiwan have been consistent and well-known to the international community. We will stay committed to the one-China principle and the 1992 Consensus. We will continue to firmly oppose “Taiwan independence”. Based on this political foundation, we are ready to have dialogue and consultation with any party, group or personage in Taiwan regarding cross-Strait relations and the future of the Chinese nation, and promote peaceful growth of cross-Strait relations. We will continue to show maximum sincerity and do our very utmost to promote peaceful reunification of China. The Taiwan question is China’s internal affair. And we have all along opposed external interference. The Chinese nation has the wisdom and the ability to handle its own affairs.
We view our fellow compatriots in Taiwan as brothers and sisters. Blood is thicker than water. We will continue to pay high attention to their well-being. Thanks to our joint efforts, there has been no loss of life to COVID-19 among Taiwan compatriots working and living on the mainland. In the face of the epidemic, we wish people on both sides of the Taiwan Strait safety and good health.