Transcript of Premier Li Keqiang’s Meeting with the Press at the Fifth Session of the 12th National People’s Congress
Premier Li Keqiang: The moderator told me that some of the journalists came to the Great Hall of the People for this press conference as early as two to three hours in advance. This shows how hard you work and how committed you are to this profession. I want to thank you for your efforts in covering the “Two Sessions” this year. Since we only have limited time, I suggest we get the questions started right away.
CNN: President Trump has been consistently critical of China, claiming that it’s stealing US jobs, manipulating its currency and not doing enough for regional security. Now we are hearing that the US-China talk of the highest level may take place as early as next month. We have a good idea of what the US wants from China, but what does China want from the US? What is China’s bottom line for a healthy, sustainable Sino-US relationship? Are you confident that you can achieve that or will it be a difficult process?
Premier Li: Your question reminds me of my trip to New York last September for the UN General Assembly meeting and other high-level events. I was asked a question about China-US ties following a speech at the New York Economic Club. It was a time when the US presidential campaign was turning white-hot. I was asked whether there will be significant change in China-US ties when a new president is elected. My reply was that China-US relations have been going forward in spite of twists and turns in the past decades. So I am optimistic about the future of this relationship no matter who gets elected. President Trump has since been elected, and President Xi Jinping has talked with him over the phone. The two presidents agreed to work together for further progress in China-US relations. President Trump and senior officials from the new US administration have explicitly reaffirmed continued US adherence to the one-China policy, which forms the political foundation of China-US relations. This foundation has remained firm and unshaken despite changing circumstances, and it would always remain so in the future. With the right political foundation in place, China-US cooperation enjoys bright prospects.
We feel optimistic about the future of China-US relations on the strength of the extensive common interests that have bound the two countries together in the course of several decades of our diplomatic relations. It is true that there are some differences between the two countries over issues like jobs, exchange rate and security. What’s important for both countries is to stay focused on the overall interests, and enhance dialogue and communication to deepen mutual understanding. Foreign relations departments of our countries are now engaged in discussions on a face-to-face meeting between the two presidents. This relationship is crucial not just for the interests of our countries, but also for regional and global peace, security and stability. We must work together to take it forward continuously.
As for China-US trade, I want to share with you what an NPC deputy from a foreign trade company told me during this year’s Two Sessions. He said that although China runs a surplus in trade with the US, for his company, over 90% of the profits goes to US firms, and the profit margin of his business is a mere 2 to 3 percent. Statistics show that last year, trade and mutual investment between the two countries created up to one million jobs in the United States. We may have different statistical methods, but I believe whatever differences we may have, we can always sit down and talk about them, and work together to find solutions. And for those differences that cannot be resolved for the time being, they can be shelved and we may continue to focus on expanding common interests, which I believe is the wise choice. And as we do so, the differences will account for a lesser and lesser proportion in overall China-US relations.
I also want to cite a recent article written by a well-reputed international think-tank. It says that should a trade war break out between China and the United States, it would be the foreign-invested companies in China, particularly US firms that would bear the brunt of it. We don’t want to see a trade war. A trade war won’t make our trade fairer. It will only hurt both sides. I understand the whole world is paying close attention to China-US relations. China hopes that no matter what bumps this relationship may run into, it will continue to move forward in a positive direction. Both our peoples are great people and we believe that we have the wisdom to properly manage differences. There is the need and capacity on both sides to expand common interests.
China National Radio: China’s economic growth has been declining in recent years and we have seen that the projected target of GDP growth in 2017 has been trimmed to about 6.5%. Will this adversely affect the global economy? Some people say that China’s economy still faces a lot of risks, especially in the financial sector. Do you think that China’s economy will remain an engine driving global economy when global economic growth remains sluggish?
Premier Li: I read some foreign media commentary describing the projected GDP growth target of about 6.5% this year as moderate downward adjustment. In fact, 6.5% growth is not a low speed and it would not be easy to meet this target. I can’t help but recall a martial art performance I saw at Shaolin Temple, during which a child monk can do over a dozen somersaults at one go quite easily, but several such consecutive somersaults for an adult monk would be quite an accomplishment due to their different size. 6.5% of GDP growth in 2017, if achieved, would generate more additional economic output than last year, as this is a growth attained on the basis of RMB 74 trillion yuan, or US$11 trillion in GDP. And this growth is projected to generate over 11 million new urban jobs. The measures we take are consistent with the laws of economics, and moreover, slower growth can help us better focus on enhancing the quality and performance of China’s economy. I don’t think China’s contribution to global growth will come down. We believe China’s economy will continue to be a strong driving force in the face of sluggish world economic recovery.
With respect to risks, we are seeing growing uncertainties in the international economic and political landscape. These are the risks on the external front. As for China, stalled development presents the biggest risk. So it is essential that we maintain steady, medium-high growth and that, in itself, is China’s contribution to global stability. We take very seriously the risks we face on the domestic front, including the financial sector. We will take prompt and targeted measures to prevent them from spreading. I should point out that China’s financial system is generally secure and we do not foresee systemic risks. We still have a good reserve of policy options and instruments at our disposal. Our deficit to GDP ratio is below 3%. The capital adequacy ratio of commercial banks in China is 13% and their provision coverage ratio is 176%, both above the international standards for financial security. As the express train of China’s economy continues to roll along at medium-high speed, we need to fasten our seat belt and ward off acute outbreaks of risks. Still less will we allow regional or systemic risks to break out.
Bloomberg: As the United States pulls back from its roles in global trade deals, such as the TPP, China seems poised to take the leadership role. You and President Xi have become advocates of free trade, open economy and globalization. At the same time, China has come under criticism for unfair trade practices and not opening its economy fast enough. Can you say what steps you are taking in the next year to convince the rest of the world that China is committed to free trade and an open economy?
Premier Li: Although globalization has encountered some bumps in the road, China has consistently upheld economic globalization and free trade. I believe such a position in itself is a good indication of China’s commitment to opening-up. It is fair to say that economic globalization has benefited countries across the world. Some problems may have occurred in this process, for example, with respect to distribution of benefits. But we don’t think they are the result of globalization per se but more of an issue of how one responds to it. China is ready to work with other countries to further improve the global governance system. We also believe that economic globalization has been deeply embedded in the global trend of peace, development and cooperation. A closed-door policy or beggar-thy-neighbor approach leads to no solutions.
Like many countries in the world, China has benefited from economic globalization as it has been opening up ever wider to the outside world. China needs to first run its own things well. But the truth is, this cannot be done with our doors shut. Hence, we will only pursue greater openness. Naturally opening-up is a gradual process. The important thing is that we have kept moving forward for the past decades.
Last year, China was still the largest recipient of FDI among developing countries and FDI reached US$126 billion. In the World Bank’s ease of doing business ranking, China moved up 18 spots in 2016 compared with where it was in 2013. We have launched 11 pilot free trade zones starting from Shanghai, and good experience gained from them will be applied across the country. This year we will hold the Belt and Road Forum for International Cooperation and more steps for opening-up will be introduced. We have proposed to many countries the building of free trade zones or the negotiating of investment and trade agreements. These will all contribute to two-way opening-up.
One thing I should point out is that when one opens itself wider and at a higher level, there will be more frictions, but we are confident that their proportion to overall economic links will only get smaller. So China will open at a higher level and remain a popular destination for investment. We welcome other partners to share in China’s development opportunities.
As for liberalization of global trade, we believe all countries need to work together to push it forward. The world belongs to us all and we all need to do our part to make things better. We are open-minded toward the various regional trading arrangements, established or proposed, and welcome progress in them. When they concern China and where conditions are in place, we would follow an open-minded approach and we would be ready to work with others to push them forward. But China has no intention to reach beyond its role or get involved where we shouldn’t. China will participate in and support all initiatives that will promote the liberalization of global trade. We the Chinese understand that the opportunities of economic globalization must be seized through opening-up. They should not be missed no matter what challenges we may face.