Address at the Opening Ceremony of the Annual Meeting of the New Champions 2018
H.E. Li Keqiang, Premier of the State Council of the People’s Republic of China
Tianjin, 19 September 2018
Professor Klaus Schwab,
Your Excellencies Heads of State and Government,
Ladies and Gentlemen,
It is a great pleasure to join you again in Tianjin. Let me begin by extending, on behalf of the Chinese government, warm congratulations on the opening of the Annual Meeting of the New Champions 2018, and a sincere welcome to all guests from afar.
Since its inception years ago, the Summer Davos Forum has borne witness to the efforts by various countries to tackle the global financial crisis and bring about global recovery. As a gathering of new champions in the business community, the Forum has contributed forward-looking insights to the quest for new pathways and engines for global growth and transformation.
It is encouraging to note the collective global recovery that has emerged following a tortuous journey. This recovery is, to a large measure, driven by the new round of industrial revolution and a new boom in innovation, which has lent fresh impetus to global economic development. That said, our world is faced with rising uncertainties and destabilizing factors, and a growing backlash against globalization. How to boost the new drivers to secure sustained growth of the global economy is a key area of concern for all of us. In this context, the theme of this Annual Meeting, “Shaping Innovative Societies in the Fourth Industrial Revolution”, cannot be more relevant.
In his keynote speech at the World Economic Forum early last year, President Xi Jinping stated China’s firm commitment to economic globalization, free trade and innovation-driven development. As we mark the 40th anniversary of reform and opening-up in China this year, we have introduced a host of major steps to deepen reform, expand opening-up and advance innovation, aiming to promote both China’s own development and global growth.
To boost the new drivers of global growth, we need to firmly uphold economic globalization, which has provided fertile ground for the new industrial revolution. The liberalization of trade and investment and the free flow of factors of production and innovation that accompanied economic globalization have fostered highly interconnected global industrial, innovation and value chains, and enabled the expansion of the new industrial revolution at a speed, scale and depth unseen before. New technologies and new industries emerged in clusters and grew exponentially, making breakthroughs across a wide range of sectors. Economies around the world got involved in this process to varying degrees, with deepening interconnectedness and interdependence. One case in point is the fact that 40% of China’s exports in goods and two thirds of its high-tech exports came from foreign-invested enterprises in China.
The rules-based multilateral trading system is the bedrock of economic globalization and free trade, and provides important safeguards for win-win outcomes. The authority and efficacy of the system should be respected and protected. Some WTO rules do need to be improved. The right approach is for all to sit down as equals to find solutions. Throughout this process, the fundamental principles of free trade should be upheld, the interests and concerns of all parties be accommodated, and the broadest possible consensus on reform be built up. Taking a unilateralist approach will not solve any problems. As no one can thrive on his own in the new industrial revolution, we must draw on each other’s comparative strengths and act together to nurture and promote innovation for shared benefits. Governments need to support businesses in collaborating on innovation in line with market principles and commercial rules, while fully protecting their intellectual property rights. Greater government-business synergy will facilitate the new industrial revolution.
To boost the new drivers of global growth in the new industrial revolution, we need to make development more inclusive. Different from previous industrial revolutions, the new round of industrial revolution is enabled by online platforms in a ubiquitously networked environment. Lower thresholds of entry have presented all with an equal and accessible opportunity to participate and benefit. Empowered by the Internet, anyone, no matter in urban or rural areas, can easily start his own business, make innovations and create wealth. As we can see, the development of smart phone applications has spawned massive industrial clusters, as tens of thousands of people upload their technical solutions and industrial application proposals onto open platforms. To turn possibilities into reality, an enabling environment is indispensable. It is imperative to enhance institutional arrangements for equal rights, equal opportunities and fair rules, follow a balanced and inclusive development approach, make education universal, and better support the vulnerable groups so as to achieve more inclusive development that benefits all.
To boost the new drivers of global growth in the new industrial revolution, we need to pursue integrated innovation and development. The new industrial revolution holds out infinite promise. Today, natural sciences, social sciences and liberal arts are deeply entwined as never before. And different sectors, enterprises and communities can leverage each other’s strengths like never before. Artificial intelligence cuts across an array of disciplines such as algorithm, bionics, sensor technology, and ethics.
E-commerce is another example of integrated innovation and development. Transaction platforms, which are set up by big companies and joined by micro, small and medium-sized enterprises as well as individual business owners, have created conditions for the direct matching of supply and demand, production and sales, resulting in a large number of new forms of business, new models and new jobs. We must seize this momentum to promote wider application of the Internet Plus model, clear the hindrance to optimized allocation of production factors, and establish more inter-disciplinary, multi-stakeholder innovation platforms to open up broader space for the development of the new growth drivers.
Ladies and Gentlemen,
China has made vigorous efforts to nurture new growth drivers. Facing a weak global economy and downward pressure on the Chinese economy in the past several years, China, instead of resorting to massive stimulus, stayed the course of reform and innovation guided by the new development philosophy. Seizing the opportunity of the new industrial revolution and harnessing our advantages in human resources and market potential, we have focused on enhancing the new growth drivers and accelerating the shift from traditional drivers of growth to new ones. Our endeavors have produced better-than-expected results: the new drivers have played a key role in sustaining growth, adjusting the economic structure and expanding employment.
We have made vigorous efforts to streamline administration and cut taxes and fees, unlocking market vitality. Our businesses and the general public often encounter red tape and high cost in their investment and operations and in starting a business and accessing government services. To address these issues, we have substantially reduced the number of items requiring administrative approval, reformed the business system, and taken the initiative to slash taxes and fees. In particular, we rolled out a nationwide program of replacing business tax with VAT in a phased manner, which has lowered institutional transaction costs and production and operation costs. The VAT reform has also improved China’s business environment and enhanced the quality and performance of Chinese companies.
In the past five years, the number of market entities in China has surged by nearly 80% to more than 100 million, and around 70% of new market entities are in active operation. This has not only accelerated the development of new drivers but also given a strong boost to employment. We are now seeing more than 13 million new urban jobs created each year in China. Employment generates income, which produces new consumption and investment, thus fostering a healthy cycle of economic development.
We have adopted a prudent yet accommodative approach to regulation, contributing to a boom in emerging industries. New industries, new forms of business and new models create new driving forces. In the beginning we may only have limited knowledge of the workings of emerging industries, which can be vastly or even completely different from traditional ones. Therefore, mechanically following old regulatory methods will not work, just like one shouldn’t cut the toes to fit new shoes. Instead, we have established a prudent yet accommodative regulatory approach.
Our approach is this: as long as new forms of business and new models do not go against laws or regulations, cross the line of security or damage public interests, we will take an accommodative attitude toward their innovations by leaving sufficient space for their development. If we are not immediately certain about the prospect of these new forms of business and new models, we will allow time to prudently observe their performances instead of imposing a regulatory straitjacket right away.
Any regulatory measures to be taken will be carefully assessed to make sure that they serve the purpose of both deterring malpractices and guiding the sound and orderly development of new forms of business. For those businesses that may entail huge risks or serious social consequences, we will make sure that these risks are dealt with resolutely. This also applies to the regulation of existing forms of business. For those malpractices that involve seeking illegal gains, putting lives and property in danger, cheating and swindling, making or selling fake or substandard goods, and infringing on IPRs, we will mete out serious punishment in accordance with the law, no matter whether they emanate from emerging or traditional businesses, or are conducted online or offline. This regulatory approach has facilitated the rapid rise of emerging industries, such as online shopping, mobile payment and the sharing economy, which have become a hallmark of the thriving new drivers of the Chinese economy.
We have encouraged mass entrepreneurship and innovation, inspiring immense social creativity. China has a workforce of nearly 900 million, among which 170 million have received higher education or training in professional skills. Every year we produce over eight million university graduates and over five million graduates from secondary vocational schools. To tap their vast creative potential, we have made institutional improvements, adopted supportive policies, and fostered an enabling ecosystem for entrepreneurship and innovation. We have strengthened services to encourage university students and returnee migrant workers to start their own businesses as a way to meet their job needs. We have reformed the science and technology management system and expanded the right of researchers to own and benefit from their scientific and technological achievements.
We have sought to exert the primary role of companies in innovation and adopted policy incentives for all companies that increase R&D input. We have built open and sharing platforms to promote collaborative innovation by large, medium and small companies, research institutes, universities and makers, making innovation more efficient and faster. In the past five years, the number of in-force Chinese invention patents has tripled, and the annual volume of technology transactions doubled. The Global Innovation Index 2018 recently published by the World Intellectual Property Organization and other institutions puts China at the 17th place globally, 18 places higher than in 2013.
As an ancient Chinese poem reads, verdant trees and gurgling springs herald a vibrant season. Likewise, the growing ranks of entrepreneurs and innovators are making China a magnet for innovation and business ventures and creating new horizons for economic development powered by new drivers. High-tech industries and advanced manufacturing are spearheading China’s industrial development, new forms and models of services keep emerging, and the industrial structure is upgrading at a faster pace. Online sales have increased by more than 30% annually, and new forms of consumption, such as information and green consumption, have seen rapid growth, raising the share of consumption in economic growth to over 60%. China’s economic structure and growth pattern has also seen a major shift, with new drivers contributing more than one third to economic growth and two thirds to new urban jobs, which lays a solid foundation for sustained and sound economic growth.