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China Daily Website

Address on current economy

Updated: 2013-11-15 06:39
( China Daily)

As a middle-income country, China, which was previously in a stage of high speed growth, has entered a stage of medium-to-high speed growth. What is medium-to-high speed growth? I think it refers to a growth rate of about 7.5% or above 7%. Such growth rate is defined as "medium" in comparison with past growth rates. We have had two-digit growth rates and an average growth rate of 9.8%, so 7-7.5% can only be regarded as medium. But in the whole world, our growth is still a high-speed one. In particular, no other major countries have such high growth rate as China has. What is more, according to our estimate, an annual growth rate of 7% will be enough for us to accomplish the building of a society of initial prosperity in all respects by 2020. While maintaining such a growth rate, we can focus more of our energy on adjusting the structure, cutting overcapacity, enhancing energy conservation and environmental protection, improving the quality of growth and creating more space for sustainable development. We should see that China is capable of achieving long-term, sustainable and sound growth, as we are still in the process of industrialization and urbanization. Our urbanization rate is 52% when people who live in cities for over six months are counted as urban residents in addition to registered permanent urban residents. The urbanization rate would be lower than 35% if only those with urban household registration are counted. This is quite low compared with developed countries and other developing countries at the same level of development, but it is also a sign of great potential. There is a big gap not only between rural and urban areas, but also among the Eastern, Central and Western regions. China's per capita GDP is 6,000 US dollars, and it is around 10,000 US dollars in some Eastern areas, but it is only 3,000 US dollars in the Western region. Such a difference means potential. More importantly, our reform will produce huge dividends. We have made tremendous achievements in carrying out reform and opening-up in the past three decades and more, and reform will never stop. We will resolutely push forward comprehensive reform even if this entails real sacrifice. Such reform initiatives include making fiscal budget public, cutting government spending on official overseas trips, vehicles for official use, and official hospitality. And we will promote financial reform to make interest rate market-based and enable small and micro businesses to secure loans more efficiently and at lower cost. We will advance these reforms. This will, of course, upset vested interests. But reform is in the interest of the people and will deliver good life to hundreds of millions of Chinese workers. No other interests are more important than these interests, so we will advance reform without hesitation.

I must stress that there will be many risks and challenges on the road ahead, such as fiscal and financial risks, unbalanced industrial structure, weak agricultural foundation, growing resource and environmental constraints, insufficient overall R&D capacity, dual pressure on our economic development placed by latecomers who are catching up and developed countries which are ahead of us economically and in terms of science and technology. It is thus by no means easy to achieve sustainable and sound economic growth. We need to be keenly aware of potential challenges and get fully prepared to handle complex situation and difficulties. To defuse existing risks and meet challenges, we need to have courage and vision, be of the same mind and make joint efforts to achieve our goal. We will go through some throes, but it is my conviction that the 1.3 billion Chinese people and the hundreds of millions of Chinese workers have unshakable resolve to realize modernization and lead a better life. We have the capability to achieve this goal.

Third, better addressing issues concerning the immediate interests of workers in economic and social progress

Workers' interests are of keen concern to all of us. The trade unions serve as a bridge and bond connecting the Party and the government with hundreds of millions of workers. It is only natural for the trade unions to look after and uphold the rights and interests of workers. Promoting economic growth and protecting workers' rights and interests are fully compatible with each other. We hope workers in their hundreds of millions and people will all work hard. But you just can't milk the cow but do not feed it. Here I wish to emphasize the following:

First, we must practise a proactive employment policy. We must ensure that those in the workforce and those who have just entered the labour market have jobs, particularly, high quality jobs. Employment is of the greatest importance to people's wellbeing. You can rest assured that the government will never slacken its efforts to create employment, which is always the focus of our attention. For us, to realize steady growth is mainly to ensure employment.

Second, we must put in place a strong social security net. We need to advance structural reform, and the most important structural reform is one that enables consumption to play an important role. In many developed countries, final consumption accounts for a significant share of GDP. In China, the ratio is 45.9% for the first three quarters of 2013. To encourage the people to spend more, we need to ensure that they don't have to be concerned about social security. Employment gives people money to consume. But why is it that even though the people have money, and there is about 40 to 50 trillion yuan of saving deposits in the banks in China, consumption is still insufficient? This is because the people have worries. And their greatest worry is about social security, particularly old age care. To be frank, we do have a problem here. Now over 300 million people have joined the urban employees' old age pension scheme. But this year, a total of 38 million people have stopped paying for old age insurance. Many of them are employees of small, medium and micro-sized businesses that are in difficulties, and some are those in flexible employment who stopped paying premium after having done so for 15 consecutive years. The government must find ways to improve the social security system and the trade unions should also get involved. We need to pool our heads together to find ways to address this issue. We should have confidence in the government. During the reform and reorganization of state-owned enterprises in the old industrial bases in Northeast China, about six million workers were included in the old age pension system in one year. But when some enterprises went bankrupt, due to a lack of relevant policy, several million workers left their jobs voluntarily without receiving any compensation. They contributed their share to the development of the People's Republic of China, and the country should not forget them. We must find ways to solve their problems. So we should establish an old age pension scheme that covers the entire population and all employees as well as a safety net that addresses their concerns in life and work. By so doing, we will deliver development benefits to more people in a more equitable way. The medical insurance system now generally covers both urban and rural areas. Here, I want to say a few words about the need to establish a medical insurance scheme covering severe illnesses. Every year, about three million people cannot afford the medical cost of severe illnesses even with reimbursement from the medical insurance scheme. The government, the society and individuals should work together to find ways to solve this issue. Here I want to emphasize that the "heart-warming" activities organized by trade unions have played an important role in addressing the problems of retired workers and those in difficulty. The government should provide policy and funding support to trade unions. Another initiative we have taken is to increase housing supply. We plan to build 36 million low-income housing units during the 12th Five Year Plan period, half of which will be built in former run-down areas. We have decided to rebuild all the run-down areas where many of the retired workers live.

 
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