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China Daily Website

Address on current economy

Updated: 2013-11-15 09:27
( China Daily)

Second, the mid-to-long term development trends of the Chinese economy

Over the past 30 years and more since reform and opening up program was launched, the Chinese economy has registered a miraculous average annual growth rate of 9.8%. But at the current stage, if we continue to depend excessively on investment, we will face increasing constraints of energy, resources and the environment, and fast growth based on heavy investment and energy consumption is also hard to sustain. We should also recognize that our competitive edge in cost is dwindling. Ultimately, economic growth is about improving people's lives and delivering a life of higher quality to them. It is thus natural to increase wages. Both the labour cost and the cost of land and other factors have increased. But the baseline of our GDP is also rising. Last year, our GDP was 52 trillion yuan. A 1% growth on such a basis is surely much larger than a 1% growth when the GDP was 5 trillion or 10 trillion yuan.

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.

 
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