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Opinion / Op-Ed Contributors

Li Keqiang answers questions at forum

Updated: 2016-06-30 08:25

Klaus Kleinfeld, Chairman and CEO of ALCOA: Thank you for taking the time. I have a question that goes on the "cloud" to the heavy industry that sometimes produces a lot of clouds. You and your administration have been very clear in addressing the issue of overcapacity. This has also caused a lot of media and international attention. As China is taking massive actions to address the issue, how are you going to deal with the economic and social impact of the changes?

Li Keqiang: Just now we discussed the "cloud" floating in the sky. Now we need to turn our attention to the traditional heavy industries standing on the ground. But the truth is a close link is already taking shape between these two. Cloud computing is playing a greater role in transforming and upgrading traditional industries by collecting and analyzing massive data to find new pathways to renovate and upgrade traditional industries. And traditional industries are one of the basis for the birth and growth of cloud computing.

Heavy industry is a traditional industry. We must not turn our back on heavy industries. Without heavy industries, where do we get the materials for the cellphones and other products? What we are doing now is to cut the excess and backward capacity in heavy industries. Such excess capacity is the result of the sluggish global economic recovery and anemic growth of global trade, so it's a global issue that requires a global solution.

There is excess capacity in some sectors in China. In recent years, we have taken strong steps to phase out overcapacity. We are firm in our determination to carry on with this effort, not only to meet our domestic need, but also to do what we should for the international community as a responsible major country. I want to emphasize that China's heavy industry capacity is mainly oriented toward the domestic market, not for large exports. Exports both last year and in the first five months of this year declined.

We are now working hard to phase out the excess capacity of steel and coal. In the next few years, we plan to eliminate 100-150 million tons of excess steel capacity and 800 million tons of coal-making capacity, involving the employment of some two million people. Yet it is encouraging that with mass entrepreneurship and innovation, new industries and new forms of business have flourished and added more jobs than we expected, so we are able to ensure that the affected workers will not lose their job but will get re-employed. The central government has allocated 100 billion yuan for this purpose, and asked local governments to come up with matching funds for the re-employment and resettlement of affected workers.

In carrying out this task, we need to be firm in the resolve, and follow a market-driven and law-based approach. We will enforce stricter environmental, safety and product quality standards to meet our goal. No doubt, the legal rights and interests of workers will be protected in this process. This is not just the responsibility of the Chinese government. I believe you all have a strong awareness of fulfilling corporate social responsibilities in your business operations.

Marc Benioff, Chairman and CEO of Salesforce: Premier Li, it's nice to see you again. Thank you for the tremendous commitment of time you've made to the conference. China has an incredible economic success and you have depicted China's future economic blueprint on many occasions. I would like to know what are the most urgent challenges or obstacles in China's economy. As CEOs like myself and others being here, is there a way that we can partner with you and how can we help you eliminate these obstacles and challenges?

Li Keqiang: It is hard to describe the biggest challenge China's economy faces in one sentence. We now face, at the minimum, two major challenges. One is the sluggish global economic recovery, which means China's economy, one that is deeply integrated into the world economy, now confronts an uncertain and unstable external environment. The other challenge is the entwining of our own long-standing problems, the historical extensive mode of development and institutional barriers. We will focus on tackling our domestic issues and managing our own affairs well.

China needs to use reform and innovation to achieve economic transformation and sustainable, healthy development. Participation of foreign companies is needed in this process. China's reform and opening-up have been developing side by side. In many cases, opening-up could propel reform. The involvement of foreign companies will introduce new technologies and managerial experience, which can be of help to Chinese companies and industrial upgrading. Meanwhile, to heed and adopt the views of companies will help us improve our institutions and provide them with better services.

During China's economic transformation, the new economy is developing, the service sector is growing and traditional industries are going through upgrading. All these will generate tremendous market demand. We welcome more foreign companies to invest in China and will further ease market access and level the playing field. Whether making investment or working in partnership with local companies, the overwhelming majority of the foreign investors would have had reasonable or even fairly high returns when they tally the total scores. China is still the most promising investment market in the world and should be the world's most attractive investment destination.

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