Dr. Klaus Schwab,
Ladies and Gentlemen,
Good morning! Let me begin by thanking Dr. Schwab for inviting me to Davos again. The last time I came here was 2018. Over the past five years, we have experienced all kinds of unexpected events, and witnessed profound changes in the world’s political and economic landscape. Therefore, the theme of this year’s Annual Meeting, “Cooperation in a Fragmented World”, cannot be more relevant.
Mutual understanding is an important prerequisite for cooperation. Online communication, no matter how frequent or how technologically advanced, is no substitute for in-person meetings. I had quite a number of very warm meetings with some old friends these two days. Hopefully, at this face-to-face meeting, I can help you understand the Chinese economy better.
In 2022, China completed its major political agenda. We held the 20th National Congress of the Communist Party of China (CPC), and elected the new central leadership with President Xi Jinping at its core. We drew up an ambitious blueprint for advancing Chinese modernization in the coming five years and beyond.
Last month, we held the annual Central Economic Work Conference to make plans for 2023 in line with the deployment of the 20th CPC National Congress. In 2022, China’s growth was 3%. And we managed to keep jobs and prices stable. Urban surveyed unemployment rate was 5.6 percent, CPI was two percent, and current account surplus was slightly above two percent of GDP.
In 2023, we will continue to try to make progress while maintaining stability, and follow a proactive fiscal policy and a prudent monetary policy. We will strive to maintain reasonable economic growth, and keep prices and jobs stable. More focus will be placed on expanding domestic demand, keeping supply chains stable, supporting the private sector, reforming the state-owned enterprises (SOEs), attracting foreign investment, and preventing economic and financial risks.
If we work hard enough, we are confident that growth will most likely return to its normal trend, and the Chinese economy will see a significant improvement in 2023. A noticeable increase of import, more investment by companies, and consumption returning back to normal can be expected.
Over the past ten years, China’s GDP grew from 54 trillion to 121 trillion yuan; average life expectancy rose from 74.8 to 78.2 years; and contribution to global growth reached around 36 percent. There are five things that we always bear in mind in making such achievements.
First, we must always take economic development as the primary and central task. Under the new circumstances, guided by the philosophy of innovative, coordinated, green, open and shared development, high-quality economic development must always be our goal.
Second, we must always make establishing a socialist market economy the direction of our reform. We must let the market play a decisive role in resources allocation, let the government play a better role. (Some people say China will go for the planned economy. That’s by no means possible.) We will deepen SOE reform, support the private sector, and promote fair competition, anti-monopoly and entrepreneurship.
Third, we must always promote all-round opening-up. Opening-up, as a basic state policy, is a catalyst of reform and development, and a key driver of economic progress in China. China’s door to the outside will only open wider.
Fourth, we must always uphold the rule of law. We must protect property rights and IPRs in accordance with the law. We must create a world-class and market-oriented business environment underpinned by a sound legal framework. Both government and market activities must stay within the confines of law.
Fifth, we must pursue innovation-driven development. We must promote innovation and education, grow human capital, foster a sound interaction of finance, technology and industry, and boost productivity.
The above five points are the important experience we have learned and gained since China started its reform and opening-up. We must stick to them and never waver in our commitment.
Let me also briefly touch upon three issues about the Chinese economy you might be interested in: first, where we are in resolving financial risks, those in the real estate sector in particular; second, our thinking on the dual circulation; third, the rationale behind China’s goal of common prosperity.
The financial risks that emerged in China over the past five years are a result of multiple factors, including macroeconomic downturn, loose financial supervision, imprudent business expansion, and insider control.
We fought a tough battle to address these risks. We dealt with conglomerates as well as small and medium-sized financial institutions of high risks, disposed of distressed assets, curbed shadow banking activities, and handled unusual volatility in the capital market.
Thanks to these efforts, we have managed to maintain overall financial stability and prevented systemic risks. We are drafting the Financial Stability Law right now, which is expected to provide legal safeguards for defusing risks and maintaining financial stability as we go forward.