Premier Li Keqiang greets journalists at the news conference after the closing meeting of the fourth session of China's 12th National People's Congress at the Great Hall of the People in Beijing, March 16, 2016. (Photo by Xu Jingxing/chinadaily.com.cn)
Cultural relics protection
China Radio International / CRI Online: In the agenda of the State Council's executive meetings ahead of the two sessions, there was a highlighted item about preservation of cultural relics. So my question is, with a country so big, facing so many problems and the government being so busy, is this issue of protecting cultural relics such an important issue?
Li Keqiang: Thank you for your keen interest in the State Council's executive meetings. The preservation of cultural relics is to boost cultural development in our country, enhance our moral strength and pass over our traditional culture. It will also help us to achieve balanced economic and social development. For the many problems that have occurred in our economic domain, such as cheating, swindling of the market place, selling fake goods, or loss of the good faith. One may also try to find causes behind those problems at the cultural level and make cultural prescriptions. The market economy is an economy on the basis of the rule of law with moral principles. So to develop culture will help us enhance moral strength in the course of pursuing modernization. We should not only work hard to create rich material wealth, but also meet our people's growing cultural needs and win the respect of other countries with the strength of culture and civilization. Thank you.
Financial market
Reuters: The recent volatility in China's stock and currency markets have drawn close attention from international investors. Mr Premier, what do you think are the major problems and challenges facing China's financial markets? What are the Chinese government's plans for future financial markets and strengthening of financing regulation? What major reform steps will be adopted for the development of stock, currency and bond markets in China? Will the recent volatility in those markets hold back China's reform development? And will the Shenzhen-Hong Kong Stock Connect be launched this year?
Li Keqiang: You've had the first opportunity to ask a question, and you made your questions all about the financial sector. That is understandable, as many economic problems first manifest themselves in financial markets. The top priority of the financial sector is to support the development of the real economy. The truth is, the dysfunctional real economy presents the largest risk to the financial markets. Last year, we took a series of steps, including cutting interest rates, and targeted reductions of banks required reserve ratio; these were not quantitative easing measures. At the same time, we also took care to insure that there is appropriate money supply. All these steps will aim at bringing down the cost of financing and enhance the development of the real economy, so I believe the job of financial institutions is to provide better services to the real economy, especially micro and small businesses.
The financial sector also operates according to its own laws, and one should always look out for possible financial risks. Last year, because of the difficulties of companies in some sectors, the nonperforming loan ratio of some financial institutions in China increased, but we are still in the good position to defuse the financial risks because the capital adequacy ratios of commercial banks is still about 13 percent, which is below the international warning line. Those bank's provision coverage ratio is also about 180 percent, which is above the 150 percent level that we set. We also have other market-based tools at our disposal to help bring down the corporate debt ratio. A very high corporate debt ratio is not new in China, as they still raise finances mostly indirectly in China, but we have a high saving's rate. In regard to volatility in the financial market, we're determined to press ahead with the building of a multi-tiered capital market, and we can also used such a market-oriented format for equity swaps to help bring down the corporate leverage ratio.
Last year, due to multiple factors, there were some unusual fluctuations in China's stock markets. Public departments took coordinated steps to stabilize the market and prevent any sustainable financial risk, and our measure achieved the desired result. As to what will the government do the next, with respect to the development of the financial markets in China, a few days ago, our newly appointed chairman of the China Securities Regulation Commission already give elaborate answers to that, so due to time constraints I will not spell them out here. Whether it is stock markets or bond and currency markets, they are after all markets, so we will continue to pursue market-oriented reform and establish a sound, legal framework for the operation of those markets. The government has the regulatory obligation, and we still need to improve our regulatory system in China. First, there needs to be full coverage of financial regulation, as we are seeing an increase in financial innovation products. Second, we need to step up coordination because all these financial markets and products are so highly interconnected, and such coordination must be authoritative. Third, responsibility must be matched with power; governments, departments and local authorities must perform their assigned possibilities conscientiously and promptly handle any possible latent risk, and also guard against moral hazards. Basically, we must sharpen our vision to exercise the most-effective regulation.
Here, I want to emphasize that it will be a process for us to put in place a fully fledged financial regulatory regime, and in this process the various government departments and local authorities must continue to do a diligent job in performing their assigned responsibilities. Well, it is important, but we watch out for possible risks to ensure that the lawful rights and interests of investors and consumers will be upheld. I want to remind the various departments and local authorities that they must to do their job properly, otherwise they will be held accountable. Thank you.
China-U.S. relations
NBC: I'm with NBC. Respected Premier Li, your work report has outlined steps to China's economic growth, which should help the global economy. But there is one factor of uncertainty and that is the continuing dispute between the world's two largest economies over a range of disputes. So Mr Premier, what do you propose can be done to improve the China-U.S. relationship and address American concerns with respect to market access, investment restrictions, level of fair competition for American companies or fair trading practices that did not steal American jobs, issues that have been raised by some candidates in the current U.S. election campaign. Thank you.
Li Keqiang: There are broad interests between China and the United States. There are also some differences between the two countries, and some differences could be quite sharp. There is no need to deny this. For some time it seems that many people have been talking about differences between the two countries, yet at the same time have overlooked one very important thing that happened last year, that is China became the United States top trading partner, with two-way trade reaching $560 billion. This in itself shows that the common interests between the two countries are constantly expanding, and (the common interests) far outweigh their differences.
Li Keqiang: As for how to ensure the healthy development of China-U.S. ties, I believe both countries need to act in keeping with the principles of equality and mutual benefit. Currently the two countries have stated readiness to press ahead with Bilateral Investment Treaty negotiations. China, on its part, will give U.S. investors wider market access in a gradual manner, but we hope such openings would be mutual, and the BIT negotiations should proceed on the basis of seeking mutual benefit. I believe the common interests between us will constantly expand. As for the differences between the two countries, there are up to 100 various dialogue and exchange mechanisms between China and the U.S.. As long as the two sides act with good faith and properly manage their differences, I believe our common interest will further expand. And as our cooperation expands, the number of differences may naturally rise, but the percentage of differences in the overall China-U.S. relationship will only come down. Broader cooperation serves the interests of both countries and the world.
Business cooperation between our two countries has always been mutually beneficial, something that I believe the U.S. business people know best. As for the ongoing general election in the U.S., it has been lively and has caught the eyes of many. I believe that no matter, in the end, who gets into the White House, the underlying trend of China-U.S. ties will not change. It has been several decades since the two countries established diplomatic relations, and the relationship has seen more than a fair share of ups and downs, but it has been always moving forward, which I believe is the underlying trend.
Shenzhen-Hong Kong Stock Connect
Reuters: Will the Shenzhen-Hong Kong Stock Connect be launched within this year?
Li Keqiang: I just want to add one thing to part of the question raised by the Reuters journalist regarding when the Shenzhen-Hong Kong stock connect will be launched. We have already launched the Shanghai-Hong Kong stock connect and a lot of experience has already been gained from its operation. That stock exchange connection has brought real benefits to both cities. Currently, authorities in the mainland and in Hong Kong are in intensive discussions, and we will work toward the launch of the Shenzhen-Hong Kong stock connect within this year.
