Li calls reforms key to sustaining development

Vice-Premier Li Keqiang stressed the role of reform in China's social and economic development on Thursday, calling for pioneering measures and a bigger role for the market amid medium-speed growth in the long term.

"Reform is still the biggest bonus for China," said the vice-premier at a State Council working conference, after hearing reports from top officials from China's 11 pioneering provinces of reform.

"We have benefited from reform in the past 30 years. ... We have to march on as there is no way back, Li told the participants of the conference.

Li said he did not completely agree with the suggestion that China faces a diminishing demographic advantage, as the country will still have a massive labor force of about 900 million people by 2030.

However, he conceded that the country's labor costs would significantly rise, and this will have to be dealt with through further reform.

The theme of Thursday's conference was widely perceived to be key information released by China's leadership after the 18th National Congress of the Communist Party of China, especially when the world's second-largest economy stands at a crossroad, facing slowing growth and rising social and environmental challenges.

Li said China will not pursue one-sided GDP growth and development will be at a medium-speed in the long term.

"It is hard to maintain double-digit growth, but 7 percent will be enough to achieve an affluent society by 2020," he said, adding that realization of that goal also depends on reform.

When commenting on the next step of reform, Li said there should be top-level decisions, but innovation from the grassroots should also be respected.

"The country has accumulated adequate experience in reform but top-level design is far from enough for a country of 1.3 billion people, and the pioneering spirit of the masses needs to be promoted."

In addition, Li said, more comprehensive reform requires courage and insight to readjust the distribution of wealth, and introduce a fairer mechanism where everyone can benefit from their efforts.

Introducing such a change will involve a bigger role for the market in both the social and economic circles in allocating resources, he said.

"We are also aware that the current reforms have entered a 'fortified zone' and a 'deep-water zone'. ... We have to face the challenges and break all the systematic obstacles that block scientific development," Li said.

Chi Fulin, president of China Institute for Reform and Development, a think tank based in Hainan province, said reform will continue to be a main engine for the Chinese economy in the future.

But reform needs to overcome some major challenges such as in monopolized sectors and the hukou residence registration system, Chi said.

"For example, in the railway system, government functions have to be separated from enterprise management if the system wants to lure more private investors," he said.

"Meanwhile, the urbanization process can be a booster of the country's development only if the hukou system allows equal rights for migrant workers," he added.

Meanwhile, Chi said, more efforts need to be made regarding structural tax reform to support the development of small and medium-sized enterprises.