Li Keqiang's speech at Summer Davos opening ceremony

Chinese Premier Li Keqiang on Wednesday delivered a speech at the opening ceremony of the seventh Annual Meeting of the New Champions, also known as the Summer Davos Forum.

The following is the full text of Li's speech:

　　   The Chinese Economy: Reform and Innovation

　　   For Sustained and Healthy Development

　　Speech by Li Keqiang

　　At the World Economic Forum

　　Annual Meeting of the New Champions 2013

　　11 September 2013

Professor Klaus Schwab, Executive Chairman of the World Economic Forum, and Mrs. Schwab,

Distinguished Guests, Ladies and Gentlemen, Dear Friends,

Let me begin by extending, on behalf of the Chinese government, hearty congratulations on the opening of the seventh Summer Davos Forum and a warm welcome to all the distinguished guests.

Seven years ago, when the Davos Forum came from the high mountains in Switzerland to the shore of the Bohai Bay in China, I was working in Liaoning and was personally engaged in the launch of the Forum, and my memories of the event are still vivid today. I am truly happy that the Forum, which has been held in Dalian and Tianjin in rotation since then, is gaining greater influence, and I find the theme of this year's Forum, "Meeting the Innovation Imperative," a forward-looking one that points the way to the future.

Five years have passed since the outbreak of the international financial crisis in September 2008. Yet the world economy still faces a complex situation. Just as developed economies begin to show some signs of improvement, emerging economies are confronted with rather serious downward pressure. As we often say in China, "Hardly has one wave subsided when another wave rises." Affected by a multiple of factors, economic growth in China has slowed down to some extent. Yesterday, Professor Schwab and I had an exchange of views with some of the business representatives. They all showed a keen interest in the state and prospects of the Chinese economy. For some time now, there have been many comments on the Chinese economy, wondering whether it may slow down too early, like in some other countries, or even encounter a hard landing. What I would like to say is that the Chinese economy, which is at a crucial stage of transformation and upgrading, is moving forward in a steady way and its fundamentals are sound.

Economic growth in China went down from 7.9 percent in the fourth quarter of last year to 7.7 percent in the first quarter and 7.5 percent in the second quarter of this year with a reduced increase in consumption, investment and foreign trade. There was a registered negative growth in the central government revenue, which has been rarely seen for many years. Confronted with downward pressures, we stayed committed to the overall policy of seeking steady economic progress. We took a host of innovative policies and measures with a holistic approach to pursue steady growth, conduct structural readjustment and promote reform, which served to ensure a smooth economic performance.

First, keeping the macro economic policy stable with consideration given to both immediate and long-term needs. In the face of economic downturn, a short-term stimulus policy could be one way to drive up growth. But after weighing the pros and cons, we concluded that such an option would not help address the underlying problems. Hence, we opted for keeping the macro economic policy stable, which we believe served both the immediate needs and long-term interests of the economy. With respect to fiscal policy, we introduced policy measures that kept deficit from expanding, readjusted the expenditure structure, cut down administrative expenditures, accelerated spending, increased support for the central and western regions as well as for structural readjustments and for improving people's wellbeing, and granted preferential tax treatment to small and micro businesses. In terms of monetary policy, we stayed focused, responded calmly and met difficulties head-on. We did not relax or tighten the monetary policy in spite of the short-term fluctuation in the money market, and properly managed liquidity. We supported the real economy mainly by making good use of both the stock and the increment. At the same time, we strengthened supervision and improved regulation to prevent and defuse potential risks in the fiscal and financial sectors. Regarding the local government debt issue, which has become a source of concern, we are taking pertinent measures to regulate and address it in an orderly fashion. Here, I can say with certainty that the situation is on the whole safe and manageable.