Premier Li Keqiang addresses Davos forum

Premier boosts confidence in China economic reform

Chinese Premier Li Keqiang on Wednesday was set to deliver a keynote speech at the Davos forum to address questions about China's economy and its "new normal" of slower yet more sustainable growth.[Special coverage]

Li's trip is the first diplomatic visit for a top Chinese leader in 2015. His speech came after China's GDP growth decelerated to 7.4 percent year-on-year in 2014, the lowest level in 24 years, raising concerns that the world's second largest economy is losing momentum.

Chinese policymakers on Wednesday reassured global investors by pledging deepening reforms meant to strengthen sustainable growth.

"China's economy is still stable with a relatively high growth rate. The country is willing to push forward structural reforms although it will lead to slower economic development," Zhou Xiaochuan, governor of the country's central bank, said Wednesday at a panel session of the World Economic Forum (WEF) held in Davos.

The IMF on Tuesday lowered its forecast for China's GDP growth to 6.8 percent for 2015, down from its October forecast of 7.1 percent.

In a Tuesday meeting with Klaus Schwab, founder and executive chairman of the WEF, Premier Li said that "the fundamentals to maintaining positive momentum in China's economic development have not changed amid complex domestic and international situations."

China will continue to implement a proactive fiscal policy and prudent monetary policy, which will be neither too tight nor too loose, and put more focus on structural reforms, Li said.

Chinese President Xi Jinping has previously said the nation needs to adapt to a "new normal" of slower growth as the country undergoes a major economic reform.

According to a report released Tuesday by PricewaterhouseCoopers (PwC), the US has overtaken China as CEOs' most important overseas growth market for the first time since PwC started asking the question five years ago.

"China's GDP growth has slowed somewhat, but it continues to be seen as a powerful global growth engine. CEOs are in no doubt that, when it comes to the most important overseas markets, it's still a two-horse race between the US and China," the report said, based on interviews of 1,322 CEOs in 77 countries and regions.

"The world has already felt the impact of China's economic slowdown, which has pressured global commodities prices and weakened investor sentiment," Chen Fengying, a research fellow with the China Institutes of Contemporary International Relations, told the Global Times Wednesday.

Structural reforms are urgently needed as China's old economic growth pattern of relying on foreign investment, exports, cheap labor and sacrificing the environment is no longer sustainable, Chen said.

Foreign direct investment (FDI) into China rose only 1.7 percent in 2014 from a year earlier, down from 5.25 percent in 2013, data from the Ministry of Commerce showed Tuesday.

"China is also transitioning from a major investment destination to an outbound investor," said Chen, citing the establishment of the China-initiated Asian Infrastructure Investment Bank and a $40 billion Silk Road Fund unveiled by Chinese President Xi Jinping to support infrastructure investments in Asian economies.

Premier Li said Tuesday China's economy is moving toward a more advanced stage that features more complex divisions of labor and more rational structures.

Improving the quality and efficiency of China's economy will also be a significant contribution to maintaining the stable, healthy development of the world economy, Li said Tuesday.

Pushing forward structural reforms is important for China's next phase of development, said Han Meng, a research fellow with the Institute of Economics of the Chinese Academy of Social Sciences.

"This year is the final year of China's 12th Five-Year Plan (2011-15), and China needs to lay out a blueprint for the 13th Five-Year Plan (2016-20) that centers on innovation-based and demand-led growth," Han told the Global Times Wednesday.

The WEF meeting, scheduled to run from Wednesday until Saturday, will explore solutions to major global challenges under the theme "The New Global Context."

During his stay in Switzerland, Li is also scheduled to hold talks with President of the Swiss Confederation Simonetta Sommaruga where they will celebrate the 65th anniversary of diplomatic ties between the two countries.