Full Text of Premier Li's address at World Economic Forum annual meeting(3)

It must be pointed out that China is still a developing country and still has a long way to go before achieving modernization. While peace is the basic condition for China' s development, reform and opening-up along with our people' s desire for a happy life constitute the strongest impetus propelling development. The space of development in China' s rural and urban areas and various regions is enormous, and the country' s domestic demand will simply generate great potential of growth. Development at medium-to-high speed for another ten to twenty years will bring even bigger changes to China and create more development opportunities for the world.

For the Chinese economy to withstand downward pressure, and to maintain medium-to-high speed of growth and achieve medium-to-high level of development, we need to say "no" to traditional mindset. We must encourage innovative institutions, and press ahead with structural reform. We need to adopt more innovative macro-regulation policies and develop a more vigorous micro economy. We need to promote more balanced development of industries, between rural and urban areas and among regions. We need to ensure relatively high employment rate, especially sufficient employment for the young people. And we need to optimize income distribution and raise the people' s welfare. All this certainly calls for tremendous efforts. Yet we will stay undaunted in the face of difficulties. We will unswervingly press ahead with reform and restructuring to ensure that our economy maintains medium-to-high speed of growth and achieves medium-to-high level of development.

To ensure long-term and steady growth of the Chinese economy, we need to comprehensively deepen reforms. We need to properly use both the hand of the government and the hand of the market, and rely on both the traditional and new engines of growth. We will let the market play a decisive role in resource allocation to foster a new engine of growth. At the same time, we will give better scope to the role of the government to transform and upgrade the traditional engine of growth.

To foster a new engine of growth, we will encourage mass entrepreneurship and innovation. China has 1.3 billion people, a 900-million workforce, and over 70 million enterprises and self-employed businesses. Our people are hard-working and talented. If we could activate every cell in society, the economy of China as a whole will brim with more vigor and gather stronger power for growth. Mass entrepreneurship and innovation, in our eyes, is a "gold mine" that provides constant source of creativity and wealth.

Speaking of this, I think of China' s rural reform conducted more than 30 years ago. The reform brought farmers' initiatives into full play and allowed them to decide for themselves matters related to rural production and management. Consequently, the problem of hunger that previously haunted China was solved in just a couple of years. In short, a structural innovation that unleashed the creativity of the people changed the lot of hundreds of millions in China. I also think of a small village I visited two months ago in eastern China. In the village were some 700 households and over 2,800 registered online stores. Each day, more than 30 million items of various sorts were sold to different parts of the world. The story of the village speaks vividly of the hard-working Chinese people actively engaged in entrepreneurship.

Going forward, China needs new sources of dynamism to carry development forward. Dynamism comes from diversity, which sparks wisdom and fosters innovation. Mass entrepreneurship and innovation serves to unleash people' s ingenuity and power. It will result in greater demand and residents' consumption, greater social wealth, and greater welfare for the people. More importantly, it will bring opportunity for many and give people the stage to reach life' s full potential. It will also bring about greater social mobility, equity and justice.

Excessive regulation discourages innovation, and healthy competition is the way to prosperity. We will deepen reform of the administrative system. This means we will continue to abolish or delegate to lower-level governments items previously subject to State Council review and approval. We will comprehensively sort out items requiring non-governmental review and approval, and put in place a negative-list approach for market access. This will incentivize market players, and help reduce the possibility of rent-seeking and corruption. We will protect intellectual property rights in accordance with the law, and do our best to foster an environment that encourages entrepreneurship and tolerates failure. Moreover, we will give protection to all sorts of legal property rights.

To transform the traditional engine of growth, we will focus on increasing the supply of public goods and services. China has made remarkable economic achievements, but inadequate supply of public goods and services remains a weak link in development. China' s capital stock on public infrastructure, in per capita terms, is only 38 percent that of Western Europe and 23 percent that of North America. The development of its service sector is 10 percentage points lower than other developing countries at similar development stages. And its rate of urbanization is more than 20 percentage points lower than developed countries. This means a massive space for increasing public goods and services. To deliver such public goods and services to improve people' s lives is the government' s responsibility. They are also important ways to boost domestic demand.