Resolute decision, timely measures aid China in crisis
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Chinese Vice-Premier Li Keqiang said in Davos on Thursday that it was resolute decisions and timely measures taken by the central government that helped China post an overall growth of 8.7 percent last year during the global economic crisis.
Li made the remarks during his keynote speech at the World Economic Forum in the Swiss ski resort of Davos.
"In the past year, facing the severe impact of the international financial crisis, the Chinese government made the resolute decision and took timely measures to implement a package plan aimed at maintaining steady and fast growth, and our efforts resulted in quick economic rebound and recovery," Li said.
"China's GDP grew by 8.7 percent in 2009, wherein growing domestic demand contributed 12.6 percentage points, making up for the loss of 3.9 percentage points caused by contraction of external demand. Investment and consumption respectively contributed 8.0 and 4.6 percentage points, showing a strong momentum of home-driven growth in the Chinese economy," Li said.
The vice-premier told the forum that his country's imports of goods in 2009 totalled 1,005.6 billion U.S. dollars while its trade surplus dropped by nearly 100 billion dollars over 2008, making it the world's second largest importer and the largest emerging market.
"With an increase of 380 billion dollars in GDP, China's contribution to world economic recovery is obvious," he said. "To effectively cope with the crisis, we increased public spending by a large margin and carried out structural tax cuts.
"In 2009, over 720 billion Renminbi yuan (105 billion dollars) of additional public investment and tax cuts totalling 500 billion yuan (73 billion dollars) added up to 3.6 percent of the GDP. They stimulated market demand and spurred economic growth, while reducing burdens on enterprises and strengthening vitality of the economy. At the same time, fiscal deficit was kept within a reasonable range of less than 3 percent of the GDP," Li told forum participants.
"The focus of public investment was to improve people's wellbeing. In fact, under the two-year investment program totalling 4 trillion yuan (588 billion dollars), more than half of the government-funded projects were designed to improve people's wellbeing, and they boosted consumer spending. Meanwhile, we significantly increased input in social security, promoted basic medical and health care system for the people as public goods, and advanced 'basic medical insurance for all'.
"While promoting growth, we spared no efforts in readjusting the economic structure. We actively developed new industries of strategic importance, such as new energy, energy conservation and environmental protection, and accelerated the phasing out of outdated production facilities that are energy intensive and heavily polluting."
The vice-premier said that in last year alone, China closed a total of 26 million kilowatts of coal-fired power generator sets whose single unit capacity was less than 100,000 kilowatts.
"China's achievements in tackling the crisis are attributable to the government's proper decision-making. More importantly, they have been made possible by all hard-working Chinese people," he said. "It is the diligence, fortitude and perseverance of the Chinese people that has ensured China's steady and fast economic growth."
In the fourth quarter of 2009, China's central government revenue, household income and profits of businesses all increased in tandem with the GDP growth, Li said.
"The price level turned from negative to positive, and the foundation for economic recovery was consolidated. However, there still remains many uncertainties in domestic and external economic environment, and the road toward China's further economic development in 2010 is beset by extreme complexities.
"To tackle these problems, we will keep continuity and stability of our macro-economic policies, continue to follow a proactive fiscal policy and moderately easy monetary policy and make our policies better targeted and more flexible in response to new circumstances.
"The key in achieving this goal is to strike a balance among promoting steady and fast growth, readjusting economic structure and properly managing inflation risks. We will endeavor to raise the quality and efficiency of growth and take effective measures to fend off potential risks."
The vice-premier said it should be stressed that, despite the international financial crisis, the fundamentals and long-term positive trend of China's economic development remain unchanged.
"Last year, we acted with resolve and confronted challenges head-on, and succeeded in ensuring steady and fast economic growth. As we draw plans for this year, we are confident that we can stay on top of the complicated situation and maintain the steady and fast growth of the Chinese economy.
"Looking ahead, we are well positioned to achieve long-term, fast and steady economic growth. China has a large population and a huge domestic market, and enjoys considerable buffer against setbacks. The process of industrialization and urbanization in China is picking up speed, and the process of modernization is irreversible.
"However, though China's economic aggregate is among the largest in the world, its per-capita national income is lower than some 100 other countries. Although cities and coastal regions have made progress in their development, people's income is still very low in China's rural areas and central and western regions. It is the strong aspiration of the Chinese people to live a better life and achieve all-round progress. And our efforts to achieve these goals hold out great potentials for development."
