Premier Li Keqiang responded to questions from Chinese and international press on Thursday March 13, 2014, concluding the annual session of the 12th National People`s Congress.

 

During the press conference, Premier Li revealed a handful of new signals, reiterated reforms in key sectors, and explained his opinions about other issues of interest. The Chongyang Institute for Financial Studies (RDCY) at Renmin University of China (RUC) has summarized the 11 new signals as follows:

 

1. "To respond to downward economic pressure, the central authorities resolutely launched an overall debt audit, in a bid to rectify financing platforms and standardize budget management."

 

Last year, central and local government debts amounted to nearly 11 trillion yuan (US$1.79 trillion), in which a large part was for urban construction, land reserves, transport, affordable housing, science, education, culture, health, agriculture and ecological protection. The huge debts have affected the national economy.

 

In 2010, the State Council demanded the cleaning up of local financing platforms through raising the threshold of registered capital, injecting good-quality capital and reshuffling legal person management, in order to improve financial companies` capital quality and their solvency. But the measure only caused a continued expansion of local debts.

 

In line with Premier Li`s repeated urge to "rectify" financing platforms, some financing platforms will be officially recognized, and others be dealt properly according to their own nature.

 

2. "Neighbors do quarrel sometimes. But as long as we respect each other, manage our differences and seek common interest, then there will be harmonious interactions, rather than discordant ones."

 

China has a very complex peripheral environment. Apart from its border countries, China has close neighbors such as Japan and Indonesia - countries with a large population. That is to say, four billion out of the world`s total population of more than seven billion people live around China.

 

This means that differences between neighbors are unavoidable. But all countries in the region should agree that cooperation for mutual benefit and development is the primary target. Thus, controlling differences in peripheral diplomacy to achieve mutual prosperity is for the greater good.

 

3. "Speeding up the publication of the power list."

 

In his reply to a question about the fight against corruption raised by the People`s Daily, Premier Li stressed that the government will speed up to publish what is known as the "power list," saying that the task is important in this year`s anti-corruption campaign.

 

Through publishing the "power list" of governments at different levels, decentralizing power will ignite market vitality, the creativity of society and the driving force of development. Based on this logic, administrative reform will pick up speed, and so will the reforms on state assets, land transfer and mineral rights transfer.

 

4. Ensuring growth to meet multiple targets

 

The premier`s statements expressed that the government is aiming to reach various targets in employment, the people`s livelihood, and economic restructuring. How the government can ensure steady growth while striving to meet these targets is a test for the leadership`s governing capability.

 

Even so, the government put forward the notion of a "reasonable growth range," which represented a major innovation in macroeconomic management.

 

5. "Major economies are paying more attention to growth and employment"

 

Premier Li noted that the G20 has recently linked growth with employment. He said it was one of the examples in which a Chinese "old topic" has arisen to claim global importance.

 

China has continued to develop industry and urbanization. In this process, growth is evidence of better employment. But in the G7, whose economies are highly virtual, the link between growth and employment is not as strong.

 

By linking growth and employment, the G20 sends a signal of encouraging investment to seek growth. China`s practice is becoming a global trend.

 

6. Reiterating "streamlining administration and decentralizing power"

 

Streamlining administration and decentralizing power is vital to stimulating market vitality and boosting the creativity of society.

 

China is aiming to shape a modernized market system, where market players are given more liberty. The rule of law is the key to dealing with government-market relations, and allowing the market to play a larger role. That is to say, companies can do whatever the law does not prohibit. By contrast, the government can only do whatever the law allows. This is the only way to motivate the entire country.

 

7. "Supporting Hong Kong to maintain and raise its central role in international finance, trade and shipping"

 

Hong Kong is the only free port in China. It plays an irreplaceable role in international finance, trade, and shipping, and is also the largest offshore RMB business center. As China seeks more international business cooperation, Hong Kong is consolidating its central position.

 

As long as Hong Kong shows a kinship to the mainland, and can maintain steady growth, it is bound to play a larger role in China`s development.

 

8. In order to reform, one has to "lead the ox by the halter."

 

Premier Li stressed that in reform, one has to "lead the ox by the halter," which means "to fulfill something, one has to grasp its essence."

 

This concept is different from the previous notion that "in reform, a slight move in one area may affect the whole situation," which emphasizes the link between parts and the whole. But the "ox pulling" theory suggests that the government`s role in the reforming process is to regulate the tempo.

 

9. Boosting the "China-U.S. relationship which generates US$100 million each working hour in business"

 

Premier Li said that in order to develop China-U.S. relations, both sides should seek common interests while respecting their differences. His theory mirrors Henry Kissinger`s idea of "go game wisdom" expressed in his book "On China."

 

In Kissinger`s view, Western diplomacy is played out like a chess game, where both players look to checkmate each other. But Chinese diplomatic wisdom is similar to that of a go game; China wishes to seek peaceful coexistence with all other parties. As long as no one counts the pieces, the game can last forever.

 

10. "Having an iron wrist and solid regulations to curb pollution"

 

In his meeting with the press, Premier Li used the phrase "iron wrist to curb pollution" for the first time, indicating that the government will declare war on officials who ignore pollution. It is because in developing China`s ecological civilization, officials linked with pollution are as distasteful as corrupt officials.

 

11. "Equipment made in China should withstand supervision from the press."

 

The government work report calls for "raising the status of Chinese products in the international supply chain, encourage exports of large equipment, such as communications equipment, railways and power plants, so that Chinese products can become famous across the world."

 

In order to upgrade its economy, China also needs to upgrade its exports. Mechanical and electrical goods now account for 57 percent of all Chinese products for export, showing a marked upward trend in the global industrial chain. But the highest quality demands are on high-end products.

 

China is a country that has started to be able to compete at the top end of the market, and establishing a reputation is important. The premier`s promise that products that are made in China should be subject to supervision is a resolute declaration that China will upgrade its industry and seek international business opportunities.

（Source: China.org.cn  中国人民大学重阳金融研究院新浪微博：@人大重阳，微信公众号：rdcy2013)