Source: World Economic Forum
Dear President Schwab, ladies and gentlemen, friends,
Good morning everyone! Thank you very much to Mr. Schwab for the invitation to come to beautiful Davos again. The last time I attended Davos was in 2018. Five years on, we have experienced various unexpected events, and the political and economic picture of the world has undergone profound changes. Against this backdrop, the theme of this year's Annual Meeting is "Strengthening Cooperation in a Divided World".
Mutual understanding is an important prerequisite for strengthening cooperation. No matter how much online communication and advanced technical means, it cannot replace direct meeting. I have seen many old friends in the past two days and feel very warm. I would like to take this opportunity to brief you on the situation of China's economy. In 2022, China successfully completed its important domestic political agenda, successfully convened the 20th National Congress of the Communist Party of China, elected a new central leadership collective with President Xi Jinping as the core, and drew a grand blueprint for the development of Chinese-style modernization in the next five years and beyond.
Not long ago, we held China's annual Central Economic Work Conference to make arrangements for economic work in 2023 in accordance with the spirit of the 20th National Congress of the Communist Party of China. From the perspective of 2022, China's economy has grown by 3%, maintained stable employment and prices, the urban survey unemployment rate is 5.6%, the consumer price index is 2%, and the current account surplus accounts for slightly more than 2% of GDP. In 2023, we will adhere to the general tone of seeking progress while maintaining stability, continue to implement a proactive fiscal policy and a prudent monetary policy, strive to maintain reasonable economic growth, and maintain the overall stability of prices and employment. We should focus on expanding domestic demand, promoting the smooth circulation of industrial chain and supply chain, supporting the healthy development of the private economy, deepening the reform of state-owned enterprises, welcoming more foreign investment to China, and preventing and resolving economic and financial risks. We believe that after hard work, China's economy will achieve an overall improvement in 2023, and it is a high probability event that the growth rate will reach a normal level, and it is expected that imports will increase significantly this year, enterprises will increase investment, and household consumption will return to normal.
Looking back over the past decade, China's GDP has increased from 54 trillion yuan to 121 trillion yuan, and the average life expectancy has increased from 74.8 years to 78.2 years, contributing about 36% to world economic growth. There are at least five lessons learned from achieving such results: First, we must insist that development is the first priority and adhere to economic construction as the center. Under the new situation, it is necessary to fully and comprehensively implement the new development concept of innovation, coordination, green, openness and sharing, and vigorously promote high-quality economic development. Second, we must adhere to the direction of socialist market economic reform. Give full play to the decisive role of the market in the allocation of resources, and better play the role of the government. Some people say that China wants to develop a planned economy, which is absolutely impossible. We must unswervingly deepen the reform of state-owned enterprises, unswervingly support the development and growth of the private economy, promote fair competition, oppose monopoly, and carry forward the spirit of entrepreneurship. Third, we must persist in opening wider to the outside world in all directions. Opening up to the outside world is China's basic national policy, opening up is an important driving force for promoting reform and development and promoting China's economic progress, and China's door will only open wider and wider. Fourth, we must persist in governing the country according to law. Protect property rights and intellectual property rights in accordance with the law, and create a market-oriented, rule-of-law, and international business environment. Whether it is the action of the government or the market, it must operate on the track of the rule of law. Fifth, we must adhere to innovation-driven development. Vigorously promote innovation, develop education, attach importance to the improvement of human capital, attach importance to the triangular cycle of finance, science and technology, and industry, and strive to improve labor productivity. These experiences have been important practices that we have been pursuing since the reform and opening up, and we must adhere to them for a long time and unswervingly.
Here, I would like to briefly cover three more issues. First, China's prevention and mitigation of financial risks, especially those related to the real estate industry; Second, China's consideration of promoting economic dual circulation; Third, China's consideration of promoting common prosperity.
In the past five years, some financial risks have emerged in China, mainly due to the macroeconomic downturn, lax financial supervision, blind expansion of business entities, insider control and other factors. We have fought a tough battle, decisively disposed of a number of high-risk large enterprise groups, disposed of high-risk small and medium-sized financial institutions, disposed of non-performing assets, reduced the scale of shadow banking, and coped with abnormal fluctuations in the capital market. Through hard work, China's financial system has generally remained stable and has maintained the bottom line of no systemic risk. We are enacting the Financial Stability Law to provide legal guarantees for the next step in resolving financial risks and maintaining financial stability.
The real estate industry is the pillar industry of China's national economy. Real estate-related loans account for nearly 40% of bank credit, real estate-related income accounts for 50% of local comprehensive financial resources, and real estate accounts for 60% of urban residents' assets. Since the second half of 2021, China's real estate market has seen a sharp decline in prices and sales, real estate enterprises have generally experienced poor liquidity, deteriorated balance sheets, and individual leading enterprises have faced major risks. We believe that if risks in the real estate sector are not handled properly, they can easily lead to systemic risks and must be intervened in a timely manner, but attention should be paid to handling the relationship between systemic risk and moral hazard. First, stabilize expectations by protecting contracts and property rights. For more than 2,600 undelivered projects involving 1.88 million residents across the country, we started with "guaranteed delivery buildings" to avoid panic in the market. Second, a large number of blood transfusions to improve the liquidity of real estate enterprises, mainly including commercial banks providing loans, providing guarantees for housing enterprises to issue bonds, and promoting equity financing. Third, deregulate the period when the real estate market is overheated, expand effective demand, and enable real estate companies to have hematopoietic functions. Through these efforts, the relationship between supply and demand in the market began to improve significantly. China is still in the stage of rapid urbanization, and the huge demand potential will provide strong support for the development of the real estate industry.
At present, China is accelerating the construction of a new development pattern with domestic circulation as the main body and domestic and international dual circulation promoting each other. The focus of the domestic cycle is to expand domestic demand, improve the industrial system, form a consumption-driven growth model, and promote the rebalancing of the economy. This logic has been the international consensus since 2008. A smooth domestic cycle requires strengthening the international division of labour and cooperation, expanding foreign trade and utilizing foreign investment. The new development pattern is open domestic and international dual circulation. We oppose unilateralism and protectionism, and hope to comprehensively strengthen international cooperation, jointly safeguard world economic stability and development, and promote economic re-globalization.
China has built a moderately prosperous society in an all-round way, and achieving common prosperity is an important social development goal put forward by us and a historic task for achieving China's long-term peace and stability. This is a long-term task that needs to be achieved gradually, and cannot be achieved overnight. When we talk about common prosperity, we emphasize avoiding polarization, and ultimately rely on common development, relying on everyone's hard work and hard work to get rich, and by no means engaging in egalitarianism and welfareism. With the development of China, the prosperity of all people will continue to increase, but there will be certain differences in people's income levels and wealth under any circumstances. That is, everyone is equal in front of opportunities, but the results are still different. In the historical process of promoting common prosperity, entrepreneurs, including foreign businessmen, will play an important role as the engine, because they are the key elements of social wealth creation, and without the gradual accumulation of wealth, common prosperity will become a source of water and a tree without roots.
Ladies and gentlemen, friends,
"Strengthening cooperation in a divided world", this theme has a strong practical focus. President Xi Jinping pointed out that at present, the changes in the world, the times, and history are unfolding in an unprecedented way, and the world is once again standing at the crossroads of history, and the choice of the people of all countries depends on the choice of the people of all countries.
I would like to make three observations on how to solve the problem of world cooperation.
First, adhere to correct principles and safeguard an effective international economic order. In the face of the new situation, the traditional way of thinking cannot provide a way out, we must abandon the Cold War mentality and understand the essence of things from the perspective of material duality. Focus on building a community with a shared future for mankind and work together to address global challenges. We believe that a reasonable international economic order must be jointly safeguarded, and economic principles such as rational division of labor, encouraging competition, opposing monopoly, protecting property rights and intellectual property rights, promoting entrepreneurship, promoting the free flow of factors, adhering to fair distribution, improving social safety nets, and maintaining macroeconomic stability have not changed.
Second, strengthen international macro policy coordination and balance the relationship between inflation control and stable growth. At present, the response line adopted by some countries is "inflation-interest rate hikes-recession-recovery". It should be noted that this round of inflation is compound inflation, the causes are complex, in addition to demand-side factors, both supply and demand should work at the same time, synchronously repair the industrial chain and supply chain, attach great importance to energy security, food security, which must promote international cooperation, maintain peace, and work together to meet common challenges. We call on major countries to attach great importance to the negative spillovers to emerging market countries and developing countries while raising interest rates, so as to prevent aggravating debt and financial risks. We also agreed to work with others to promote the resolution of the debt problems of some developing countries.
Third, actively respond to global climate change. Most countries in the world have recognized the urgency of climate governance and need to take joint action. In the wake of the coronavirus pandemic, we recognize that climate change and the public health crisis are somehow linked, and that effective international cooperation is needed on this issue. We will uphold our commitments to the international community, actively promote international cooperation in the field of climate change, jointly and effectively address the many severe challenges brought about by climate change, and promote the building of a community with a shared future for mankind.
Strengthening cooperation in a divided world is a practical issue we are facing, and we should frankly face the current situation of division, thoroughly analyze its causes, advocate a positive and harmonious game, find common ground that may expand cooperation, explore effective mechanisms for expanding cooperation, and firmly safeguard world peace. I am very grateful for providing us with such an opportunity at Davos, and I sincerely wish this forum a complete success and contribution to the promotion of international peace and international cooperation in a divided world.
Thank you all for listening.