Premier Li meets with international financial chiefs

China's Premier Li Keqiang speaks at the '1+6' roundtable in Beijing, July 22, 2016. [Photo provided to chinadaily.com.cn]

Premier Li Keqiang on Friday met with six international financial chiefs and held a roundtable discussion in Beijing.

The following is the full text of the joint press release of China's Premier Li Keqiang, World Bank Group President Jim Yong Kim, IMF Managing Director Christine Lagarde, WTO Director-General Roberto Azevêdo, ILO Director-General Guy Ryder, OECD Secretary-General Angel Gurría and FSB Chairman Mark Carney.

The global economy is sluggish and faced with downside risks and uncertainties. Recently, the IMF has lowered slightly its global growth forecast and flagged rising downside risks arising from higher economic and political uncertainty and increased volatility in some market segments. The World Bank lowered its forecast for global economic growth in 2016, and emphasized the need for greater urgency in implementing structural reforms to counter stronger downside headwinds. The WTO has indicated uncertain near term global trade growth prospects and a challenging international trade policy environment with rising protectionist measures, despite some positive developments. The ILO expects the expansion of the global economy to be too weak to close the employment and social gaps left by the international financial crisis. The OECD has pointed to declining productivity trends and uncertainties besetting future global growth. The FSB has noted that global economic and financial difficulties were increasing and structural challenges became more pronounced. Against this backdrop, it is critical to enhance international economic policy coordination. Taking the opportunity of holding the G20 presidency this year, China is committed to fostering innovation and other new growth engines, deepening structural reform in particular on the supply-side, promoting investment and infrastructure development, implementing financial reform, advocating growth in trade, adding more and better jobs, advancing the 2030 Sustainable Development Agenda and addressing other global challenges, in a bid to achieving stronger, sustainable and balanced growth for the global economy. During this process, we welcome stronger policy communication and ongoing cooperation between China and the World Bank Group, the IMF, the WTO, the ILO，the OECD and the FSB in the relevant areas. China and international organizations participating in the Round-table (hereinafter referred to as “we”) reached the following consensus:

1. On the macro economy. We recognize that aggregate demand will remain weak in the short run, and it will take time for supply-side policies to show effects, so a comprehensive package of policies are needed to strike a good balance between short-term and long-term goals. Strong, combined and coordinated efforts are needed, including use of all policy tools - monetary, fiscal and structural – to deal with risks and uncertainties in the world economy, safeguard financial stability and support economic growth. Monetary policy should continue to support economic activity and ensure price stability. Fiscal policy should be flexible to promote growth, job creation and confidence, while ensuring fiscal sustainability. Moreover, where fiscal rules and frameworks allow, fiscal policy should be used to support structural reforms while preventing and mitigating fiscal risks. Structural reforms should be tailored to country needs—including their income levels, cyclical positions, and available policy space—and operate along with other policies to support growth. Implementation of agreed financial reforms remains important to boost the resilience of the financial system. Well-calibrated and effective communication of policy stances will help to boost confidence, enhance policy effectiveness, and limit negative spillovers. China has taken the initiative to adapt to and guide the economic New Normal. While supporting aggregate demand, China continues to strengthen the structural reform, especially the structural reform on the supply-side, break a path for growth, accelerate the shift of growth models from emphasizing size and speed to quality and efficiency, and boost sustained driving forces for growth. Against the backdrop of global economic slow-down, China maintained steady growth during the first half of 2016, registering 6.7% year-on-year. Economic structure has been improved, and consumption and the service sector have become the major driving forces of the Chinese economy. The new economy featuring new technology, new products, new industries and new business models is growing rapidly, and industrial transformation and upgrading is advancing fast. We believe that the fundamentals of the Chinese economy remain positive in the long run. With deepening reforms, and implementing tasks of reducing overcapacity, destocking, deleveraging, reducing cost and shoring up weak spots, the Chinese economy will achieve strong, sustainable and balanced growth, and make a continuous contribution to global economic growth.

A roundtable discussion was held by Premier Li Keqiang and six international financial chiefs in Beijing on July 22, 2016. [Photo provided to chinadaily.com.cn]

2. On structural reforms. We recognize the importance of structural reforms in dealing with the slowdown of global productivity growth and promoting steady, durable and inclusive recovery of global economy, which is also essential in realizing the ambition of the G20 Blueprint on Innovative Growth introduced by Chinese Presidency of G20. While country circumstances differ, there are shared directions of reform in general terms, including deregulation, enhancing competition, encouraging innovation, promoting fiscal reform, promoting trade and investment, strengthening the financial system, advancing labor market reform, improving infrastructure, enhancing environmental sustainability and promoting inclusive growth. The OECD and the IMF fully support the enhanced structural reform agenda as one of the priorities identified by Chinese Presidency of G20 this year. The international organization (IOs) also support G20 members' efforts in developing a set of priority areas and guiding principles for structural reforms, as well as an indicator system to further improve assessing and monitoring of the progress of structural reforms and their adequacy to address structural challenges, and welcome the substantial progress that has been made in this regard. The OECD, the IMF and other IOs will continue to contribute proactively to the work streams under the G20 Growth Framework, and tap into their expertise to provide valuable policy analysis and recommendations for G20 structural reforms. China will strengthen the cooperation with the IOs to jointly support the G20 plays an important role in further promoting the policy actions on structural reforms at both country and global level.

3. On innovation. We need to make efforts to foster new sources of growth such as innovation, new industrial revolution and the digital economy. We support the G20 developing action plans and guiding principles in these areas, and based on these working out the G20 Blueprint on Innovative Growth to foster new drivers of the growth of the world economy. We also encourage G20 Task Forces covering the above areas to continue their work in this regard in order to maintain continuity. Sound framework conditions and structural reforms are essential for rebalancing the Chinese economy and transitioning to a more sustainable, consumption-led and knowledge-based economy. On this basis, more efforts are needed to harness the development opportunities presented by the new industrial revolution and make more people benefit from it. Actions in the intertwined areas of innovation and the digital economy, including investing in the new technologies and skills in the direction of future development, can provide valuable support for new sources of growth – boosting productivity gains, opening new markets, meeting unaddressed needs and tapping into new sources of human endeavor. Innovation is a key driver of productivity, growth and wellbeing: in a context of demographic change and diminishing returns on capital, it will become even more important in the future as a source of long-term growth, while digitalization is reshaping economies and offering new ways to spur efficiencies and improve services across all facets of life. The OECD will continue to support the delivery and implementation of an innovation-driven growth path.

4. On trade and investment. Trade can play an enhanced role in creating jobs, sustaining economic growth and prosperity. We call upon members to keep RTAs transparent, inclusive and open to participation by others. They should ensure that their RTAs are not only consistent with WTO rules, but also help to strengthen the overall trading system. The multilateral trading system should maintain its role as the main channel for trade liberalization and facilitation, with the WTO promoting coherence across the global system.

We welcome the success of the WTO Bali and Nairobi Ministerial Conferences and urge rapid implementation of the outcomes, in particular the Trade Facilitation Agreement and the elimination of agricultural export subsidies. We strongly support advancing post-Nairobi negotiations on remaining Doha issues, with development at its centre and in a spirit of solidarity and mutual trust. We encourage WTO Members to explore new issues where further cooperation could contribute substantially to global trade and prosperity, including those brought by changing business models and technical development.

China's Premier Li Keqiang speaks at the '1+6' roundtable in Beijing, July 22, 2016. [Photo provided to chinadaily.com.cn]

We welcome continuous progress made by G20 in trade and investment areas, including stronger functions of G20 in coordinating trade and investment policy. We also welcome the first release of World Trade Outlook Index by the WTO at the G20 Trade Ministers Meeting, as well as the monitoring reports by WTO, OECD and UNCTAD on trade and investment measures taken by the G20 members. We note with concern that trade-restrictive measures continue to rise in the context of global trade slowdown and urge to step up vigilance against protectionism.

5. On labour and employment. The current global outlook for jobs is mixed with slower growth leading to weaker prospects for employment and wages in many countries. Rising inequality and the risk of setbacks to the global drive to reduce poverty, make policy initiatives to increase opportunities for decent work a priority. Labour market developments were more positive in China and some other large economies than the rest of the world. Structural changes in employment continued and could accelerate as a result of technological innovation, increased interdependence and the need for environmental protection. Policies that promote strong, sustainable and balanced growth play a vital role in managing adjustment and will remain key drivers in mitigating adverse and maximizing positive effects of labour market changes. The prominence accorded to decent work and inclusive growth in the 2030 Agenda means the multilateral system must further strengthen the coherence of its policies for jobs and growth to reach Sustainable Development Goals.

China's economic growth has now entered the phase of “New Normal”, and needs to address the structural mismatches in employment. Upholding the conviction that employment is the foundation of the livelihoods of the people, the Government of China is implementing the Employment First Strategy and more active employment policy, forgoing ahead with continuous reforms to streamline administration, delegate power, strengthen regulation and improve services, and promoting mass entrepreneurship and innovation. The Government is also working hard to develop vocational education and training and improve the social protection system. Along with sustaining a medium-high growth rate and upgrading the economy to the medium- and high-end in China, the Government has created more jobs, and improved job structure. Together with its social partners, the Government of China has made positive contributions to international labour governance and the south-south cooperation of the ILO. The Government stands ready to strengthen cooperation with the international community including the ILO, and will play an even bigger role in realizing inclusive growth and decent work for all.

6. On financial regulatory reform. Notwithstanding the improvement in resilience brought about by post-crisis financial reforms, the global financial system faces pronounced risks, which could be amplified by the slow-down in global growth. Therefore, China, as a member of the FSB, will continue to firmly support the FSB's efforts in maintaining the stability of the global financial system, improving the financial regulation coordination framework and enhancing global financial system resilience. We call for full, consistent and timely implementation of agreed reforms, which are aimed at delivering an open and resilient system able to fund investment, trade and growth. We look forward to the coordinated work by the IMF, FSB and BIS to take stock of international experience with macro-prudential framework and tools, to help promote effective macro-prudential policies. The increase in market-based finance and the emergence of the digital economy have the potential to be an engine of productivity, international connectivity and growth. We strongly support the work of the FSB to identify new and emerging risks and their efforts to promote international cooperation such that the potential of innovations can be realized in a stable and resilient fashion.

China's Premier Li Keqiang and six international financial chiefs pose for pictures during the roundtable held in Beijing on July 22, 2016. [Photo provided to chinadaily.com.cn]

7. On sustainable development. The 2030 Sustainable Development Agenda is a critical component of promoting inclusive, sustainable growth. We call for countries actively design and implement country plans based on their respective national conditions. Economic growth is the foundation to end poverty and hunger. For growth to be sustainable, all members of society must share in the benefits of growth. Ensuring rapid economic growth requires: promoting economic transformation and upgrading; implement policies to maintain macroeconomic stability policies; proper and effective investments in infrastructure; and improving business environment for private enterprise to thrive orderly and create jobs. In addition, countries should adopt other policies including greater investment in education and health, to ensure that benefits reach all segments of society by promoting equal opportunity—including gender equity. With rapid technological change, early childhood education takes on particular importance, as it will determine the capabilities of future workers to thrive in a labor market likely to be very different from that of today. A judicious use of safety nets not only protects those that cannot benefit from current growth, but also help the poor build the assets they need for future prosperity. We applaud and support China's efforts, as the G20 presidency, to promote the development of action plans to implement 2030 Sustainable Development Agenda, launch the industrial initiative to support African and least-developed countries, so as to help developing countries to achieve inclusive growth. To achieve SDGs, all parties should take prompt efforts to address increasingly pronounced global challenges, including pandemics and other global public health risks (e.g. Zika; Ebola; and antimicrobial resistance), conflict and forced migration, and climate change/weather-related calamities.

8. On global economic governance. We acknowledge the need to, with the developments of world economy, continuously improve and reform international economic governance system and to increase the representation and voice of emerging economies and developing countries. During this process, the IOs welcome China continue to play a constructive role. Global challenges, global public goods and coordinated global action require global governance and effective global organizations suited for their tasks.

We reaffirm our commitment to maintain a strong, quota-based, and adequately resourced IMF. We support a fully equipped IMF for it to fulfill its responsibilities in this very uncertain financial and economic time. The implementation of the 2010 Reforms early this year marks an important milestone in moving forward the IMF's quota and governance reform. It significantly increased the IMF's core resources, and also improved the IMF's governance by better reflecting the increasing role of dynamic emerging and developing countries in the global economy. More than 6 percent quota shares shifted to dynamic emerging market and developing countries and also from over-represented to under-represented members. We look forward to the completion of the 15th General Review of Quotas by the 2017 Annual Meetings, including a new quota formula. We reaffirm that any realignment in quota shares under the 15th review is expected to result in increased shares for dynamic economies in line with their relative positions in the world economy, and hence likely in the share of emerging market and developing countries as a whole. The IMF should continue exploring ways to strengthen the Global Financial Safety Net (GFSN), with the IMF at its center, including through more effective cooperation with regional financing arrangements and improving its lending toolkit. We support the examination of a broader use of the SDR to enhance the resilience of the international monetary system (IMS). We look forward to the outcomes of the World Bank Group's shareholding review in accordance with the roadmap and timeframe agreed at the 2015 World Bank Group Annual meetings.

We agreed that this meeting was constructive and fruitful. The participants agreed that the round-table should become a regular mechanism, so as to strengthen ties between China and international organizations, deepen communication and cooperation in the international economic and financial arena, and jointly explore responses to global economic challenges. We agreed to hold the 2nd round-table at an appropriate time and place.