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Li Wei

Joining hands to deal with changes of the times and improve Sino-EU relations

Note: Following is a speech by Li Wei, President of the Development Research Center of the State Council (DRC), made on Dec. 16, 2014 at the European Chamber Annual Conference 2014, under the theme of "Saddling up for Reform".

Dear guests, ladies and gentlemen,

Good Morning. It gives me a great pleasure to attend the European Chamber Annual Conference, under the theme of "Saddling up for Reform". The year of 2014 is the year of horse in the Chinese horoscope and it marks the beginning of China's endeavor to comprehensively deepen its reform. As we review the reform of 2014, I would like to say that it is an important year for China. One thing I would like to add here is that China's reform and opening-up was launched in 1978, which was also a year of horse. Over the past 36 years, China's achievements have become the focus of world attention. Having said so, I feel that it is quite significant to hold this conference at such a historical point. On behalf of the Development Research Center of the State Council (DRC), I would like to extend my warm congratulations to the conference.

The world is filled with development and crises, turbulence and reforms, competition and cooperation as well as challenges and opportunities. We can see that the economic globalization is developing further, regional economic integration is fast unfolding, a new technological revolution is striving for a breakthrough and international order and governance are making in-depth adjustment, and people are working for a better future with outstanding wisdom and courage. But, at the same time, humans are experiencing unprecedented growth troubles and puzzlement about development. Climate changes and ecological deterioration are threatening human existence; sharp social contradictions have become a world-wide phenomenon; and food shortages, cyber crime, epidemic diseases, and extremism are looming up one after another. Consequently, people need to joint their hands to push forward reform and face up to these crises and challenges. An ancient Chinese saying goes like this: "One thing that develops to its limit will bring about change, change prevents it from getting stuck, and then it can continue to develop and will last long". The French novelist Honoré de Balzac also said that anything can become better through proper reform. This inspires us that in such a complex and volatile era, only reform can help us avoid danger, optimize global governance and embark on the path of sustainable development.

While enjoying a significant impact on the world development, China has become the world's second largest economy after decades of rapid development and the international community has shown great concern over China's reform. Over the past year, I have met with a good number of foreign dignitaries, international CEOs, business leaders and heads of think tanks to discuss issues related to China's reform. During our talks, they wanted to know about China's reform and opening-up and seek opportunities for cooperation in various fields with China. It is obvious that against the backdrop of globalization, China's reform and opening-up are not simply China's own concerns, but also an issue related to the smooth global development, which will benefit the people not only in China and Europe but also in the world. China's reform and opening-up is a strategic option to actively face up to and address the challenges both at home and abroad, change its economic development mode and safeguard social fairness and justice. Globally speaking, this option helps to shape the driving force for growth, deepen structural adjustment and improve governance pattern.

The 3rd and 4th Plenary Sessions of the 18th Central Committee of the Communist Party of China (CPC) held respectively in November 2013, and October 2014 are two significant events and an overall arrangement was made to comprehensively deepen reform and promote the rule of law. China will continue to push forward reform and opening-up as planned. To improve the socialist market economy system, a lot of work has been done, including dozens of major reform measures being implemented. In the economic and social field, the reform is enhanced in accordance with standard, efficiency, equity, justice and openness.

First, we will standardize the market operations in line with laws. As the essence of market economy is the rule of law, the market economy needs to have a law-based performance. With regard to the non-standard and inappropriate issue in the market economic system, China will enhance reform in two aspects: one, we will standardize government administration, build a law-based government, move forward with the rule of law, keep the government power under control and have it exercised in a transparent manner. In order to foster a standardized budgetary system with openness and transparency, we have revised the Budget Law which will take effect on January 1, 2015. Two, China needs to standardize the market activities of enterprises, establish enterprise credit file through information means, punish dishonesty through law enforcement and make the fulfillment of social responsibilities the conscientious pursuit of enterprises. We will optimize regulation process and promote regulation efficiency through the means of "system plus technology" and bring into play the role of commercial and industrial organizations in standardizing enterprise behavior. We have also revised the Environmental Protection Law and enhanced the punishment towards the violation of the environmental law to standardize the production and business activities of enterprises.

Second, we will promote market efficiency through streamlining administration and delegating power to lower levels. through which government's improper intervention in economic activities will be minimized so as to release innovative and creative potential of major market players and increase resource allocation and efficiency. This is what Premier Li Keqiang has emphasized in advancing reform. The government has called off or delegated to lower level governments 632 items in 7 batches previously subject to State Council review and approval, publicized the government power list and enterprise investment negative list, reformed the industrial and commercial registration system, revised the government-approval investment directory, and reduced the tax burden on small and micro-businesses by a big margin. It has also started a customs clearance integration program in the Yangtze River Economic Zone, Guangdong Province, and the Beijing-Tianjin-Hebei region to increase efficiency and lower enterprise costs. What needs to be pointed out is that streamlining administration and delegating power to lower levels is by no means laissez-faire, but is a combination between administrative supervision and management so as to render better service. Through proper and law-based supervision and management, we hope to increase market efficiency and let the market be the driving force in economic and social development.

Third, we will improve a fair-oriented competition for a better market environment. As fair competition is the basic principle of the market economy, we are striving to build an open and orderly market with equal rights, opportunities and rules for all players. We will establish a property protection system centered on fairness and equality, under which all types of property rights either State-owned or private, domestic or foreign-funded, will all get protection under the law. We will advance fairness in admission, develop mixed ownership, and lower the access threshold for private capital to make investment in railways, port construction, clean energy, and the petrochemical industry. The pilot public-private-partnership (PPP) model and private banks that attract great public attention are actively moving forward. We will improve the enforcement of the Anti-Monopoly Law and the Anti-Unfair Competition Law and treat all types of enterprises equally in supervision and management.

Fourth, we will promote achievements sharing towards the goal of social fairness and justice. China needs to foster an achievements sharing mechanism in line with the principle and motive of social fairness and justice which is the starting point and final goal of China's reform. We are now pushing forward people-oriented urbanization to bolster the realization of social justice and equality. We have launched the household registration system to enable migrants with stable employment to settle down in urban areas and enjoy the same public services as urbanites. While striving to improve social security system, we have instituted a complete medical insurance to cover the entire population, established a unified basic endowment insurance system across the country and consummated the social relief system. As for income distribution, which is causing a lot of social concern, China has enhanced the reform of benefit packages related to the executives of State-owned enterprises and the post-related consumption reform to standardize income distribution.

Fifth, we will reform and optimize the investment environment through further opening up. In line with the new trends in economic globalization and regional economic cooperation, China has deepened reform through further opening-up and optimized investment environment through reform. Over the past year, China has introduced a number of new measures for further opening-up projects. In autumn 2013, President Xi Jinping put forward the initiative of the Silk Road Economic Belt and the 21st Century Maritime Silk Road. In addition, the Sino-Korean and Sino-Australian free trade negotiations have witnessed essential progress, and the negotiations on investment agreement between China and the US, China and the EU, are underway. The China-ASEAN free trade zone is expecting a further upgrading. It is believed that these reform projects will enhance China's reform and make the Chinese and international rules coordinate and dovetail with and adapt to each other. At the same time, the Shanghai Free Trade Zone pilot project is spreading to other places for a better management of foreign investment and a stable, more transparent, and predictable business environment.

Ladies and gentlemen,

China and the EU are two major economies in the world with many interests in common. Over the past few years, both sides have seen economic relations developing rapidly. In 2013, their trade volume was worth more than $550 billion and the EU has been China's largest trade partner for 10 years in a row. So far the EU, as the fourth largest source of foreign investment, has made a total investment of more than $90 billion in China. In return, China is EU's largest import market and the second largest trade partner. The two sides have made in-depth communications in dealing with the financial crisis and promoting cooperation in many fields. It can be said that China and the EU, having formed a close tie bound with common interest, are now striving to forge a community sharing weal and woe.

In this respect, I'd like to take this opportunity to make some suggestions on further enhancing Sino-EU cooperation.

First, increasing strategic cooperation, improving global governance and promoting democratic international relations. With the development of globalization, various countries have become more dependent on each other, but the world development is tending to become unbalanced and polarized. Different interest groups have become divided and difficulties have increased in global governance and coordination. However, the current governance system, which is fragmented and lacks efficiency, is not capable of adapting to a new situation and urgently needs reforming. Both China and the EU are major global players in the polarized world and should play a greater role in global governance reform. The EU consists of many sovereign states and has rich experience in democratic governance. Being one of the major propellers for global governance reform, China is now actively advocating the establishment of a new international relationship focused on cooperation and win-win results. The EU and China need to increase trust and strategic cooperation, and strengthen policy coordination to increase democracy in international relations.

Second, increasing economic exchanges and explore new areas for cooperation. China and the EU already enjoy close economic relations, and efforts should be made to expedite Sino-EU investment negotiations to get substantial results. We should give impetus to trade facilitation and investment liberalization, bring difference and friction under control with superb wisdom and explore new fields for cooperation while maintaining the sound economic and trade collaboration. Many EU member countries enjoy remarkably innovative capacity and are taking a leading role in new energy, Internet information, high-end equipment and knowledge-intensive services, with abundant R&D results. With a vast market, a well-developed industrial support system, a large number of R&D personnel and highly skilled workers, China is implementing an innovative development strategy. It can be said that both sides have a huge room for cooperation in these emerging fields.

Third, promoting cooperation in building the Silk Road Economic Belt and the 21st Century Maritime Silk Road for further Sino-Euro connectivity. This initiative is a major strategy for regional economic cooperation in the course of globalization and enhancing this strategy will provide an important public product for the entire world and help improve international governance. It is conducive to countries along the Silk Road Economic Belt and the 21st Century Maritime Silk Road to draw on each other's advantages for common development. China and the EU are at the opposite ends of Eurasia Continental Bridge and their connectivity and communication are especially important for building the Belt and Road project. China has put into use a number of international railway freight transport lines running from Chongqing, Zhengzhou in Henan Province and Yiwu in Zhejiang Province to Europe via Xinjiang Uygur Autonomous Region, and this marks a good beginning. It is expected that both sides will increase cooperation in the field of infrastructure and relevant areas for greater communications.

Fourth, increasing cooperation between Sino-Euro think-tanks for more policy communications. Since policy exchanges are an important way to increase cooperation between China and the EU, think tanks need to play a more active role in this regard. As we know think tanks can pull in talented people in various areas and are more or less independent to provide options for policy-making, and this will enable them to play an objective and fair role for mutual exchanges. The Euro boasts abundant resources of think tanks while China is actively pushing forward the construction of think tanks with Chinese characteristics. Both sides need to increase cooperation between their think tanks, join their hands to study the common issues and contribute to Sino-EU relations. At the same time, think tanks need to promote exchanges with governments, enterprises and business circles to better understand the needs of different sides and come up with better-quality suggestions. During this year's high-level Sino-British and Sino-French economic and financial talks, a consensus has been reached that top thinks tanks from Britain and France will make cooperation and exchanges with the Development Research Center of the State Council in China. I returned from Istanbul yesterday, where the DRC and the Center for International Relations and Sustainable Development (CIRSD) led by Mr. Jerzy Ray Mitch, Serbia’s former foreign minister and former president of UN General Assembly, jointly sponsored an international symposium on building the Silk Road Economic Belt and the 21st Century Maritime Silk Road. More than 250 participants from 14 countries attended the meeting and we achieved positive results related to the goal of the symposium.

Ladies and gentlemen,

In the era of reform, both China and the EU need to take an active approach in dealing with the internal and external challenges and addressing their problems through deepening reform. In the course of pushing forward reforms, both sides would share more and more common issues and enjoy more and more room for cooperation. We need to learn from each other, increase exchanges, expand cooperation, consolidate the foundation and initiate new prospects for future Sino-Euro cooperation.

In conclusion, I'd like to wish the annual meeting a complete success.

Thank you!