Inclusive Development: A Better World for All

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Speech by H.E. Li Keqiang Premier of the State Council of the People’s Republic of China To British Think Tanks

London, 18 June 2014

The Royal Institute of International Affairs, known as Chatham House, and the International Institute for Strategic Studies are well-known around the world. Today, you are hosting this event together. This shows the great importance you attach to China and is a reflection of inclusiveness.

Chinese Premier Li Keqiang delivers a speech to British think tanks. 

Inclusiveness is the mark of human civilization and progress. Chinese thinkers before the Qin Dynasty valued the notion of harmony without uniformity and believed in peace as being the most precious. This coincides with the belief of ancient European philosophers that harmony generates justice and kindness. The history of human development shows that the Eastern and Western civilizations, though of different origins, both appreciated the importance of harmonious coexistence, inclusiveness and mutual learning. Inclusiveness and common development are needed all the more in the 21st century. We need not only to increase employment and promote balanced, coordinated, fair and equitable development within a country. We also need to achieve development that features peaceful coexistence and common growth among countries and regions. Inclusive development should indeed be a common goal pursued by all countries in the world.

The world is paying great attention to China. There are all kinds of views about China’s economic growth. A line from a Chinese poem reads, “A mountain, when viewed in face, may look like a range; when viewed from the side, it may look like a peak.” That means a mountain, seen from different angles, will leave people with different impressions. What it implies is that different conclusions may be drawn when people see things from different perspectives. The UK is the first to complete industrialization while China is the biggest developing country in the world. I believe your interest in China is actually about whether the world can achieve inclusive development. China’s pursuit of a new type of industrialization, informationization, urbanization and agricultural modernization is a pursuit of inclusive development on the biggest scale in the world.

After more than 30 years of reform and opening-up and through hard work of our people, China has steadily improved the lives of its 1.3 billion people, lifted over 600 million people out of poverty and ensured the people’s right to survival and development. China’s development has been achieved in an open environment. The firm goal of our 1.3 billion people is to achieve modernization, which will be a long journey. China is the second biggest economy in the world, but it ranks after 80th in the world with a per capita GDP of US$6,800. In China’s vast central and western as well as northeastern regions, per capita GDP is slightly over US$5,000 and it is a mere US$3,000 in some western provinces. Some 200 million Chinese still live below the poverty line by World Bank standards. At the same time, fast economic growth has been accompanied by a growing pressure on resources and the environment. These will remain our difficulties and challenges in the long run. To achieve modernization, it is important to complete industrialization and urbanization. This is exactly what the Chinese people are working for at present and for some time to come.

First, on China’s urbanization.

In the past few decades, China’s urbanization has been advancing, but it is still lagging behind on the whole. Over 600 million Chinese are still living in rural areas. Due to inadequate financial resources and limited public goods, the 200 million rural migrants cannot enjoy the same public services as those who have been living in cities with urban residency. Between now and 2020, we need to grant urban residency to 100 million of such rural migrants, mainly in eastern China. We also need to encourage another 100 million rural residents in central and western regions to settle down in cities and towns nearby. In addition, there are 100 million Chinese living in run-down city areas, which need to be redeveloped at a faster pace. To address these three problems, each involving 100 million people, is a pressing task for China as it pushes forward the new type of urbanization.

But our challenges go beyond that. Even if we had solved all the above-mentioned problems for the 300 million people, we still have several hundred million of farmers who will move to cities in the coming years. This will be difficult to accomplish without over ten years or even longer and the tasks will only be more difficult on our way ahead. For any country to complete industrialization, it has to achieve agricultural modernization, raise agricultural productivity and, on normal cases, keep the percentage of agricultural population low. China will not be an exception. To have so many people move to live and work in cities in an orderly manner will be a long process. That is why we say that China will not be able to become a medium-level developed country and achieve modernization until the middle of the century.

Second, on China’s industrialization.

Industrialization is an important aspect of modernization. It took western countries over 100 years to achieve industrialization, while China has instituted a full-fledged industrial system in just a couple of decades. China now leads the world in the output of many industrial products. You are all familiar with goods “made in China”, but China mainly produces medium- to low-end products. It has to advance to a medium to high level in industrial development. Industrial upgrading will serve our joint response to climate change. It is also a natural choice for China if it is to break energy, resources and environment bottlenecks. China will pursue a new type of industrialization, advocate green and low-carbon development and step up efforts to conserve energy and reduce emissions so that Chinese products will be more energy-efficient and environment-friendly and China will achieve internally-driven growth through innovation. This will also bring huge business opportunities for the world. In the coming five years, China will import more than US$10 trillion worth of goods, and invest over US$500 billion overseas. Outbound visits by Chinese tourists will exceed 500 million. China will be happy to share its development dividends with other countries in the world.

In the modernization drive of such a populous country like China, there is no example to follow. We face a whole range of challenges and need to make hard exploration and efforts. After decades of fast growth, China’s growth has moderated to a medium-to-high speed compared with the double-digit rate in the past. Some people begin to worry that the Chinese economy will not maintain sustained growth and will head for a hard landing. I can assure you that such things will not happen, because economic growth in China is supported by urbanization and industrialization. What is more, there are big gaps between urban and rural areas and among different regions as well as unreasonable industrial structure. All these mean potential and huge domestic demand for China’s development. As long as we keep to the right direction and work hard, we will be able to maintain medium-to-high growth of the Chinese economy for a long time to come.

Since the beginning of this year, the Chinese economy has maintained stability on the whole despite considerable downward pressure. We will continue to follow a proactive fiscal policy and a prudent monetary policy. We will not resort to massive stimulus measures; instead, we will further innovate the thinking and model of macro-regulation, combine a ranged approach with a targeted approach in adjustment, strengthen anticipatory adjustments and fine-tuning, ensure economic growth will stay within a proper range between the minimum rate needed for job creation and the CPI growth ceiling to keep inflation under control. We have confidence in meeting the growth target of about 7.5% set for this year. This will also lay a solid foundation for our future development.

China’s economic aggregate has exceeded US$9 trillion. An annual growth of around 7.5%, adjusted for inflation, will be translated to an increment of about US$1 trillion, equivalent to a medium-sized economy. This is no easy job, but it will bring huge business opportunities to China and the world. I have given you so many figures, not to play a game of numbers though, but to show you that China has the condition and ability to promote balanced, coordinated, sustained and healthy economic development.

Third, on China’s peaceful development.

To achieve modernization in a big developing country like China and to fulfil the Chinese dream of great national renewal requires a peaceful international environment and stable neighbourhood. Otherwise, we cannot focus on development. This is an irrefutable truth.

The Chinese people love peace. Our ancestors taught us that we should not do to others what we don’t want others to do to us and that we must help others achieve success if we want to achieve success ourselves. This has been imprinted into the DNA of the Chinese nation and become an accepted code of conduct for the Chinese people. Expansion is not in the Chinese DNA, nor does China subscribe to the logic that a strong country is bound to be hegemonic.

The achievements China has made through development in the past three decades are attributable to an external environment of peace and stability. The path of peaceful development has benefited the Chinese people and enabled different countries to achieve win-win development. This is the one thing important we have learned from our development over the past decades and we will never give it up. China will remain committed to inclusiveness, openness, peace and cooperation even after it becomes stronger in the future.

China is a major responsible country. China stands for mutual respect, equality and peaceful coexistence among countries and acts in accordance with the UN Charter and the norms governing international relations. China calls for peaceful settlement of disputes and conflicts through diplomatic channels and opposes the use of force or interference in other countries’ internal affairs. China is steadfast in pursuing the path of peaceful development and follows a win-win strategy of opening-up. China is ready to work with other countries to foster an international environment of enduring peace.

China has over the years contributed significantly to peace and stability in Asia. Thanks to the common ground China reached with neighboring countries for cooperation and win-win progress, a sound atmosphere has been created for handling differences through negotiations and consultations, hence the prosperity and development of East Asia today. China follows a neighbourhood policy of building friendship and partnerships with surrounding countries and wants to live in peace with all its neighbors. But for those acts of provoking incidents and undermining peace, China will have to take resolute measures to stop them so as to prevent the situation from getting out of control and bring the situation back to the track of dialogue and negotiations. I believe as long as countries in the region could engage in dialogue and negotiations with sincerity and in good faith, the environment of peace and tranquility will be maintained.

History tells us that war means the failure of human wisdom. Peace is the result of reflection on disasters and sufferings. As the former British Prime Minister Winston Churchill once said, “In history lies all the secrets of statecraft. Those that fail to learn from history are doomed to repeat it.” We must learn lessons from the past, face history squarely and be forward-looking. We need to seek political settlement of international and regional issues, and work together to counter traditional and non-traditional security challenges and advance prosperity and development of the world.

Fourth, on China’s reform and opening-up.

China’s modernization needs not only a peaceful and stable external environment, but also strong impetus from reform and opening-up. China’s big population means tremendous creativity and its market has huge vibrancy. I once worked as the Party secretary of a village production team in Fengyang county, Anhui province back in the 1970s, a time of the planned economy. I was responsible for assigning work to the hundreds of farmers in the village every day. The villagers worked hard in the field from dawn to dusk, but still they could make very little for a decent meal. Later, to enforce rural reform, the system of household contract responsibility was introduced, which gave villagers the right to decide what crops to grow and how to grow them. In just a few years, food was no longer a problem. It is reform and opening-up that has given hundreds of millions of Chinese vast space for pursuing their own development, and spurred steady social progress. Reform has led to fast development of China. It has provided a driving force for economic growth today and it will sustain China’s development in the years to come.

The key to reform is to streamline administration and delegate government power. To further energize the market and encourage greater creativity from the society, the government needs to, first and foremost, reform itself by delegating powers on matters outside their mandate and leaving to the market what should be decided by the market. Though the economy was operating under difficulties last year, we managed to unleash the potential of private investment through streamlining administration and delegating power. The reform of business registration system in March this year was followed by a surge of over 40% in the number of newly registered businesses, giving strong boost to new business start-ups and job creation. We will also advance structural reform and give more play to the role of private capital by easing market access. All in all, the purpose of reform is to inspire the enthusiasm of the Chinese people and provide more platforms for their innovation and creation so that there will be a chance for everyone’s dream to come true. Of course, to delegate power does not mean that the government will give free rein to everything. We will delegate power while enforcing government regulations with tighter oversight on and law-based handling of the production and selling of counterfeit and shoddy goods, IPR infringement and environmental pollution.

Opening-up is in itself a way of reform. We will implement a new round of opening-up, ease market access for foreign investment and open the services sector and hinterland and border areas wider to the outside. We will explore, through the China (Shanghai) Pilot Free Trade Zone, a management model featuring pre-establishment national treatment plus a negative list approach. Our purpose is to provide a level playing field for Chinese and foreign investors and businesses alike. China regards the UK as a choice of destination for outbound investment and hopes British companies will take China as their major investment destination. Deepening reform and opening-up is bound to unleash enormous vitality in the Chinese economy, benefiting the Chinese people, bringing more opportunities to the world and making important contribution to the inclusive development of the world.

The global economy is on the whole showing signs of recovery, but there are still many uncertainties and destabilizing factors. Developed and developing countries have become the twin engines of world economic growth. Countries need to continue to demonstrate the spirit of solidarity, coordination and cooperation shown in the course of coping with the international financial crisis, vigorously carry out reform and innovation, enhance coordination on macroeconomic policies, remove protectionist barriers and foster a level playing field to expand converging interests and share the fruits of globalization.

The past ten years since establishment of the comprehensive strategic partnership between our two countries has witnessed fruitful results in bilateral cooperation in business, science and technology, people-to-people exchanges and other fields. During my visit, I had in-depth and candid talks with government leaders of the UK. The two countries issued a joint statement. The two sides shared the view that China and the UK need to strengthen political trust and strategic cooperation, respect each other’s core interests and major concerns, increase communication and coordination at the UN Security Council and in such multilateral mechanisms as the G20, work together to uphold the multilateral trading regime, promote negotiations on a China-EU investment treaty and feasibility studies on establishing a China-EU free trade area, and increase dialogue on climate change, counter-terrorism, etc. The two sides need to make full use of the guiding role of the annual meeting between the prime ministers of the two countries and other mechanisms to ensure that our cooperation operates smoothly and efficiently across the board. China and the UK may work together to contribute to the development of China-EU relations as a whole.

China and the UK need to work as partners for common growth and inclusive development. We need to not only expand but also enrich our cooperation. We need to not only do business with each other, but also conduct more high-tech cooperation. China will work more closely with the UK in infrastructure, manufacturing, urbanization and other areas to increase two-way trade and investment. China and the UK will launch direct trading between the RMB and sterling and China will open an RMB clearing bank in London, which will enhance our financial cooperation. The UK leads the world in innovative development, especially in new and high technologies, energy conservation, environmental protection and scientific research, and China is implementing a strategy of innovation-driven development. This represents broad prospects for our cooperation in science, technology and innovation. We shall make good use of the Research and Innovation Partnership Fund set up to facilitate high-standard development projects and research findings with a view to providing a strong support for the development of our two countries.

China-UK cooperation is not limited to the economic field; we also need to strengthen people-to-people exchanges. The British culture values scientific thinking, good reasoning and accommodation of others, while it is China’s tradition to emphasize openness, inclusiveness and mutual learning. China and the UK, though thousands of miles apart, are actually “distant neighbors”. Our respective science and technology, culture and arts as well as academic thinking, each having its own proud tradition, have been a source of mutual inspiration. Shakespeare’s Romeo and Juliet is popular in China, while The Peony Pavilion composed by the Chinese writer Tang Xianzu of the Ming Dynasty has been put on stage here in the UK. The British use English as their mother tongue, while in China 300 million Chinese are learning English, more than most of the countries in the world. And though China was where tea was first discovered, the British drink more tea than most people in the world. Right now, over 130,000 Chinese students are studying in the UK, accounting for half of the number in all EU countries. China and the UK need to deepen our cultural and people-to-people exchanges and step up cooperation in education and culture. The UK government has agreed to simplify visa application for Chinese citizens. This means more Chinese people will be able to visit or come to work in the UK, injecting more vitality to the UK economy.

Both the UK and China are great nations. We both have a time-honored history and each has created a splendid past. Now, both countries are determined to ride the tide of the times and seek new changes. As the English poet Percy Shelley wrote, “Man cannot make occasions, but he may seize those that offer.” Similarly, the famous Chinese writer Su Shi of the Song Dynasty remarked that “when your turn comes, seize it; and when opportunity knocks at the door, grab it, or it will slip away”. China and the UK, the East and the West, developing countries and developed ones alike, should seize opportunities, meet challenges together, and build a better world through inclusive development.

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