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Home > Ambassador Liu > Remarks
Remarks by H.E. Ambassador Liu Xiaoming at the International Conference "China at the Crossroads: Economic Challenges and Opportunities": Steady Chinese Growth Creates More Opportunities for the World
University of Nottingham, 6 September
2017/09/07

Professor Sir David Greenaway,

Scholars,

Professors,

Ladies and Gentlemen:

It is a real pleasure to join you at this International Conference hosted by the University of Nottingham. I welcome this opportunity to discuss with you about the hot topic of the Chinese economy.

The fact is, there is no shortage of reports and comments on this hot topic. You may read the Financial Times or the Wall Street Journal everyday and never fail to find a piece on the Chinese economy. Some are positive. Others talk it down. So what is the real situation? How is China's economy doing?

Despite of the many different opinions and observations, my answer to this question is simple and firm:

China's economy is making steady progress. This trend remains unchanged. The foundation for steady growth is solid. The momentum is clearly strong. And this growth is not only good for the Chinese people but also good for the people of the world.

Let me break my observations down into five points.

First, if we compare China's economy to a giant ship, its stabilizer is the supply side structural reform. China is pressing ahead with supply side reform. A key element of this reform is reducing the overcapacity in steel and coal.  In the first six months of this year, the reduction efforts have been notably effective. On the year-on-year basis, capacity utilization is up by 3.4 percentage points while debt ratio of large-scale enterprises is down by 0.8 percentage point. Such progress would not have been possible without the supply side reform. This reform is a major initiative to bring China's economy into a "new normal", namely, moderate speed and greater efficiency. In turn, this has sustained the steady growth of China's economy.

Meanwhile, China is also working to encourage reasonable consumer demand. In the first six months, consumer demand contributed 63.4% of China's growth. This is 30.7 percentage points higher than the contribution from investment. It means consumer demand is now playing a fundamental role in driving economic growth. Stronger consumer confidence, growing consumer demand and upgrading consumption pattern will all help to sustain the trend of China's steady growth.

Second, China's growth has a powerful accelerator. This accelerator is innovation.

China has made innovation a development strategy. We are carrying out this strategy in greater depth.

  • We encourage innovation and entrepreneurship.
  • We are working to upgrade the real economy.
  • We are developing advanced manufacturing sector.
  • We are implementing an internet+ action plan.

In so doing, we want to achieve better quality and efficient growth.

Emerging and high-tech industries in China are growing fast. The rise of mobile payment, bike share, online car hailing and many other new service models, operations and sectors are making life easier for consumers while creating a considerable number of jobs. Let me take the sharing economy for example. In 2016, the market of sharing economy in China totalled 3.5 trillion RMB. This more than doubled the figure just a year ago. Around 600 million people are involved in the sharing economy and 60 million are service providers. Moreover, artificial intelligence and new energy vehicles are fast becoming new engines of China's growth.

If China's economy is compared to a bullet train, then innovation is what keeps this train running fast.

Third, improving social welfare provides the propellant for China's growth.

  • In the past few years, more than 13 million urban jobs were created annually. This has kept urban unemployment at around 5%.
  • Three welfare networks, namely, pension, health care and compulsory education, have been put in place.
  • China is also working hard on poverty relief and reduction by focusing on eradication of abject poverty by 2020. This means the remaining 40 million poor in rural China will be lifted out of poverty.
  • In urban shantytowns where approximately 100 million people live, more than six trillion RMB have been invested over the past few years. With these funds, 30 million homes have been renovated and over 80 million people re-housed.

There is no doubt that the improvement of life and the increase of middle class population are expected to fuel a long-term, healthy growth of China's economy.

Fourth, the optimized business environment serves as the lubricant for China's growth.

  • In recent years, business environment in China has been constantly improved thanks to continuous efforts to deepen reform and expand opening-up. A series of measures have been adopted to lower the institutional cost for businesses.
  • On average, 18,000 new companies are registered every day.
  • From January to July, nearly 18,000 foreign invested companies were established. This is 12% more than the same period last year.
  • In more and more sectors, foreign investors now enjoy national treatment.

Going forward, China will continue to make its market even more business-friendly to foreign businesses. To ensure a level playing ground for both foreign and Chinese businesses, we have adopted a negative list approach and introduced pre-access national treatment. Building a fair, just and transparent business environment will contribute to China's healthy growth.

At the same time, Chinese businesses are also making investment overseas.  Here, the key is to avoid and to limit irrationalities. While staying committed to facilitate outbound investment, China has the need to guard against risks arising from unruly practice. We are taking new measures to enhance relevant rules and order to ensure the healthy and orderly development of outbound investment.

Now, my fifth and last point: China's economic growth is an engine that drives the global economy.

As an old Chinese saying goes: "The world belongs to no one but everyone." China's economic development not only delivers benefits to its own people but people all over the world.

China is now the world's second largest economy and an important engine for global growth. For many years China contributed over 30% of the world growth. In the first six months of 2017, China's GDP grew by 6.9%, exceeding the target.  At the same time, export and import of goods grew by 15% and 25.5% respectively. They were the fastest half-year average growth since 2011. China is already the largest trading partner of more than 120 countries and regions of the world. While working on its own growth, China is also committed to building an innovative, invigorated, interconnected and inclusive world economy. We are committed to a global economy that is open and underpinned by multilateral trading regime.

In May, the Belt and Road Forum for International Cooperation was successfully held in Beijing. The Belt and Road Initiative is a manifestation of China's support for economic globalization, for win-win cooperation and for diversity and innovation. It reaffirms China's commitment to building a community of shared future for mankind. This Initiative has the potential to provide the much needed driving force for long-term growth and prosperity of the world economy.

Two days ago, the ninth BRICS Summit was successfully concluded in Xiamen, China. As emerging political and economic powers, China and other BRICS countries are making greater contribution to building a world economy that is open, inclusive, balanced and beneficial to all.

At the same time, we are fully aware that all is not plain sailing. China's structural adjustment is an uphill journey. The supply side reform remains a challenging process. The uncertainties of the world economy will bring new risks and challenges to China's growth.

But the Chinese economy is resilient against risks. China's comprehensive and deeper reforms will generate the power for growth. China's structural adjustment and upgrading will create huge potential. This will enable China to address all kinds of risks and challenges while sustaining its growth.

I have every confidence that the future of China's economy will be even better and brighter.

Ladies and Gentlemen,

Bertrand Russell once wrote: "China has always been an exception to all rules."

I think these words are still highly relevant in the study of China's economy today. The point he was making is that in the study of China, one should focus more on Chinese history, culture, tradition, national conditions and systems, rather than analyzing China's development mechanically with the economic and social theories of the west.

In my view, confidence and commitment are key to China's steady growth and will drive the bullet train of China's economy towards a promising future.

And with a growing economy, China will offer a larger market, generate more capital, turn out a greater variety of products and provide more valuable opportunities to the world. China will make even greater contribution to the building of a community of shared future for mankind.

In conclusion I wish today's forum a complete success!

Ambassador Liu talking with Professor Justin Yifu Lin (right) and Sir John Peace Lord-Lieutenant of Nottinghamshire (center) 

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