Innovative Growth That Benefits All
–Remarks on the World Economy at Session I of the 10th G20 Summit
H.E. Xi Jinping, President of the People’s Republic of China
Antalya, 15 November 2015
It gives me great pleasure to meet you again in Antalya. First of all, I would like to thank President Erdogan and the Turkish side for the warm hospitality.
Turkey is the meeting place of the ancient Eastern and Western civilizations. Today, leaders of the G20 are gathering here to discuss important issues concerning world economic development and cooperation. Such discussion cannot be more relevant. The G20 is tasked to promote global growth. Under the current circumstances, we must answer two questions. The first is how to make an accurate assessment of the health of world economy. The second is what are the right prescriptions for boosting global growth and employment.
Our basic observation is that the profound impacts of the international financial crisis are lingering, and the world economy is still in a period of deep adjustment. A review of the major global economic crises in the 20th century shows that flawed responses from countries would often make economic recovery more difficult. During the crisis this time, the countries concerned have adopted various fiscal and monetary measures, which have, to a certain extent, stabilized the market and reversed the downward trend. However, as things stand now, the current crisis is far more complex than any of the previous crises, and it cannot be fixed overnight. A multi-pronged approach is therefore required to overcome the crisis. This explains why seven years into the crisis, the world economy is still slow in recovery and weak in growth.
As an old Chinese saying goes, “To cure a disease, one should treat its root causes; to fix a problem, one should target its source.” Taking a closer look at today’s world economy, we can see that the momentum generated by the last round of scientific and industrial revolution is waning and the potential for growth under the traditional economic system and model of development is diminishing. At the same time, the problem of uneven development is far from being resolved, and the inadequacies of the existing economic governance mechanism and structure have become more evident. These factors have weakened the momentum of global growth and dampened effective demand, which are manifested in sluggish growth, rising unemployment, soaring debt level, slump in trade and investment, deceleration of the real economy, excess leverage in the financial sector and turbulence in the international financial and commodities markets. Like a person who falls ill, running a fever may just be the symptoms, the root cause, however, lies with problems in the body system.
Once the root cause is located, targeted medicine must be prescribed. As the premier forum for international economic cooperation, the G20 should identify its goal, set the direction and exercise leadership. We should not only address the immediate challenge by stabilizing growth, but also tackle the root cause by gathering momentum for long-term development. We should implement the outcomes of previous summits and strive to forge new consensus. We should manage our own affairs well by taking effective measures at home, and respond to the challenges together through closer cooperation. In this connection, I wish to make the following proposals.
First, strengthen macroeconomic policy communication and coordination, and form synergy between our policies and actions. We have an old Chinese saying, “The going is difficult when doing it alone; the going becomes easier when doing it with many others.” The trend of the world economy in recent years shows that in the age of economic globalization, no country can prosper in isolation. Coordination and cooperation is the only viable choice. Members of the G20 are all major economies. Together, we represent over 80% of the global economy, and naturally carry greater responsibilities for global growth. Therefore, we must and, in fact, can be more proactive in our actions.
We should take necessary fiscal and monetary policies in line with our respective national conditions to drive global growth and maintain market stability in the world. Major developed economies should consolidate and strengthen the momentum of recovery, while emerging markets and developing countries should overcome downward risks and pressure to keep growth on track. In this process, the parties should pay particular attention to the communication and coordination of their respective policies in order to avoid negative spillovers. For major countries who carry significant weight in the world economy, it is all the more necessary for them to take into full consideration the impact of their macroeconomic policies on others and increase the transparency of their policy-making process. China will continue to make its own efforts toward this end.
Second, promote reform and innovation, and boost the medium- and long-term growth potential of the world economy. Innovation provides the driving force for long-term global growth. A review of historical experience shows that the dynamism and creativity unleashed through institutional reform and the new industries and products enabled by the advances in science and technology have been essential for the world economy to turn the corner and recover from previous major crises.
One strong impression I have got from meetings with Chinese entrepreneurs back at home and during my visits to foreign countries is that the new round of scientific and industrial revolution is creating historic opportunities. New ideas and new business forms such as Internet+, sharing economy, 3D printing and smart manufacturing are generating enormous business opportunities and demand. There is also huge potential in upgrading traditional industries with new technologies. We should seize the opportunities, and make innovation-driven development and cultivation of new growth points the new priorities of G20 cooperation. We should make greater efforts on both supply and demand sides, accelerate the transition from old to new drivers of growth, work together to create new, effective and sustainable global demand, and set the direction for world economic growth.
Third, build an open world economy and reinvigorate international trade and investment. Growth in international trade has been slower than that of the world economy for three consecutive years. In 2014, foreign direct investment around the world dropped by 8%. This is something that deserves close attention. If the world economy could be compared to a human body, trade and investment is like its blood. If the blood vessels are blocked, the health of the world economy would be at risk.
Therefore, revitalizing trade and investment and restoring these two engines of the world economy to high-speed operation is another priority for the G20. We should reject protectionism and uphold and strengthen the multilateral trading regime in order to provide sufficient space for the development of different countries. We should ensure that regional free trade arrangements serve as a useful complement to multilateral trading regime, rather than create new obstacles or barriers. We should work for balanced, meaningful and development-oriented outcomes of the 10th WTO Ministerial Conference and endeavor to realize the goal of the development round as early as possible.
Fourth, implement the 2030 Sustainable Development Agenda and lend strong impetus to equitable and inclusive development. To eliminate poverty and hunger and achieve equitable, open, all-round and innovation-driven development, this is not only our shared moral responsibility, but will also unlock immeasurable effective demand. At the UN Sustainable Development Summit last September, together with many of the leaders in this room, we adopted the 2030 Sustainable Development Agenda. As most of the world’s major economies are represented in the G20, it has every reason and ability to set a good example by being the first to implement the agenda.
China is committed to lifting over 70 million people in rural areas out of poverty in the next five years. We will set up a fund for South-South cooperation and increase investment in the least developed countries and support developing countries in their efforts to implement the 2030 Agenda. China will make implementation of the 2030 Agenda part of its 13th Five-Year Plan. I suggest all the G20 members come up with their own national plans of implementation which will be combined to form a G20 plan of action to boost strong, sustainable and balanced global growth.
I know that you have been following China’s economy closely in recent period. This is fully understandable, for China is already the second largest economy and closely interconnected with other economies. Here I want to make it clear that we have the confidence and ability to sustain a medium high growth rate and continue to create development opportunities for other countries. At the most difficult time for the world economy, China undertook the task to drive growth. Between 2009 and 2011, China’s contribution to the global economic growth stayed above 50%. Today, the Chinese economy, though slowing down to some extent, still contributes to over 30% of the global growth and remains a major driving force for the global economy.
–Such confidence is underpinned by our resolve and action to deepen reform in a comprehensive way and develop an open economy. After 30-plus years of fast growth, we have come to a critical point when we must adjust the growth pattern and structure of the Chinese economy. We are not immune from the impacts of the sluggish global economy. In the face of the downward pressure, we could have resorted to massive stimulus measures that would spur faster growth in the short term. We do have the ability to do so, but we have chosen not to do so, because the growth fueled by huge input of resources and investment will be unsustainable for China and put the world economy at risk. That is why we underscore the need for structural reform to tackle the deep-seated and medium- to long-term problems in the economy to secure more efficient, solid and sustained growth. This endeavor won’t be a smooth sailing. It won’t happen overnight. It will inevitably encounter difficulties and resistance. But our resolve to push forward structural reform is rock-firm and our policy to open up further is clear. There will be no change in our commitment.
–Such confidence is supported by the strong dynamism within China’s economy and the effective policy guidance from the Chinese government. In the first three quarters of this year, consumption and services contributed to almost 60% and over 50% of China’s economic growth respectively. Hi-tech sector is growing notably faster than industrial growth in general. And new drivers of growth are quickly emerging. For the year of 2015, China’s economy is expected to grow at around 7%, with an increment equivalent to the GDP of a medium-sized country and larger than the increment created by the double-digit growth several years ago.
We have adopted the proposal on the 13th Five-Year Plan, committing to the attainment of a society of initial prosperity in all respects and the doubling of the 2010 GDP and per capita urban and rural income by 2020.
In the coming five years, we will pursue innovative, coordinated, green, open and shared development, focus on implementing the strategy of innovation-driven growth, create new driving force and ensure balanced progress in promoting a new type of industrialization, IT application, urbanization and agricultural modernization.
We will move from being a big manufacturer to a strong manufacturer and boost technological innovations and their application including mobile internet, cloud computing and big data.
We will pursue green and low-carbon development to improve the environment and ensure that our people live in a beautiful China with clean air, green eco-system and clear water.
We will integrate the Chinese economy more closely with the global economy, implement the “Belt and Road” Initiative, give foreign investment greater market access, particularly in the service sector, explore a model of foreign investment regulation based on pre-establishment national treatment plus negative list, foster a high-standard international business environment and build a community of shared interests.
We will also ensure people’s well-being and improve their living standards across the board, put in place new institutions for equitable, fair and inclusive development made possible and shared by the people, so that more fruits of development will be shared by all in a more equitable fashion.
All these efforts, as they unfold, will give strong momentum to the Chinese economy while generating enormous demand and becoming a new source of growth for the world economy.
Instead of talking the talk, we must walk the walk. As passengers of the same boat, let us continue to forge ahead in the spirit of partnership, make concerted efforts to secure win-win cooperation with mutually reinforcing growth of our economies, and open up a bright future of the world economy.