Jointly Maintain and Develop an Open World Economy*
September 5, 2013
Your Excellency President Putin,
It is a great pleasure to meet you here in beautiful St. Petersburg, and to discuss together measures to promote world economic growth and employment. First, I would like to extend my heartfelt thanks to President Putin and the Russian government for your proactive efforts and considerate arrangements in making this summit possible!
At present, the world economy is gradually recovering, and the situation continues to develop in a good direction. At the same time, the negative impact of the international financial crisis lingers on, and there is still a long way to go for global economic recovery.
The situation decides our tasks, and our actions determine their effectiveness. We should take a long-term view, strive to shape a world economy in which all countries enjoy development and innovation, growth linkage and integration of interests, and firmly maintain and develop an open world economy.
– Innovative development is necessary for the sustainable growth of the world economy. Growth driven by stimulating policies and large-scale and direct government intervention in the economy can only treat the symptoms but not the disease, while growth at the cost of high energy consumption and environmental pollution is even less sustainable. Countries should improve the quality and efficiency of economic growth and avoid simply measuring development by the GDP growth rate. They should invigorate markets and enhance economic competitiveness through active structural reform.
– Interactive growth is necessary for the sturdy growth of the world economy. A vibrant world economy depends on the joint growth of all countries, which should be aware of the commonality of their destinies, and gain a really clear understanding of the linkage effect, that is, "benefit to one means benefit to all, whereas harm to one means harm to all." We should cooperate while competing, and achieve mutually beneficial results through cooperation. We should take into consideration the interests of other countries when pursuing our own national interests, and take into consideration the development of other countries when seeking our own development. Mutual help between different countries in solving salient problems is the objective requirement of world economic development. Every country should be able to create a linkage between its own development and that of other countries, and to bring to each other positive instead of negative spillover effects.
– Convergence of interests is necessary for the balanced growth of the world economy. Balanced growth is not a zero-sum game that transfers growth from one country to another, but a growth entailing shared welfare. Countries should give full play to their comparative advantages, work together to optimize global resource allocation, improve the layout of global industry, build a global value chain that shares interests equally, and foster a big global market that benefits all parties, so as to achieve mutually beneficial development.
To shape a world economy of this kind, all G20 members need to build a closer economic partnership, and to shoulder their due responsibilities.
First, they need to adopt responsible macro-economic policies. The major economies should take care of their own matters and ensure that their own economies are sound. This is our basic responsibility. We should improve the macro-economic policy coordination mechanism, and strengthen communication and coordination.
Macro- and micro-economic policies and social policies must be integrated. All countries should support economic policies with social ones, and create favorable conditions for the implementation of macro and micro-economic policies. The decision of the G20 Finance Ministers and Central Bank Governors' Meeting and G20 Labor and Employment Ministers' Meeting to strengthen coordination between economic and employment policies is correct, and we should stick to it firmly.
In this regard, China adopts its economic policies not only for the good of its own economy, but for the good of the world economy as well. China's economic fundamentals are good. In the first half of this year its GDP grew by 7.6 percent. Nonetheless, China also faces such problems as high local government debt and excessive capacity in some industries. These problems are controllable, and we are taking measures to address them.
We have realized that to solve the root problems in our long-term economic development we must firmly streamline our economic structure, even if we have to slow down the growth rate a bit. Any undertaking needs comprehensive and far-sighted thinking. A development model resembling killing a goose to get its golden eggs or draining the pond to catch the fish cannot be sustainable.
China's economy is highly integrated with the world economy. A China that enjoys more stable, higher-quality and more sustainable growth is conducive to the long-term economic growth of the world as a whole. China has the conditions and ability to achieve sustainable and healthy economic development, and produce more positive spill-over effects for the world economy.
Second, we must safeguard and develop an open world economy. "A single flower does not make spring while one hundred flowers in full blossom bring spring to the garden." Countries will grow if their economies are open, and conversely decline if their economies are closed. We must follow the tide of the times, oppose all forms of protectionism, and make good use of international and domestic markets and resources.
We should maintain a free, open and non-discriminatory multilateral trading system. We should avoid making exclusive trade standards, rules and systems, so as to prevent the segregation of the global market and the disintegration of trade systems. We should improve the global investment rules, guide the rational flow of global development capital and use development resources more effectively.
Third, we must improve global economic governance, and make it fairer and more just. The G20 is an important platform for developed and developing countries to engage in consultations on international economic affairs. We should build the G20 into an important force for stabilizing the world economy, weave an international financial safety net and improve global economic governance.
We should continue the reform of international financial institutions. The relevant countries should further push forward the implementation of the plan for reforming the management of the International Monetary Fund and for making a new sharing formula that reflects the weight of the economic aggregate of the different countries in the world economy, and continue to strengthen oversight concerning the international financial market, so that the financial system will depend on, serve and promote the development of the real economy in a sound way. The relevant countries should build a stable and risk-resistant international monetary system, reform the basket of currencies for Special Drawing Rights, strengthen the connections between international and regional financial cooperation mechanisms, and build a "firewall" against financial risks.
China supports the strengthening of multilateral cooperation against tax evasion, and is keen to contribute its share towards international tax governance.
I would like to stress that, in order to promote the sustainable and healthy development of its economy and society, China will resolutely carry its reform forward. We are conducting overall research into comprehensively continuing the reform to a deeper level, so as to streamline the structures in the economic, political, cultural, social and ecological sectors through overall planning, further release and develop social productivity, and give full play to the creativity of the whole of our society.
China will build a stronger market system, streamline the structures in the fields of macro-economic regulation and control, taxation, finance, investment, administration and other fields, and give full play to the basic role of the market in resource allocation.
China will further the reform of the marketization of interest and exchange rates, to increase the flexibility of the Renminbi exchange rate, and gradually make the Renminbi capital account convertible.
China will adhere to the opening-up strategy of mutual benefit, continue to streamline the structures of investment and trade, improve relevant laws and regulations, create a legal environment of fair operations for foreign companies in China, and resolve trade disputes with relevant countries through consultations.
As long as we work together and build a closer partnership, the G20 will enjoy more stable, better and further development, and the people of all countries will have more confidence in the world economy and in our future life.
* Speech on the world economic situation at the first-stage meeting of the G20 Leaders Summit.
(Not to be republished for any commercial or other purposes.)