China Center for International Economic Exchanges

Wei Liqun: Promoting the Economic Transformation and Development Through Reform and Innovation of Administration
Date:Apr 01,2016    Author:Wei Liqun    Source:CCIEE

The Speech at the Opening Ceremony of 80th International Forum on China's Reform with the Theme of Economic Transformation and Sustainable Growth.

From 31 October to 1 November 2015, Emerging Economies Economic Policy Forum 2015 was held in HaiKou, capital city of Hainan Province. The forum is themed Economic Transformation and Sustainable Growth – Joint Development of the Emerging Economies Along One Belt and One Road. It is co-organized by the China (Hainan) Institute for Reform and Development (CIRD), UNDP, China Center for International Economic and Technical Exchanges, and GIZ. It was on live webcast by China Reform Forum Network. The following is the speech of Wei Liqun, Board Chairman of CIRD and President of Research Association of China's Administrative System Reform.

First, On behalf of CIRD, I would like to extend my warm welcome to all the leaders, experts, scholars and media friends at the forum. And thank you all for the long attention, support and inspiration to the development of CIRD. And my heartfelt appreciation goes to the strong support of the party committee and government of Hainan province over the past 24 years.

This is the 80th International Forum on China's Reform hold by CIRD. As an influential think tank, CIRD has played an important role in serving the policymaking of China's reform and development, and promoting China’s foreign exchanges and cooperation since its inception on 1 November 1991. I believe the forum will yield fruitful results.

At present, the world economy as a whole is still in the process of deep adjustment from the international financial crisis. The major economies are taking different directions, and volatility in some emerging economies is picking up. Against this background, it has become the focus of attention that how the emerging economies including China will accelerate their economic transformation and form new powers of sustainable development. Now, it is very timely and necessary for us to hold the international forum today and discuss the significant topic of economic transformation and sustainable development, as well as the cooperation between emerging economies along the Belt and the Road. It is of great significance for emerging economies to promote the cooperation and transformation and expand the economic prospect, and will have a positive impact on forming a win-win cooperation mode of global governance.

Now, I would like to talk a few points about the innovation of China's administration reform and the economic transformation and development.

Generally speaking, the emerging economies in the world are all faced with urgent task of transforming their economic structures and upgrading their economic growth. However, with different national condition and different phase and level of economic development, naturally, each country is adopting different methods and routes to advance its economic transition and growth. After 30 years of development, the high-speed development of China’s economy is shifting to the new normal, this is the critical period for transformation and upgrading. In recent two years, the distinctive feature with China’s economic transformation development is speeding up the process of marketization and transforming economic development mode, and promoting the economy transfer to middle and high speed and level through deepening streamline administration and delegating power and innovation of the macro-control mechanisms, in order to achieve the more advanced, efficient, fair and sustainable development.

Firstly, unprecedented progress has been made in streamlining administration and delegating power. Since the eighteenth National Congress of the Communist Party of China in 2012, the Administration has more resolve and courage to promote streamlining administration and delegating power, the target of reducing one-third items of the administrative approval is achieved more than two years ahead of schedule. Recently, administrative approval has been revoked or delegated for over 640 matters by departments of the State Council. The investment matters that are subject to examination and approval have been reduced 76% at central government level. Examination and approval procedure has been canceled for all outbound investment projects other than few special cases. Business registration is first licensed and then certificated, and the business license, the organization code certificate and the certificate of taxation are integrated into one document. Subscribed capital contribution rather than paid-in capital is applied for registered fund, and the regulation of enterprise annual inspection is replaced by that of annual report. The State Council has cancelled 211 items of qualification accreditation and performance appraisal in four batches, a reduction of 1/3. At the central government level, 420 administrative fees and government managed funds have been abolished or reduced, relieving businesses and individuals of their annual financial burden by nearly 100 billion Yuan RMB. Most provinces (municipalities and regions) have cancelled or delegated 40% of their administrative approval matters, in the highest case, 70% of the matters. These reform measures in streamlining administration and delegating powers have effectively unleashed market vitality and social creativity. New market players have mushroomed, reaching over 20 million in the last two years. In the first half of this year, the average number of newly registered businesses has reached 11,100 per day, among which 90 percent are small enterprises and 96.3 percent are private enterprises. Social organizations have also been developing accordingly.

Secondly, the government should improve the market supervision while streamlining administration and delegating power. The purpose of streamlining administration and delegating power is to give the power back to market, public, enterprises, social organization and local government, and fully respect their rights and let them play efficient roles. However, it doesn’t mean to give up the administration function and neglect due responsibilities. Both streamlining administration and delegating power and market supervision are the inherent requirement of the modern market economy system. They complement each other, and neither can be neglected. Along with streamlining administration and delegating power, the Chinese government also focuses on innovation and strengthening government supervision. In recent two years, the State Council has assured reform idea of integration of streamlining, supervision and service, emphasizing on inwards and afterwards supervision and optimizing the government service. The potential methods include revising the relevant laws and regulations in a timely manner, regulating and rectifying market order according to the law, strictly dealing with violations of laws and regulations in the economic, finance and taxation fields, striving to create a fair and orderly market competition environment. By offering the public products and public services, strengthening the standard of the public services, and providing on-line services, the government is trying to establish one-stop service model for the public.

Thirdly, the government should adapt to the new situation and create new macro-control patterns. In recent two years, the Chinese government has positively adapted to and led the new normal of economic development, and tried hard to create the new thoughts and methods for macro-control. One is that the idea of control within reasonable range is established. That means trying to keep in a reasonable range the macro indicators of economic growth rate, new employment, resident income and consumer price, and the focus for macro-economic policy is on adjusting economic structure, transforming of economic growth mode and advancing reforms. In addition to regulating the quantity, the government also values the quality of the economy and has set a series of comprehensive macro-control targets of enhancing quality and efficiency, optimizing structure and adopting green development. The other is that the pointed macro-control modes are adopted. Base on the control within reasonable range, the government will apply directed control and accurate control to pre-adjust and fine-adjust the significant variables which might slide out of the reasonable range. The last is that the policy instruments of macro-control are innovated. While comprehensively utilizing the fiscal and monetary policies, the government has been trying to combine the industrial policy with regional policy, supply policy with demand policy, aggregate balance with structural adjustment, and long-term policy with short-term measures. Overall speaking, the capability and level of china’s macro-control have distinctly improved.

By deepening the reform of streamlining administration and bringing forth new ideas to a series of macro-control measures, China's economic transformation and development has continuously made new achievements.

First, The overall economy maintained steady and rapid growth. According to the data announced by the National Bureau of Statistics ten days ago, calculated at comparable prices, the GDP in the past three quarters have increased by 6.9% compared with the same period last year. In t, the growth rate was 7% for the first and second quarters and 6.9% for the third. Although it fell slightly, the overall economic stable fundamentals have not changed and the steady trend for the better has not changed. Since this year, the global economic recovery has not been as good as expected and the downward pressure from the domestic economy has increased. Therefore, it was really not easy to have achieved such a success. We should also see that China's economic growth was acquired on the basis of $ 10 trillion economic scale and it was an increase on high base. At present, every one percent growth is equivalent to 1.5% increase five years ago and 2.6% 10 years ago. That is to say, the amount of one percent growth now is much larger than that in the past. Other macroeconomic indicators are better than expected. In the first three quarters, 10.66 million new jobs were created, exceeding the annual target. This is mainly because driven by reform measures such as streamlining administration, delegating power and so on, the public’s enthusiasm for entrepreneurship and innovation have been highly triggered. In the first three quarters, the consumer price increased moderately by 1.4% year on year. All the facts show that China's macro-economy has maintained healthy growth in economic transformation.

Secondly, Economic structure optimization and adjustment have made new progress. Looking from the supply structure change, in the first three quarters of this year, the first industrial added value increased by 3.8% year on year and the same data for the second industry was 6.0%. For the third industry, its added value rose by 8.4%, accounting for 51.4% of GDP which was 2.3% higher than that of last year. Looking from the changes in the domestic demand structure, in the first three quarters, the final consumption expenditure contributed to 58.4% of GDP growth, a 9.3% increase compared with the same period last year. Looking from changes in income distribution structure, the national income distribution continued tilting to residents. In the first three quarters, Chinese per capita disposable income grew faster than GDP. The real growth rate of per capita disposable income for rural residents was 1.3% higher than that of the urban. Urban-rural relative income gap continued to shrink. The above indicates that Chinese economy has begun to shift from the industry-oriented to the service-oriented, from driven by excessive investment to driven by coordination between investment and consumption.

Thirdly, Innovation-driven development maintains a good momentum. Driven by comprehensively deepening reform and opening-up and by introducing series of policies to encourage people to engage in private businesses and innovations, China's new technologies, new industrial forms, new products, new powers and new economy have developed rapidly. In the first three quarters this year, high-tech industry grew significantly faster than the overall industry, and the added value of high-tech industry increased by 10.4% year on year, 4.2% higher than that of above-scale industry. Emerging industries such as Internet Plus, intelligent equipment, new materials, biological medicine, energy saving, environmental protection and green economy flourished. The demand of information, culture, health, tourism and other consumption was strong. New economic growth point formulated rapidly.

In a word, on the one hand, the Chinese government emphasizes on streamlining administration with an aim to give the market a decisive role in resource allocation. On the other hand, it pays attention to innovative market regulation and macro-control, striving to let the market, the "invisible hand" and the government, the "visible hand" produce joint effect and coordinate with each other so as to enable the government play a better role. This is very important for China to speed up industrial upgrading and transformation and to promote economy to maintain high-middle speed development towards medium and high end. This is also the critical experience for China to facilitate economic transformation and sustainable development.

At the same time, we clearly understand that China's economic transformation and upgrading still face quite a lot difficulties and challenges. At present, economic downward pressure is high. System reform is in the crucial period. Structure adjustment is experiencing pain. Power conversion stays in the transition period. China should deepen reform of streamlining administration and make innovations in market supervision and macro-control to release more dividends and to open up more space for economic transformation and sustainable development.

First, further streamlining administration and enhancing vigor of market and society. We should completely delegate the power that should be delegated, cut those should be cut and eliminate those should be eliminated, no tail, no blind space or flexibility. In order to further open space for administrative approval system reform, the State Council is determined to clear up the administrative approval items that the central government designated the local to implement. Recently, the State Council has decided to revoke first bunch of 62 items of the kind. At the end of this year, items without lawful or regulatory basis will be cancelled totally in principal. Meanwhile, we should promote negative list management in an all-around manner. From 2018, unified national negative list system of market access will be formally implemented. Negative list management will cover from free trade area to the whole country and from foreign capital to domestic one, which will help get rid of institutional obstacles bounding economic development and innovation. We should also accelerate opening up of the market, especially reforms and opening up of the service industry. Market access need be expanded for electricity, telecommunications, petroleum, finance, culture, tourism, education, health care and other sectors. By means of negative list system, market access in some important service sectors can be fixed to form a new pattern of opening up so as to better promote economic restructuring and upgrading.

Secondly, further innovating and strengthening market supervision to regulate and maintain market order. Market supervision system should be improved and comprehensive cross-sector and cross-industry regulatory and law enforcement system should be established with the rules and regulatory issues of related departments put onto a unified monitoring platform to promote comprehensive cross-sector and cross-industry law enforcement, and to mobilize the public and media to participate in supervision to finally form a combined force of “regulation”. New ideas should be brought into supervision method, making full use of big data, cloud computing, Internet of the Things and other modern information technology to establish large data monitoring system, to build supervision mode of Internet Plus and to realize information resource open sharing, interconnecting and information isolated island breaking. Supervision in critical fields should be strengthened, especially improving financial supervision and regulation system and perfecting consumer market regulation to promote the establishment of service regulatory standards and eventually to comprehensively promote the standardization, institutionalization and normalization of market regulation and supervision.

Thirdly, innovation and macroeconomic regulation should be strengthened to ensure that regulation is more scientific and efficient. The ideas and methods of macroeconomic regulation should be further improved in time by adhering to regulation within a reasonable range, targeted regulation, integrated regulation of quantum and structural regulation, short-term and long-term regulation, and direct and indirect regulation so that the foreseeability, pertinence and effectiveness of macroeconomic regulation could be enhanced. In the near future, proactive fiscal and prudent monetary policies should continue to be adopted. Along with the reform of SOEs and price system, continued measures should be taken to further reduce the tax and fees to relieve the burden of businesses. Construction of the people’s livelihood projects and investment in public goods should be intensified, and more PPP should be operated. The overall monetary policy should be maintained prudent and stable, and the targeted regulation should be reinforced. More powerful industrial policy and land policy should be implemented and a coordinative role of each policy should be ensured. The traditional industries should be transformed and upgraded. Sophisticated high-tech should be encouraged to use in transforming and upgrading the manufacturing industry. The proportion of proprietary intellectual property rights, OBMs and high-end products should be increased, and modern service industry should be intensified. Macro-economic policy coordination and communication with major economies and emerging economies should be actively strengthened to seek common interests. At the same time, China should actively participate in the bilateral and multi-lateral international economic cooperation to forge a bigger global voice and build a favorable external environment for the domestic economic transformation and development. With growing economic dimension, it is becoming increasingly important for China to strengthen the international coordination of macroeconomic regulation.

It is our belief that, with the advancement of overall opening and reform, China is embracing a broader prospect for its economic transformation with greater achievements.

In the coming years, China, like all the other emerging economies, will face a lot of common challenges in its economic development. No single country can alone sort out many major issues in global economic development. It needs not only inter-governmental coordination and action mechanism on global governance, but also the contact and coordination among NGOs and think-tanks, especially the think-tanks in emerging economies. It is our hope that the experts and scholars from the think-tanks of emerging economies could establish a diversified and regular academic exchange mechanism with the aims of strengthening cooperation among emerging economies in the implementation of the Belt and Road Initiative, providing intellectual support to global governance, and making contributions to emerging economies by helping them participate in the economic globalization and share its dividends.

 

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