Premier Li outlines a clear and pragmatic vision

Editor's note: On Sept 9, 2013, the Financial Times carried an article by Chinese Premier Li Keqiang, China will stay the course on sustainable growth, to dispel fears that the country's economic slowdown will lead to a sharp decline - or even a hard landing. In his meeting with a group of global business executives on Sept 10 before the Summer Davos in Dalian, Li stressed that China is able to tackle difficulties and challenges in the course of its economic development, as reform can release the "biggest bonus" to boost the market's vitality. China Daily reporters interviewed renowned economists home and abroad to share their views on Li's article and the Chinese economy.

China is expected to maintain stable economic growth and achieve the 7.5 percent growth target set for this year, boosted by a series of positive economic figures for trade and inflation.

"The present macroeconomic environment is much different from the late-1990s, when conventional Keynesian and monetarist approaches could be applied aptly," said Leung, who added that he believes the policy taken by the Chinese government will neither over-stimulate the economy, nor allow it to sink further.

-----Chris Leung

                                                                            Senior economist at DBS Bank in Singapore

The ongoing economic reform and restructuring, which are the top priority for the new leadership, will benefit China's growth in the long term, although they may slow it in the short term.

"In particular, overcapacity and low investment efficiency in a number of sectors, as well as credit imbalances and rising leverages accumulated in the past four to five years, remain the major challenges to be addressed by the new leadership in the coming years."

-----Zhu Haibin

                                                                          Chief Chinese economist at JPMorgan

"Setting out his agenda for China's future in the Financial Times is indicative of China's growing role in the global economy. Li (Keqiang)'s plans are quite ambitious but all turn on the increase of consumer demand and the adjusting of China's expectations away from double digit growth. One of the lessons of history is that no situation continues without change. While it is easy to point to the challenges that China faces in the future, as all major nations are challenged, Li has put the world on notice of China's plans. Transparency and realism reside in this ambitious construct. China is trying to prepare for the future."

-----Bob Berring

                                                                            Law professor at the University of California, Berkeley

"I think this was a very important op-ed. It signaled very clearly that the new leadership understands that the growth model must change and that this will be a long process. The op-ed acknowledged that some of the slowdown in growth was due to these restructuring initiatives. Premier Li's focus seems to be on balancing the role of the state and the market, a difficult task given the influence of state-owned enterprises in some sectors of the economy. Premier Li is putting a large emphasis on the role of urbanization in continuing China's economic growth and it will be interesting to see the shape of the new urbanization plan this fall."

----Nicholas Borst

                                      Research associate and China program manager at Peterson Institute for International Economics

"It makes sense that Premier Li would offer hope that China will rebalance its economy, given the emphasis since the 18th Party Congress and the Lianghui on sustained growth and reform. Specifically, China will have to rebalance away from inefficient investment-driven growth and move toward faster consumption rates. Reading Premier Li's speech suggest that he knows that it will be a daunting task to move China away from production and investment and towards greater consumption and improved household income. His speech sets the stage for major reform, particularly by fighting entrenched interests and inertia in local governments, state owned enterprises, the export sector, and even the financial system itself. Using the Summer Davos conference in Dalian allows for Premier Li to reassure foreign investors and markets that China is sincerely committed to managing continued economic reform and growth."

 -----Jon Taylor

Professor of political science at the University of St. Thomas in Houston

China skeptics have again talked about the "China Crash" syndrome. They have expressed economic growth in China is unbalanced. They are concerned over excessive debt and related fears of a fragile financial sector; property bubble collapsing; and the presumed lack of progress on economic rebalancing.

As the world's second-largest economy, the sustainability of China's economic growth is a key element of global growth. China is committed to rebalancing its economy because the old China model of producer-biased growth model is no longer sustainable.

China is facing the crucial stage of transformation. The challenge for China is an increasingly greater role to market forces through continued liberalization and reduced government involvement. The government recognized these challenges and has outlined many of these reform directions and policy objectives in recent announcements. Many studies have suggested the new critical mass of reform measures on further restructuring the Chinese economy is already taking place.

The fundamental factors on underpinning growth and rebalancing in China will remain supportive and help mitigate the costs of the old model of high investment. What China needs is specific policy measures, and timely and focused implementation. It is imperative for China to continue with these reform policies to ensure greater economic and social stability. These measures would strengthen China's integration into the global economy with major implications both for China and for the world.

-----Stanley Kwong

Managing Director/Term Professor, China Business Programs, School of Management, University of San Francisco

The premier has offered a welcome reinforcement of plans for reform and rebalancing of the economy as the Third Plenum approaches. These policies produce both winners and losers, so outside observers will watch closely for how these policies are implemented. They will also be seeking greater transparency about China's accumulating debt structure.

-----Douglas Paal

Vice president for studies at the Carnegie Endowment for International Peace

"I agree with Li Keqiang's op-ed that China can avoid another Asian crisis based on changes to Fed policies. I believe that if all else remains the same, the only real risks I see to China's growth trajectory are outright military conflicts and/or a Malthusian crisis. The reforms and other opportunities from a transition to a service economy will unleash a new wave of entrepreneurial activity.

-----Ann Lee

Author of What the U.S. Can Learn from China

Premier Li outlines a clear and pragmatic vision for sustaining economic growth and addressing the massive and complex social and economic issues confronting China. The Bay Area Council is proud to be partnering with China on expanding trade, investment and economic cooperation between our two countries and, as Premier Li describes, exploring "new ways to open China to the outside world."

-----Del Christensen

Chief of Global Business Development, Bay Area Council

Premier Li's intention to moderate China's economic growth to a "mere" 7.5 percent per year will mean instead of doubling every 7 years, China's economy will double in a decade and continue to be the object of worldwide envy. His plan to make the economy more balanced with emphasis on raising the standard of living for the rural sector means generally more personal consumption and therefore more opportunity for everybody to sell more to China.

-----George Koo

A Chinese community leader in San Francisco Bay Area and international business consultant

2. Central Asia is at the core of the greater Eurasian economic space and essential for effective Eurasian integration, but traditionally has lacked connectivity with the rest of the Eurasian continent. If, as President Xi indicated, China is throwing its huge and growing economic weight and financial resources behind linking Central Asia with the rest of Eurasia, this will greatly enhance the economic prospects of the region and significantly improve the outlook for economic integration of greater Eurasia. Such integration will benefit all the countries in Eurasia and act as a stimulus to world economic growth.

3. A key to the success of China's New Silk Road initiative will be whether it goes beyond words to action. This requires cooperation not only between China and Central Asia, but also between China, Russia, the European Union and even India. It requires that existing regional institutions, such as the SCO, EurasEC, CAREC, GMS, SAARC, ASEAN and the European Commission, actually cooperate with each other and that the international financial institutions, such as the World Bank and the Regional Development Banks of Eurasia (ADB, EBRD and EABD) apply their technical and financial resources to support Eurasian economic integration.

-----Johannes Linn

Senior Fellow, Global Economy and Development, Brookings Institution

The centerpiece of Premier Li's reform is to define boundaries between markets and government. The government will withdraw from certain areas where market and society can be of greater benefit.

Li's governing philosophy should not be summarized by "short-term policies", such as de-leveraging and refraining from large-scale stimulus.

-----Tang Jianwei

Senior manager at Bank of Communication

Rather than de-leveraging, "deregulation" would be more apt, as seen in his consistent calls for the introduction of private capital to reinvigorate market dynamics.

-----Guan Qingyou

Assistant dean of the Minsheng Securities Research Institute