Full transcript of policy briefing of the State Council on Jan 16, 2015

Zhu Zhixin:

You also mentioned whether we will increase investment. I think, to drive the economy, we always emphasize the troika — investment, consumption and imports and exports. In that process, I think we should not neglect any one of them. We should take better advantage of the key role of investment and the fundamental role of consumption.

The fundamental role of consumption, in my opinion, is a very great boost to the Chinese economy, as China has a huge market and great consumption ability. The Chinese economy has great resilience, great potential and a great market, which will keep our economy growing.

Then, should we take advantage of the key role of investment? I think many pay attention to that question. I personally believe that the effectiveness of a massive stimulus is reducing because China's economy has reached 58.8019 trillion yuan. The total investment in 2013 was 44 trillion yuan. That number surpassed 51 trillion in 2014. An economy at such a scale cannot be easily driven by government investment. But the key role of investment is to release potential for economic growth on the basis of an optimized structure.

The key to macroeconomic policy is to grasp the change in total supply and demand, and make moderate intervention. If economic growth slips out of a reasonable range, which is the floor and ceiling I just mentioned, we need to make a decisive move, I believe. When the economy is within a reasonable range, I think we should pay more attention to maintaining its vitality and improving its environment.

In that process, we need to follow the spirit of the Third Plenary Session of the 18th Central Committee of the Communist Party of China, and give full play to the decisive role of the market in resource allocation, while better playing the role of government, to drive economic growth with both hands.

We should make achievements in the third aspect, imports and exports, as well. Only the coordinated pull from the troika can drive the Chinese economy forward in a more balanced way, through difficulties. Thank you.

Zhong Shan:

The question you mentioned on the trade surplus is an old one. When the trade surplus on the Chinese side starts to go up, people will pay attention. Last year, as our import prices went down, the trade surplus obviously went up.

Recently, many news media started to focus on that question. There are two points I want to make.

First, the trade surplus is not decided by the government. It is determined by the market. In essence, it is decided by the competitiveness of the industry and commodities. The Chinese government has never pursued a trade surplus. When it comes to labor-intensive products, we have a trade surplus against countries in Europe and America. But for high-tech products, they have a trade surplus. For instance, US and European countries sell us planes. We sell them clothes. In high and new technology, they have a trade surplus. In textiles and apparel, we have a surplus. So the trade surplus and deficit is essentially determined by the competitiveness of the industry.

Take another example from a larger perspective. China's trade in goods has a strong competitive advantage, so we have a surplus. On the contrary, in our service trade, China has a huge deficit, with more than $100 billion, indicating China's service industry is less competitive than American and European countries.