【正确答案】Distinguished Guests,
Ladies and Gentlemen,
Let me begin by extending warm congratulations on the opening of the third Annual Meeting of the New Champions, or the Summer Davos, and a sincere welcome to you all.
Over the past year, the world economy has experienced the most severe challenge since the Great Depression. We may recall the worries voiced by many people early this year when we gathered in Davos for the World Economic Forum annual meeting. Since then, thanks to the concerted efforts and active measures of the entire international community, some positive changes have taken place. The world economy is beginning to recover, although the process is slow and tortuous. We can now see the light of dawn on the horizon. This is a critical juncture and it is highly significant for political leaders, entrepreneurs, experts and scholars of various countries to gather together here and discuss how to "Relaunch Growth" of the world economy. I sincerely wish this meeting a great success!
This unprecedented global financial crisis has taken a heavy toll on the Chinese economy. Yet, we have risen up to challenges and dealt with the difficulties with full confidence. And we have achieved initial results in our endeavor.
We have arrested the downturn in economic growth. In the first half of this year, China's GDP grew by 7.1 percent, investment expanded at a faster pace, and consumption maintained fast and steady growth. Domestic demand played a stronger role in driving the economy forward. From January to July, 6.66 million new urban jobs were created, income of urban and rural residents increased, and overall social stability was maintained. We effectively managed fiscal and financial risks and kept budget deficit and government debt at around 3 percent and 20 percent of the GDP respectively. Banks' asset quality and ability to fend off risks were improved. At the end of June, the NPL ratio of commercial banks was 1.8 percent, down by 0.64 percentage point from the beginning of the year, and capital adequacy ratio stood at 11.1 percent.
With the world economy still mired in recession, it is by no means easy for us to have come this far. The achievements we have made are not something that dropped into our lap. Rather, they are the results of the proactive fiscal policy and moderately easy monetary policy and the stimulus package that the Chinese government and people have pursued in line with the national conditions. Some people take a simplistic view and believe that China's stimulus package means only the four triIlion RMB yuan investment. This is a total misunderstanding.
China's stimulus package focuses on expanding domestic demand and is aimed at driving economic growth through both consumption and investment. Of the total four trillion yuan in the two-year investment program, 1.18 trillion yuan will come from the central government, and it will mainly be used to generate greater investment by local governments and the non-public sector. We have made vigorous efforts to stimulate consumption and make domestic demand, particularly consumer spending the primary driver of economic growth. We have increased subsidies for farmers, raised the minimum purchasing price of grains, introduced performance-based salaries for primary and middle school teachers, and increased the basic cost of living allowances for urban and rural residents so that the people will be able to spend more. In order to boost consumption, we have offered subsidies for the program of bringing home appliances, agricultural machinery, automobiles and motorcycles to the countryside and the program of exchanging used automobiles and home appliances for new ones. Purchase taxes on small-engine and energy conserving and environment friendly cars have been cut by half. In the first seven months, a total of 7.31 million cars were sold and total retail sales of consumer goods rose by 15 percent.
China's stimulus package aims to address both immediate problems and long-term needs, and achieve economic growth in the course of restructuring. By the end of July, 52.4 percent of the investment made by the central government had gone to government-subsidized housing, projects for better rural livelihood and social programs. Another 24.7 percent had been channeled into areas such as independent innovation, economic restructuring, energy conservation, emission reduction and ecological enhancement. Only 22.9 percent of the investment had been used for major infrastructure projects. This shows that the central government has a clear vision in expanding investment, that is, the money should focus on shoring up the weak links in economic and social development, help remove the bottlenecks in the national economy, and contribute to structural readjustment and transformation in the development model while giving a strong push to domestic demand. We have formulated and carried out plans to adjust and reinvigorate ten key industries, with a view to both addressing their immediate difficulties and ensuring their long- term development. In particular, we want to strengthen technical upgrading and innovation, rein in excess capacity and support the development of new industries of strategic significance so that the Chinese economy will be put on a more sustainable path.
China's stimulus package seeks to coordinate the role of the government and the market and enable development and reform to advance in a mutually reinforcing way. The bulk of government funds will go into public services and serve as a guide for the flow of non-public funds. The structural tax cuts involving 550 billion yuan are aimed at raising corporate capacity to invest and people's ability to spend. The government-funded interest discount and tax tools are designed to encourage the restructuring, merger and reorganization of enterprises. And the cut in interest rate and the required reserve ratio has ensured reasonably adequate liquidity in the banking system. All the key reform measures that we have taken this year are intended to eliminate the institutional and structural barriers in the economy and strengthen the vitality and dynamism of economic growth.
China's stimulus package is designed to both sustain economic growth and improve people's livelihood. We give priority to projects affecting people's well-being in allocating public resources. We have introduced, on a trial basis, a new rural old-age insurance program in 10% of the counties across the country, with a total coverage of 90 million people. We are pressing ahead with comprehensive reform in the pharmaceutical and health care system. Within a period of three years, governments at all levels will invest an additional 850 billion yuan to make medical services more accessible and affordable for both urban and rural residents. The central government has set aside 42.9 billion yuan to provide medical insurance for all retirees of the closed or bankrupt state owned enterprises. We are taking all possible steps to expand employment, particularly jobs for college graduates and rural migrant workers. For the year of 2009, the central budget for education, medical and health care, social security, employment, government- subsidized housing and other programs related to people's well-being will be 29.4% higher than that of last year.
China's macro-economic policy and the stimulus package are on the whole in keeping with the country's reality and have proven to be timely, forceful and effective. However, the stabilization and recovery of the Chinese economy is not yet steady, solid and balanced. With many uncertainties remaining in the prospects of the world economy, we still face tremendous pressure of the decline in external demand. And we are under various constraints in expanding domestic demand in the short term. Some industries and businesses remain in a difficult situation, and the task of economic restructuring is a daunting one. Some of the stimulus measures will see their effect wane, and it will take time before those long-term policies show effect. Given such a state of affairs, we cannot and will not change our policy direction in the absence of proper conditions. We will continue to take maintaining steady and relatively fast economic growth as our primary task. We will unswervingly follow the proactive fiscal policy and moderately easy monetary policy, and fully implement and continuously enrich and improve the stimulus package. We will promptly identify and address new developments and new problems in the economy, make our policies more targeted, effective and sustainable, and guard against and fend off various potential risks, including inflation, so that the Chinese economy will achieve fast and steady growth and the country will enjoy social stability and harmony.