Xinhua News Agency, Beijing, October 19th-On the morning of October 19th, Committee member the Political Bureau of the Communist Party of China (CPC) Central Committee and Liu He, Vice Premier of the People’s Republic of China accepted a joint interview with People’s Daily reporter Gong Wen, Xinhua News Agency reporter Zhao Cheng and CCTV reporter Xu Qiang on current economic and financial hot issues. The following is the interview record.
Reporter: Vice Premier Liu, we know that you are very busy, but there are some changes in the current economic and financial situation. I hope you can answer a few questions and respond to market concerns.
Liu He: Welcome to the interview. I am very willing to answer your questions.
(1)
Reporter: Vice Premier Liu, what do you think of the recent sharp fluctuations in the China stock market?
Liu He: Recently, there have been obvious fluctuations and declines in the China stock market, which are caused by many factors. The first is external factors. After the central banks of major countries raised interest rates, global stock markets began to fluctuate and declined, and the US stock market also showed a significant correction. At present, this process is still continuing. Sino-US trade friction has also had an impact on the market, but frankly speaking, the psychological impact is greater than the actual impact, and China and the United States are currently in contact. Second, China’s economic structure is in the process of breaking the old and establishing the new, which will inevitably have an impact on the stock market. Third, the market expectation has changed, and the uncertainties in the future economic environment have affected investors’ behavior. Investors are very concerned about the development of private economy and the protection of property rights. In addition, there are some technical factors in the market in recent days, such as passive lightening in the process of stock market decline. The combination of these factors makes the stock market fluctuate.
Recently, I have paid close attention to the evaluation of China stock market by international investment institutions and the market analysis of domestic professional institutions. Everyone agrees that China is becoming the most valuable investment market in terms of global asset allocation, the bubble has been greatly reduced, the quality of listed companies is improving, and the valuation is at a historical low level. Therefore, many institutions suggest paying close attention to China stock market and think that China stock market has high investment value. I believe that investors will make rational judgments on these assessments. It can be said that the adjustment and clearing of the stock market is creating good investment opportunities for the long-term healthy development of the stock market.
(2)
Reporter: What new measures does the government have to promote the healthy development of the stock market?
Liu He: The government attaches great importance to the healthy and stable development of the stock market. At present, the psychological characteristics of the stock market are that there is a strong expectation for institutional innovation and reform policies, and there is a strong positive feedback effect between market performance and this expectation. Therefore, to promote the healthy development of the stock market, we must launch new reform measures in a targeted manner. Recently, the People’s Bank of China, China Banking and Insurance Regulatory Commission, China Securities Regulatory Commission and other relevant departments have been studying and introducing new reform measures, with some new institutional arrangements and policy tools. This morning, these policies have been announced in succession, including at least the following aspects. First, in terms of stabilizing the market, banks’ wealth management subsidiaries are allowed to invest in the capital market, financial institutions are required to scientifically and reasonably manage the risk of equity pledge financing business, and funds managed by local governments and private equity funds are encouraged to help promising companies ease the difficulties of equity pledge. Second, in the reform of the basic market system, the Measures for the Administration of Private Equity Management of Securities and Futures Operating Institutions were formulated, the share repurchase system of listed companies was improved, the market-oriented reform of mergers and acquisitions was deepened, the reform of the New Third Board system was promoted, and the support for the listing of scientific and technological innovation enterprises was increased. Third, in encouraging long-term sources of funds in the market, we should increase the financial nature of insurance funds and strategically invest in high-quality listed companies, strengthen the strength of institutional investors, and consolidate the foundation of long-term investment in the market. Fourth, in promoting the reform of state-owned enterprises and the development of private enterprises, we will accelerate the launch of a series of new measures, including promoting the reform of mixed ownership of state-owned enterprises in the capital market and supporting leading private enterprises in industrial mergers and acquisitions.We will launch a bond financing support plan and an equity financing support plan for private enterprises. Fifth, in terms of opening wider to the outside world, we will continue to open wider to the outside world in all directions and accelerate the opening up in banking, securities, insurance and other fields in accordance with the spirit of Boao’s speech. This year marks the 40th anniversary of reform and opening-up. The major policy of reform and opening-up has been decided, and the key is to implement it. Now is a critical moment when actions are better than a dozen programs. All parties should implement them more vigorously, have a stronger sense of responsibility, dare to take responsibility, act quickly, and effectively introduce some specific policies to promote the healthy development of the stock market.
(3)
Reporter: At present, private enterprises are facing some anxiety about implementing the basic economic system. What do you think of this issue?
Liu He: First of all, I want to emphasize that we must unswervingly implement the basic economic system and adhere to the "Two Unswervings". On the one hand, we will unswervingly consolidate and develop the public economy, on the other hand, we will unswervingly encourage, support and guide the development of the non-public economy. At present, there are some misunderstandings and deviations in the actual implementation process. For example, the business personnel of some institutions believe that it is safe to provide loans to state-owned enterprises, but it is politically risky to provide loans to private enterprises, and they would rather not do anything than make political mistakes. This kind of understanding and practice is completely wrong. We must understand this problem from the perspective of politics and the overall situation. Private economy plays an important role in the whole economic system, contributing more than 50% of tax revenue, more than 60% of GDP, more than 70% of technological innovation, more than 80% of urban employment, and more than 90% of new jobs and enterprises. Without the development of private enterprises, there will be no stable development of the whole economy; If there is no high-quality private enterprise system, there will be no modern industrial system. Supporting the development of private enterprises means supporting the development of the whole national economy. Those acts that do not support the development of private enterprises for the sake of so-called "personal safety" have great problems in political orientation and must be resolutely corrected. For private enterprises, we should emphasize "four musts": First, we must adhere to the basic economic system and give full play to the important role of small and medium-sized enterprises and private economy in China’s economic and social development.Second, we must attach great importance to the temporary difficulties faced by small and medium-sized enterprises and take accurate and effective measures to vigorously support their development. Third, we must further study the policies and measures to support the development of small and medium-sized enterprises in reducing the burden of taxes and fees, solving financing problems, improving environmental protection and improving the ability of scientific and technological innovation. Fourth, we must improve the capabilities of small and medium-sized enterprises and the private economy, constantly adapt to changes in the market environment, and strive to achieve high-quality development. Recently, the Office of the Leading Group for Promoting the Development of Small and Medium-sized Enterprises in the State Council, the All-China Federation of Industry and Commerce, etc. will go to various places to learn about the implementation of the basic economic system and the development of small and medium-sized enterprises. I hope you will give us your support.
(4)
Reporter: There is some discussion in the society about "the country advances and the people retreats". What do you think of this?
Liu He: The so-called argument that "the country advances and the people retreats" in society is both one-sided and wrong. Recently, some private enterprises that expanded rapidly through high debt in the early stage have encountered difficulties in liquidity because of deviating from their main business. State-owned banks or state-owned enterprises have helped or even reorganized to help private enterprises tide over the difficulties, which just reflects the interdependence and cooperation between state-owned enterprises and private enterprises. I think it is a good thing, and there is no problem of "national advancement and civil retreat". When private enterprises operate well, state-owned capital can withdraw. Conversely, if state-owned enterprises encounter difficulties, they can also actively participate in improving efficiency through private enterprises. We also encourage qualified and better private enterprises to play an active role in industrial restructuring and merge and reorganize some small and medium-sized enterprises in the same industry that have competitive potential but are currently facing difficulties.
It must be noted that China’s state-owned enterprises and private enterprises have formed a complete industrial chain. State-owned enterprises are mostly in the upper reaches of the industrial chain, playing a role in basic industries and heavy manufacturing industries, while private enterprises are increasingly providing manufacturing products, especially final consumer goods. The two are highly complementary, cooperative and supportive, and China’s economy will continue to improve in this direction and move towards high-quality development in the future. We must change from the traditional concept of solidification to the new concept of modern industrial chain to understand the state-owned and private economy.
I especially want to say that at present, China’s economy is still in the "three-phase superposition" stage, and some enterprises are facing some difficulties. This is precisely the stage where entrepreneurs can make great achievements. Entrepreneurs with courage, vision and courage should take the lead and live up to expectations. The China government will create an equal environment, strengthen the rule of law, strengthen the protection of property rights and intellectual property rights, adhere to the basic economic system, and deepen reform and opening up. There is no reason why we should not be full of confidence in the broad prospects of China’s economic development.
(5)
Reporter: What do you think of the current economic and financial situation and changes in industrial structure?
Liu He: I think that China’s economy has generally maintained a stable and positive basic trend. From the main indicators such as economic growth, employment, price, balance of payments, corporate profits, fiscal revenue and labor productivity, China’s economic operation is in a reasonable range. Compared with the major economies in the world, China’s economic performance is excellent, and the International Monetary Fund and the World Bank have highly praised China’s sustained economic development. From the financial field, monetary policy operates steadily, financial structural deleveraging advances steadily, the impulse of blind expansion of various institutions regardless of risks is obviously converged, and investment behavior tends to be rational. At the same time, various risks and problems accumulated in history are inevitably coming to the bottom, which is an inevitable process and should be treated rationally.
In view of the marginal changes in economic operation, the State Council, the CPC Central Committee, put forward the requirements of stabilizing employment, finance, foreign trade, foreign investment, and expectations, and we must resolutely implement them. Of course, in particular, we must handle the relationship between steady growth, structural adjustment and risk prevention. On the one hand, we must maintain the stability of economic growth, on the other hand, we must prevent and control financial risks and maintain the relative stability of macro leverage ratio. The key to the balance between the two is to implement a policy system with supply-side structural reform as the core. In the past three years, we have achieved phased results in "three to one, one reduction and one supplement". The international community generally believes that through "destructive innovation", the price level of some surplus areas in China’s economy has returned to equilibrium, and the relationship between supply and demand has improved significantly, thus stimulating economic growth and promoting global economic recovery.
The task of China’s economic restructuring has not yet been completed, and the supply-side structural reform should be further deepened. The next step should focus on enhancing the vitality, resilience and innovation of micro-subjects, thus promoting economic transformation and upgrading and promoting a virtuous circle of the national economy. We should do three things well. First, support the development of private enterprises, improve financial accessibility and reduce various burdens. Second, we should deepen the reform of state-owned enterprises, especially the reform of mixed ownership, establish a more perfect corporate governance structure, strengthen the construction of internal incentive mechanism and improve core competitiveness. Third, the financial system should improve its adaptability and enhance its ability to serve the real economy. Under the current situation, it is especially necessary to speed up the system construction and give full play to the key role of the capital market. Of course, doing these things well needs the support of sound macro policies. We will continue to implement a proactive fiscal policy, a sound monetary policy, a clear industrial investment policy, and a more inclusive and sustainable social policy to further deepen the core policy of supply-side structural reform. Analyzing the performance of China’s economy, we may feel some difficulties if we look at one thing at a time, but once we look forward to it as a historical process, the development prospect is very bright.
Judging from the virtuous circle of national economy, China’s economy is undergoing a structural transformation. We often say that it is changing from traditional kinetic energy to new kinetic energy. Now the market is very concerned about which direction to turn. It is complicated to describe this transformation process clearly, because it is a process of market-oriented exploration and trial and error, but from the demand direction, several points are clear. First, the huge middle-income groups in China are rising, and they are creating huge diversified demands; Second, the aging population is obvious, and it is also forming huge demand; Third, a new round of scientific and technological revolution and industrial transformation characterized by the combination of biotechnology and information technology is emerging, which requires us to propose supply-side solutions and create huge demand; Fourth, green development creates development opportunities. We should seize these directions, identify and seize new opportunities in the great historical process of industrialization, informationization, urbanization, marketization and internationalization, strive to transform traditional industries, vigorously develop new industries and accelerate the construction of a modern economic system.
Finally, I want to say a word. Under the leadership of the CPC Central Committee with the Supreme Leader as the core, it is a historical necessity for China to achieve peaceful development. The difficulties and problems we encounter are all difficulties and problems in progress. As long as we keep this in mind, our hearts will calm down and China’s tomorrow will be better!
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