Li rules out devaluation of currency

China will stick to market-oriented reform of the exchange rate formation mechanism and will not stoop to competitive devaluation of its currency, Premier Li Keqiang stressed.

China will stick to market-oriented reform of the exchange rate formation mechanism and will not stoop to competitive devaluation of its currency, Premier Li Keqiang stressed at a World Economic Forum event yesterday.

“China will create conditions for a stable exchange rate,” Li said at the opening plenum of the Annual Meeting of the New Champions 2018, also known as Summer Davos, in north China’s Tianjin.

The yuan exchange rate has shown signs of fluctuations recently, raising concerns that China is devaluing the currency on purpose.

“It is not true, as one-way devaluation of the yuan will bring China more drawbacks than benefits,” Li said. “China’s economic fundamentals are solid, with a sound balance of international payments and sufficient foreign exchange reserves. The yuan exchange rate therefore is fully capable of remaining basically stable at a reasonable and balanced level.”

“China will never go down the road of relying on yuan depreciation to stimulate exports,” he said. China will not do that to chase “thin profits” and “a few small bucks.”

Li also said the world’s multilateral trading system should be upheld. “All existing problems need to be worked out through consultation,” he said, adding that unilateralism does not offer solutions.

The premier promised to build a business environment that treats Chinese and foreign companies equally, and ensures fair competition.

“China will make greater efforts to promote opening-up, deepen reform in all areas, further ease market access, improve transparency of policies, as well as conduct fair and equitable regulation,” Li said.

“We will optimize the business environment. Whether it’s a Chinese or foreign company, once it gets registered in China, it should enjoy fair treatment in such fields as streamlined administration, tax and fee reduction as well as fair and equitable regulation.”

He also said China would further cut taxes and fees to reduce the corporate burden.

“The Chinese government has made great efforts to streamline business procedures, and cut taxes and fees over the past several years,” he said.

These efforts have reduced institutional transaction costs and companies’ production and operation costs, optimized the business environment and improved the quality and profits of companies.

“We will make greater efforts to cut taxes and fees and continue to ease the corporate burden and resolutely prevent new burdens on businesses. Efforts will also be made to develop new policies on tax cuts and fee reduction, and more forceful measures will be taken to ease financing difficulties facing the real economy and reduce financing costs,” Li said.

The premier added that China would adopt a stricter protection system on intellectual property rights.

He said protecting IPRs meant protecting and inspiring innovation. “China cannot achieve innovative development without an environment that respects knowledge and protects property rights,” Li insisted.

China has established a complete legal system on IPR protection. China’s IPR spending to overseas owners is 14 times higher than in 2001 when it became a member of the World Trade Organization, according to Li.

The premier said China would further strengthen law enforcement and adopt a stricter and more forceful punitive compensation system on infringement to protect innovation in all areas.

China has become a fertile land for global entrepreneurs and innovation, with new growth drivers breaking new ground for the country’s economic development. “Among all industrial sectors, high-tech and advanced manufacturing have been taking the lead, while new business models have been constantly emerging in the service industry, and the upgrading of industrial structure has been on the fast track,” Li said.

“China’s online retail sales went up by more than 30 percent annually, and emerging consumption, such as information consumption and green consumption, has also grown rapidly. Consumption has contributed more than 60 percent to China’s economic growth,” he revealed.

Currently, significant changes are taking place in the country’s economic structure and growth pattern, while new growth drivers have contributed to more than a third of China’s economic growth as well as to more than two thirds of new jobs in Chinese cities and townships, he added.

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