Channel NewsAsia of Singapore: The Foreign Investment Law has just been adopted at the NPC Session today. Yet there is also worry that the exceptional swift adoption of this piece of legislation is only in large measure a response to pressure from the United States. And the ambiguity of some legal provisions will only provide the Chinese government further wiggle room for self-discretion and lower investors' expectations of the actual effects of enforcement. How would you respond to this? What specific measures will the government take to ensure full enforcement of the law?
Premier Li: Opening-up is China's fundamental state policy. It has delivered real benefits to the Chinese people and has benefited the world. So why won't we go ahead with it? If we make a promise on opening-up, we will certainly deliver on it. For instance, last year, we lifted foreign ownership restrictions in some key basic industries. And we have seen the delivery of a big number of major projects in these respects. Last year, China remained the largest recipient of FDI among all developing countries. Going ahead, we will continue to carefully listen to the views from various parties and keep making China more open.
The just concluded NPC Session adopted the Foreign Investment Law. This piece of legislation is designed to better protect and attract foreign investment through legislative means. This law will also regulate government behaviors, requiring the government to perform its functions in accordance with the law. The government will introduce a series of matching regulations and directives to protect the rights and interests of foreign investors, such as on working mechanisms for handling complaints filed by foreign-invested enterprises. These will be the important things for the government to do in the following weeks and months to see that this law will be truly operable.
We will continue to implement a management system of pre-establishment national treatment plus a negative list. We will release a newly revised negative list which will become shorter. And going forward, we will further shorten our negative list, which means that more areas will be opened up for foreign investment. We will also enhance the protection of intellectual property. In this respect, we will make revisions to the laws on IPR protection and introduce a mechanism of punitive compensation to ensure that all infringements of intellectual property will be seriously dealt with and have nowhere to hide. We also hope that foreign governments can view in an objective light the cooperation between Chinese companies and their foreign partners based on mutual agreement. In a word, China will further open up, and China's opening-up measures will not come on a one-off basis, but will be introduced quarter after quarter and year after year. In hindsight, when we review the course of China's opening-up, we would realize how tremendous a change that has taken place in this country.
Guangming Daily: Last year, the Central Bank cut required reserve ratio several times, lowering the costs of financial institutions. However, companies still feel there is difficulty in accessing affordable financing. And they have yet to feel the actual results of those policy adjustments. What measures will be adopted this year to ensure there will be better financial services for the real economy?
Premier Li: Serving the real economy is the bounden duty of the financial sector. However, there does exist the problem of inaccessible and expensive financing for the real economy, in particular, private businesses and small and micro companies. Last year, we took a number of steps to curb the fast rise in the financing cost faced by our companies. The Central Bank cut required reserve ratio four times to reduce costs for financial institutions, so that more money will flow to our private companies, and small and micro companies. This year, we will take a multi-pronged approach in this respect to significantly ameliorate this problem that is seriously constraining our economic development and the vitality of our market. Our goal is to further cut the financing cost for small and micro companies by another one percentage point this year.
As China takes its own initiative to further open up, we will adhere to the principle of competitive neutrality and treat both domestic and foreign-invested enterprises as equals. Likewise, we also need to treat all businesses under various types of ownership as equals. As far as lending is concerned, there do exist some problems and obstacles. We need to encourage financial institutions to enhance their internal management system and provide more services to private companies, and to small and micro firms, to lessen their financing cost and rein in arbitrary charges. When small and micro companies are vibrant, our economy will be full of life and energy. And there will be a stable employment situation.
In the meantime, we also need to forestall financial risks. No new loans will be made to zombie companies which are no longer solvent. And so-called financial activities that are illegal and non-compliant must be stopped and seriously dealt with. We are fully capable of forestalling systemic financial risks. Strengthening financial services and preventing financial risks are mutually reinforcing.
TASS: This year marks the 70th anniversary of diplomatic relations between Russia and China, a milestone in the history of relations between our two countries. Last year, for the first time, two-way trade exceeded US$100 billion. What new breakthroughs do you foresee for the growth of Russia-China relations, and in particular, their economic and trade cooperation this year?
Premier Li: China and Russia are each other's biggest neighbors. A sound and stable China-Russia relationship serves the interests of the two countries, the region and the world.
This year is the 70th anniversary of diplomatic ties between the two countries. In the past seven decades, our relationship has traveled an extraordinary journey. And today it has reached a very high level featuring deepening mutual political trust and growing people-to-people exchange. As you mentioned, in spite of the downturn in global trade growth last year, trade between our two countries exceeded, for the first time, US$100 billion. That shows there is still much untapped potential in our business ties. And we need to work together to further expand areas of cooperation. For example, we may continue to focus on our big project cooperation and trade in commodities. We may also strengthen our cooperation between micro and small firms and cross-border e-commerce platforms. We may enhance collaboration in aviation and aerospace, and also enhance exchanges at the sub-national level and between our peoples. In a word, we need to make use of all possible means at our disposal to, first, keep our 100-billion-dollar trade stable, and then, work further toward the goal of doubling it.
The Paper: You have been calling for the growth of Internet Plus and sharing economy. However, we also saw serious problems last year in these areas. What's your comment? What measures should be adopted to better regulate the growth of sharing economy?
Premier Li: Internet Plus and sharing economy can also be viewed as a platform economy. Like other new things, they also have upsides and downsides. They have added new jobs, and made life easier and more convenient for our people. They have also driven China's industrial development. For example, the growth of e-commerce, express delivery services and mobile payment have made life more convenient for our people. When wisdom and strength are pooled, all stand to benefit.
For these new forms of business and new business models, we must not exercise arbitrary regulation or oversight, that is, either letting them be or shutting them down as soon as problems appear. Our choice over the years is to exercise accommodative and prudential regulation. By accommodative, we need to recognize that what is known about new things is always much less than what is unknown about them. So they should be allowed a good chance to grow. And the government needs to detect and redress any possible problem that comes along the way.
By prudential regulation, the government needs to draw a clear line at public safety and security. And no one should be allowed to use Internet Plus or sharing economy as an excuse or means for cheating and manipulation. In this way, our purpose is to foster a more enabling environment for all entrepreneurs and provide our companies good opportunities in developing new drivers of growth. In a word, there should be equal access to the market and impartial regulation on the part of the government. In market competition, the fittest will survive. And with impartial regulation, good rules will be enforced. There will always be both happiness and pain in the growth of new forms of business. The job of the government is to provide them with proper guidance.
Internet Plus and sharing and platform economies still have broad space for further growth. For example, e-commerce and express delivery services have made it possible for industrial goods to reach rural areas, and for quality agricultural produce to be delivered to urban households. In the industrial sector, we may advance the Industrial Internet to put idle production equipment to better and more efficient use and encourage technological innovation. In the social sphere, Internet Plus has also made a difference. For example, it has enabled the sharing and connectivity of different medical, health care resources, educational resources and other services so that even children, aged people and others living in remote rural areas can have access to better hospitals, schools, doctors, teachers and other quality resources. There are many such concrete examples. Such a development has further energized our markets and unleashed public creativity.
