David Daokui Li: Financial and fiscal reform the focus for China

David Daokui Li, Director of the Center for China in the World Economy and Dean of the Schwarzman Scholars at Tsinghua University, said during the 2015 World Economic Forum in Davos, Switzerland that Premier Li Keqiang's keynote speech was "pragmatic" and China will be focusing on financial and fiscal reform in its last year of the 12th Five-Year-Plan. 

Li said that compared with Shinzo Abe's remark in last year’s forum, Li Keqiang’s speech was “more detailed and pragmatic” as he made clear that China’s growth will be fostered by two engines - it means China needs to encourage mass entrepreneurship and innovation in order to achieve sustainable economic development at a medium-to-high speed. In short, governmental and non-governmental forces need to better cooperate when facing downward pressure. 

Li believes that China will be focusing on financial and fiscal reform this year and that is to say, a certain portion of local debt has to turn from bank debt to public debt so as to reduce potential shock to the entire financial architecture.

Another highlight in Premier Li’s speech was that he made a direct response to the western concern by saying that growth even at 7% at this stage will produce more than a 10% increase on 5 years ago. David Daokui Li pointed out that the West was actually paying attention to how China’s growth will impact the world rather than the economy itself. Considering this, what matters most to them is the actual amount of increase, not just the percentage in growth.