Meeting the Challenges: A Historical Record of China’s Development—Speeches by Wen Jiabao at the World Economic Forum Events

3. Premier Wen answers questions at a Business Working Lunch

83 PREMIER WEN ANSWERS QUESTIONS AT A BUSINESS WORKING LUNCH (28 January 2009, Davos) On 28 January 2009, on the sidelines of the annual meeting of the World Economic Forum in Davos, Premier Wen Jiabao held a working lunch with about ten business and financial leaders. They had in-depth exchanges of views on global economic and financial developments and China’s responses. Peter Sutherland (Chairman, BP): Oil prices have been falling recently. While this is good news for the global economy, falling oil prices also signal a global economic slowdown. Mr. Premier, what forecast would you give for China’s economic growth? Wen Jiabao: Let me clarify one point in relation to the falling oil prices. Some people have claimed that it is China’s rapid growth that has pushed up oil prices. But the plummeting oil prices now show that they were wrong. All countries need to have a secure, stable, and clean energy supply and pricing regime. MeetingTheChallengesEN_FA02_17Dec2013.indd 83 MeetingTheChallengesEN_FA02_17Dec2013.indd 83 19/12/13 11:26 AM 19/12/13 11:26 AM MEETING THE CHALLENGES 84 The international financial crisis has affected China’s real economy and has increased downward economic pressures on China. To sustain steady and robust economic growth, as early as last July we took steps and last November we unveiled ten measures that aimed to boost domestic demand. I stressed that our response should be swift, forceful, targeted, and result-oriented, and we adopted a package plan to counter the crisis accordingly. These measures have begun to take effect. In the second half of December last year, China’s economy showed signs of recovery as: the output of enterprises with annual sales of over five million yuan grew 0.3 percentage points since November; the prices of iron, steel, and non-ferrous metals rallied; and corporate inventories and the backlog of goods at ports dropped. Due to the array of incentives that we offered, production in some enterprises has picked up and exports in some sectors have stabilized. Still, we need to work hard to meet the 8 percent growth target this year. Joseph Hogan (CEO, ABB): Because of the financial crisis, sales in the United States and elsewhere have contracted, but things are better in China. People expect that China will play an important role in fighting the crisis and the subsequent trade protectionism. Rupert Murdoch, Chairman of the News Corporation, said that in the wake of the crisis, about US$50 trillion to US$70 trillion of assets evaporated in the West. People’s lives were shattered as their confidence dissipated and the financial sector was in chaos. Still, the world should maintain a free and open market. Wen Jiabao: We are committed to the basic state policy of opening-up and we are opposed to trade protectionism. The impact of the financial crisis on China is different from the impact on the United States. After implementing reforms, the ratio of non-performing loans (NPLs) of Chinese banks is lower. The banks’ capital adequacy ratio is higher MeetingTheChallengesEN_FA02_17Dec2013.indd 84 MeetingTheChallengesEN_FA02_17Dec2013.indd 84 19/12/13 11:26 AM 19/12/13 11:26 AM 2009 ANNUAL MEETING OF THE WORLD ECONOMIC FORUM 85 than the Basel requirement and there is sufficient liquidity. As a whole, China’s financial system is in good shape. Nandan Nilekani (Co-chairman, Infosys): With Western economies slowing down, Asian countries should build a common market and free trade area to ease the impact of recession in the West. Wen Jiabao: As China develops, it has become more integrated with the global economy. What we need is for the developed countries to open their markets to China. Even though China has strong purchasing power, some developed countries have refused to recognize China as a market economy and have banned the export of some products to China. This is unwise. We should fight trade protectionism not in words, but in deeds. This should be the strong message sent out by the current annual meeting. We support the building of free trade areas in Asia and regional financial cooperation such as currency swaps. Marcel Rohner (CEO, UBS): Many governments are moving to tighten banking regulations following the financial crisis, which may curtail global financial freedom. Wen Jiabao: Last December, UBS, a strategic investor in the Bank of China (BOC), sold all of its shares in BOC.1 We understand that UBS made this...