- `Chinese economy is still operating within the proper range'
- China to continue developing a `consumption-driven economy'
Chinese President Xi Jinping pledged to open his country to greater foreign investment and accelerate structural reforms, speaking on the eve of a gathering with U.S. business leaders that kicks off a U.S. trip.
Xi, who arrives Tuesday in Seattle, assured that Chinese economic growth is "still operating within the proper range," giving written remarks in an interview with the Wall Street Journal published on its website. "China has the capacity and is in the position to maintain a medium-high growth in the years to come."
With potentially difficult talks looming with U.S. President Barack Obama, Xi emphasized that China’s defense buildup isn’t designed for "some kind of military adventure." He reassured on Chinese moves in the South China Sea, and rejected the idea that China is a sponsor of cyber-theft.
China will stick with its economic opening despite a slowdown, Xi said, and “place greater emphasis on developing an innovation and consumption-driven economy.” He added that understanding the Chinese economy means taking the long view, and that foreign investors are still planning to increase or maintain their investment in China.
Xi’s remarks aimed to buttress global confidence in his nation’s slowing economy after a stock market rout and surprise currency devaluation triggered a worldwide sell off in commodities, equities and emerging market currencies. China remained committed to opening its markets and completing a transition from export-driven growth to consumer driven expansion, Xi said, even as he defended the government’s intervention to try to stem a $5 trillion slide in stock values.
The interview, which the Journal called his first with foreign media since Chinese stocks plunged this summer, was covered by the official Xinhua News Agency and transcripts were published by state-run China National Radio and China.com, a government news portal.
“An important goal for China’s current economic reform is to enable the market to play the decisive role in resource allocation,” he told the Journal. “That means we need to make good use of both the invisible hand and the visible hand.”
There was no reversing from the economic opening, which he compared to “an arrow shot that cannot be brought back.”
Xi’s responses echo comments by other officials on the economic slowdown, stock-market plunge and currency devaluation. Premier Li Keqiang and People’s Bank of China Governor Zhou Xiaochuan have offered similar assurances.
“We are stepping up efforts to shift our growth model, make structural adjustment and place greater emphasis on developing an innovation and consumption-driven economy,” Xi said in the interview. “By solving these problems, China’s economy will transform itself and retain its robust dynamism for development.”
As part of the shift, Communist Party leaders said this month they plan to sell shares of some state-owned enterprises and consolidate others in the country’s largest overhaul of its bloated businesses since the late 1990s.
On the yuan exchange rate, Xi reiterated the official line that there’s no basis for “sustained depreciation” of the Chinese currency. He said the Aug. 11 devaluation was a move to give “greater say to the market in deciding the exchange rate” of the currency, also known as the renminbi or RMB. “Reform of the RMB exchange rate formation regime will continue in the direction of market operation,” Xi said.
Xi also downplayed the recent drop in China’s foreign reserves, which fell by a record $93.9 billion last month as the PBOC bought yuan and sold dollars to defend against a rapid currency depreciation. Even after that, Xi noted that China’s $3.56 trillion in reserves “remain abundant and is still very large by international standard.”
China won’t change its policy of seeking investment from foreign companies and protecting their rights, Xi said. Attracting such investment “has played a significant role in promoting China’s economic development” and given it the technologies, skills and vision needed for the country’s modernization.
China’s economy expanded 7.3 percent last year, the slowest pace since 1990, and further decelerated to 7 percent in the first half of this year, matching the government’s target. Economists expect full-year growth to be 6.9 percent, according to the median of estimates in a Bloomberg survey.
As he prepares for meeting Obama, Xi called for more Sino-U.S. cooperation and addressed some thornier issues straining ties between the countries such as cyber-espionage and its asserting South China Sea territorial claims.
China takes cybersecurity “seriously,” Xi said, and denied his country engages in “theft of commercial secrets in any form, nor does it encourage or support Chinese companies to engage in such practices.”
“Cybertheft of commercial secrets and hacking attacks against government networks are both illegal; such acts are criminal offenses and should be punished according to law and relevant international conventions,” Xi said. “China and the United States share common concerns on cybersecurity. We are ready to strengthen cooperation with the U.S. side on this issue.”
Xi insisted that China’s land reclamation in the South China Sea, one of the world’s busiest shipping lanes, shouldn’t raise hackles as its claim to the territory is “backed by historical and legal evidence.” Garrisons built on new islands allow China to “better uphold navigation and safety in the South China Sea,” he said, adding that China has never had any ambition to expand outside its territory.
“China has always pursued a defense policy that is defensive in nature and a military strategy featuring active defense,” Xi told the Journal. “China has no military base in Asia and stations no troops outside its borders.”
— With assistance by Jeff Kearns, and Xin Zhou