On September 19, 2018, Premier Li Keqiang attended the opening ceremony of the 2018 Summer Davos Forum at Tianjin Meijiang Convention and Exhibition Center and delivered a special speech, answering the questions of President Schwab of the World Economic Forum. On September 20, Li Keqiang held a dialogue with representatives of the international business community attending the 2018 Summer Davos Forum in Tianjin Meijiang Convention and Exhibition Center. The relevant Q&A and dialogue are recorded as follows:

Schwab: Respected Premier Li, thank you for your comprehensive and detailed introduction to the policies and objectives of the Chinese government. I believe that all the Chinese and foreign guests present here, like me, have gained a lot of important information from your speech. We know that China is deepening reform and opening up. My question is about credit and financing in China, as well as deleveraging. Maybe many of you here share my concerns about this. I'd like to hear your views on these issues.

Li Keqiang: Although China's macro leverage ratio is not low in the world, it is not the highest. An important reason for this is that China's savings rate is relatively high, and the direct financing channels have not been smoothly opened, which is an objective factor.

On the other hand, China's leverage ratio has indeed risen relatively fast in the past few years. In order to achieve long-term sustainable development, we have taken measures to stabilize leverage in recent years. It can be said that the growth of leverage ratio in the first half of this year is declining. We talk about structural deleveraging because there are indeed some aspects of leverage that are on the high side. According to the recent data, these aspects of leverage are also in the process of steady decline.

At the same time, however, we also found that some enterprises, especially small and micro enterprises, encountered problems of difficult and expensive financing. We are taking a series of measures to promote and solve the financing difficulties of small and micro enterprises in particular. We also need to expand the channels of direct financing and foster a capital market that can develop direct financing. For example, recently we found that some parties had taken inappropriate tax measures on venture capital funds, and the State Council took timely measures to stop them. We encouraged venture capital development, so that there were more channels for direct financing.

There are both advantages and disadvantages in the world. The ancients once said that you can't have both fish and bear's paw. Today, we just want to have the best of both worlds. We know that this is a challenge, which is testing our wisdom. We also hope that all of you and people of insight from all sides will provide us with wisdom. Our goal is to achieve it unswervingly, although there will be setbacks.

Stan Eric Hagen, Chairman of Okra Group, Norway: Against the background of Sino US trade friction, developed countries such as Europe, the United States and Japan have started negotiations on bilateral free trade zones. The existing global trade governance system dominated by WTO is facing great challenges. How will the Chinese government respond to this change and what measures will be taken to maintain China's position as a major trading country in the world?

Li Keqiang: First of all, I think bilateral and multilateral trade negotiations are two "wheels" that complement each other. Free trade negotiations between developed countries have a long history, and developed countries also have free trade negotiations with some developing countries. As a developing country, China also has bilateral free trade negotiations with some countries. As long as it is in line with the trend of globalization and the basic rules of free trade, China is always welcoming and willing to see positive results.

However, in the current situation, we cannot ignore that there is indeed a problem of rising trade protectionism in the world, and the foundation of multilateral trade rules has been shaken to some extent. We believe that multilateral trade rules have been negotiated and implemented by most countries in the world for many years. The basis of this rule is to maintain free trade. No matter what kind of bilateral trade negotiations, the most basic rules of multilateral trade should be upheld.

It can be said that mankind has made great and substantial progress in material achievements in recent decades, largely thanks to a peaceful international environment and a basic rule of free trade. We live together in this world and should jointly uphold the principles and rules that should be observed. If we break the rules made by the majority for the benefit of the minority, we will eventually damage the interests of everyone. This is a world of coexistence.

Of course, this does not mean that the existing multilateral trade rules cannot be improved or reformed. In the process of promoting globalization and free trade, there are indeed problems of one kind or another. If some countries complain about this, you can sit down and talk about it. We can make multilateral trade rules more suitable for global development and inclusive growth. The talks and reforms are not "starting from scratch", but should improve the multilateral trade rules on the original basis. And in this process, we should take into account the concerns and interests of all parties, especially the interests of people in developing countries, especially the least developed countries. Because if the extremely poor population continues to exist on a large scale in this world, it will be difficult for the world to be peaceful. China has a positive attitude towards the reform of WTO rules. We have reached consensus with the EU at this year's China EU Summit to establish a joint working group on WTO reform. We hope that everyone will come to discuss, and that everyone will discuss and deal with their affairs.

Countries should not only improve their own level of development, but also promote fairness and solve the problems of difficult groups. The world is the same. We should not only maintain the momentum of world economic recovery and achieve development and prosperity, but also help narrow the gap between North and South.

Jay Flatley, CEO of Ilumina: China has made some breakthroughs in the opening up of the financial sector in recent years, but the degree of openness of the financial sector is still low. Foreign financial institutions operating in China still face many employment restrictions. Could you please introduce the schedule of China's financial opening up and the possible opportunities for foreign enterprises?

Li Keqiang: This year marks the 40th anniversary of China's reform and opening up. Looking back at China's opening up over the past 40 years, compared with ourselves, we can say that the strength and depth of China's opening up exceeded the expectations of the year and some international friends. We will continue to open wider to the outside world.

Now China is indeed a big country in the trade of goods. We do maintain a favorable balance of trade in goods. Of course, this is not what we are pursuing. We hope that trade will develop in a balanced way. But at the same time, China's trade in services is in deficit, and the deficit is increasing year by year, including finance.

We believe that both surplus and deficit are due to international division of labor and different positions in the industrial chain to a large extent. We do not deliberately pursue or avoid. Considering the pros and cons, should we further open the service industry or seek to reduce the deficit in the service industry? Our choice is the former. Even if the trade in services will continue to have a larger deficit, China will unswervingly open up the service industry. Because opening up the service industry will eventually promote our enterprises to improve their competitiveness, which is beneficial in the long run, and will bring more and fairer choices to our consumers.

Of course, the financial services industry is a relatively special field, and its openness is often related to a country's development stage, economic level and supervision level. As such a large world economy, maintaining financial stability is necessary not only for China but also for the world. Therefore, we should not only resolve to continue to open the financial services industry, but also promote it in an orderly manner.

In the next few years, we will further open the financial services industry. Now our foreign investment banks have cancelled the share ratio limit. In the next few years, we will also promote the cancellation of the share ratio limit in insurance and securities, and orderly promote full license and full share ratio operations. Of course, one of its important prerequisites is qualification. In any country, qualification is required to engage in the financial industry. However, we are willing to gradually implement pre access national treatment for foreign capital to enter China's financial industry. We are making preparations and expect that in three years, there will be a number of qualified foreign enterprises with full share ratio and full license financial operation qualifications in China.

Sina Gangshi, president of Suntory, Japan: We know that the Chinese government has been strengthening the protection of intellectual property rights for many years, but some companies believe that their intellectual property rights have been violated. In your opinion, how to effectively implement intellectual property protection at the institutional and legal levels? What specific measures will be taken in the future?

Li Keqiang: The key point of your question is to protect intellectual property rights in the process of China's opening up and attracting foreign investment, which is a policy that China has always followed. This is not only to attract foreign investment, but also because China needs innovative development. Without the protection of intellectual property rights, it is almost impossible for China's economy to transform and upgrade, and for China's industries to move from low to medium end to high end. This is our own interests and also in line with international rules.

China is constantly increasing its efforts to protect intellectual property rights and punish infringements. In the past five years, we have investigated and handled more than 1.4 million infringement cases, and will continue to increase the punishment and fine multiples. It is necessary to make infringers hard to escape once they break the law for life, and make them hard to gain a foothold in this field, or even in the whole market.

When we first developed the market economy, we clearly realized that property rights are the foundation of the market economy. Now we are developing an innovative economy, and intellectual property rights are the foundation of development. It must become the common concept of the whole society.

I have said this question many times, and I asked many foreign entrepreneurs to raise it when I met them. What cases of intellectual property infringement can be directly raised to me or to our government departments. However, for various reasons, they didn't mention it at the scene. As you said just now, I have heard some reflections below. I hope you can speak out boldly. Government departments will be held accountable if they handle them improperly. It is better to say one foot than to do one inch. I hope, and I believe you can see, that China is constantly taking more stringent systems and effective actions in protecting intellectual property rights. Of course, all parties should work together.

Of course, the fair and just transaction of intellectual property rights is in line with market rules, and all countries in the world share the same idea. For example, the foreign patent license fees and technology royalties paid by Chinese enterprises last year are among the top in the world and may increase in the future, but we will never allow compulsory transfer of intellectual property rights.

Wu Wenxiu, Chairman and President of Japan International Airlines Group: My question is that you talked about further reducing corporate tax burden at the "two sessions" in March this year. At the beginning of July, the merger of municipal national tax bureaus and local tax bureaus across the country marked the smooth deepening of the reform of the national tax and local tax collection and management system, which can promote free competition. In the future, what measures will the Chinese government take to continue to promote tax reform and effectively reduce the burden on enterprises?

Li Keqiang: You know more about China. Indeed, in the past few years, when the economic downturn pressure was relatively large and the fiscal revenue declined, we decided to implement large-scale tax cuts, mainly to cancel the 60 year business tax, adjust the VAT rate, reduce the tax burden of SMEs, and encourage enterprise research and development. These measures can be said to have achieved results.

From the second half of last year to the first half of this year, China's tax revenue increased to a certain extent, even exceeding the GDP growth rate. Here I would like to say that this is because China's economy has been stable for some time. In the first half of this year, the profits of industrial enterprises exceeded 15%. We also pushed forward the reform of "deregulation, regulation and service" to promote the substantial growth of new enterprises, with an average monthly increase of about 200000 tax sources. This has led to a period of rapid tax growth in China. But our focus is whether the tax reduction measures are in place.

Since the second half of the year, China's tax revenue from the central to the local has declined significantly. The main reason is that on May 1, we further introduced VAT and related tax reduction measures.

Next, in the face of the complicated international situation and the difficult challenges faced by domestic development, we will implement more large-scale tax cuts and more obvious fee cuts. The VAT rate should continue to decline, and the special additional deduction of individual income tax should be implemented to residents in a fair and simple manner to increase their consumption capacity. At the same time, the tax department collects social security fees on behalf, which is a measure of institutional and institutional reform, but tax and fees are two different concepts. What we are asking now is to ensure the stability of the current collection policy of social security fees under the current circumstances, and not to pay off debts collectively. After the implementation of the new tax collection and management system, the efficiency of charging may increase. At the same time, the rate of social insurance must be significantly reduced. The purpose is not only to increase the burden of enterprises, but also to reduce the burden of enterprises. The government should live a tight life, not to embarrass enterprises, so that people can live a good life.

All enterprises registered in China, whether foreign or private, are treated equally. The measures of simplifying administration, reducing taxes and fees are fair to you. If there is any unfairness, you can complain.

Elizabeth Delos Pinos Ponte, CEO of Aura Biosciences in the United States: In recent years, the Chinese government has successively issued a number of guidelines to promote innovation and entrepreneurship, which shows that the Chinese government attaches great importance to the innovation driven development strategy. How about the latest progress in promoting innovation and entrepreneurship? How can the international business community better participate in China's innovation trend and provide new impetus for China's economic development and transformation?

Li Keqiang: China should be guided by innovation to promote economic development and cultivate new development momentum. In recent years, the Chinese government has done a lot of practical and effective work in this regard. For example, we have promoted mass entrepreneurship and innovation, implemented reforms such as streamlining administration and delegating power, and promoted the birth of a large number of new market players. From the original thousands of newly registered enterprises every day to 18000 newly registered enterprises every day in August this year. China has become a country with more than 100 million market players.

China promotes mass entrepreneurship and innovation, based on the idea that everyone has the ability to innovate and has the possibility to create. If more than 1.3 billion Chinese people and 900 million labor force can be mobilized, we can imagine how creative the society will be. The theme of this forum is "building an innovative society in the fourth industrial revolution". I think the innovative society is to mobilize the potential created by everyone.

Second, innovation should give everyone equal opportunities to innovate. We have taken a series of measures to "release, regulate and serve", which is to let everyone have equal opportunities to innovate, which will change the fate of many people. The efficiency and fairness we talk about can be fully reflected in this respect.

Third, innovation is global. It is innovation in the context of globalization. China is willing to face the world with an open mind, and hopes that all of you here, foreign entrepreneurs, scientists and people from all walks of life, will participate in China's development with an open mind, which is actually to jointly promote the development and progress of mankind. I reiterate once again that we will strictly protect intellectual property rights. Innovation requires innovative thinking and intellectual property rights.

When you come to China, there will be a large number of even hundreds of millions of innovators with you. It has become a common phenomenon that our "Internet+" gathers wisdom and power. I also believe that your innovation spark will collide with Chinese innovators. As entrepreneurs, you can obtain economic benefits. I believe you all have career pursuits. We welcome you to achieve your career goals in China's innovative competition.

(Xinhua News Agency, Tianjin, September 20)

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