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Transcript of Premier Li Keqiang's Meeting with the Press at the Fifth Session of the 12th National People's Congress


The Great Hall of the People, 15th March, 2017

Premier Li Keqiang: The moderator told me that some of the journalists came to the Great Hall of the People for this press conference as early as two to three hours in advance. This shows how hard you work and how committed you are to this profession. I want to thank you for your efforts in covering the "Two Sessions" this year. Since we only have limited time, I suggest we get the questions started right away.

CNN: President Trump has been consistently critical of China, claiming that it's stealing US jobs, manipulating its currency and not doing enough for regional security. Now we are hearing that the US-China talk of the highest level may take place as early as next month. We have a good idea of what the US wants from China, but what does China want from the US? What is China's bottom line for a healthy, sustainable Sino-US relationship? Are you confident that you can achieve that or will it be a difficult process?

Premier Li: Your question reminds me of my trip to New York last September for the UN General Assembly meeting and other high-level events. I was asked a question about China-US ties following a speech at the New York Economic Club. It was a time when the US presidential campaign was turning white-hot. I was asked whether there will be significant change in China-US ties when a new president is elected. My reply was that China-US relations have been going forward in spite of twists and turns in the past decades. So I am optimistic about the future of this relationship no matter who gets elected. President Trump has since been elected, and President Xi Jinping has talked with him over the phone. The two presidents agreed to work together for further progress in China-US relations. President Trump and senior officials from the new US administration have explicitly reaffirmed continued US adherence to the one-China policy, which forms the political foundation of China-US relations. This foundation has remained firm and unshaken despite changing circumstances, and it would always remain so in the future. With the right political foundation in place, China-US cooperation enjoys bright prospects.

We feel optimistic about the future of China-US relations on the strength of the extensive common interests that have bound the two countries together in the course of several decades of our diplomatic relations. It is true that there are some differences between the two countries over issues like jobs, exchange rate and security. What's important for both countries is to stay focused on the overall interests, and enhance dialogue and communication to deepen mutual understanding. Foreign relations departments of our countries are now engaged in discussions on a face-to-face meeting between the two presidents. This relationship is crucial not just for the interests of our countries, but also for regional and global peace, security and stability. We must work together to take it forward continuously.

As for China-US trade, I want to share with you what an NPC deputy from a foreign trade company told me during this year's Two Sessions. He said that although China runs a surplus in trade with the US, for his company, over 90% of the profits goes to US firms, and the profit margin of his business is a mere 2 to 3 percent. Statistics show that last year, trade and mutual investment between the two countries created up to one million jobs in the United States. We may have different statistical methods, but I believe whatever differences we may have, we can always sit down and talk about them, and work together to find solutions. And for those differences that cannot be resolved for the time being, they can be shelved and we may continue to focus on expanding common interests, which I believe is the wise choice. And as we do so, the differences will account for a lesser and lesser proportion in overall China-US relations.

I also want to cite a recent article written by a well-reputed international think-tank. It says that should a trade war break out between China and the United States, it would be the foreign-invested companies in China, particularly US firms that would bear the brunt of it. We don't want to see a trade war. A trade war won't make our trade fairer. It will only hurt both sides. I understand the whole world is paying close attention to China-US relations. China hopes that no matter what bumps this relationship may run into, it will continue to move forward in a positive direction. Both our peoples are great people and we believe that we have the wisdom to properly manage differences. There is the need and capacity on both sides to expand common interests.

China National Radio: China's economic growth has been declining in recent years and we have seen that the projected target of GDP growth in 2017 has been trimmed to about 6.5%. Will this adversely affect the global economy? Some people say that China's economy still faces a lot of risks, especially in the financial sector. Do you think that China's economy will remain an engine driving global economy when global economic growth remains sluggish?

Premier Li: I read some foreign media commentary describing the projected GDP growth target of about 6.5% this year as moderate downward adjustment. In fact, 6.5% growth is not a low speed and it would not be easy to meet this target. I can't help but recall a martial art performance I saw at Shaolin Temple, during which a child monk can do over a dozen somersaults at one go quite easily, but several such consecutive somersaults for an adult monk would be quite an accomplishment due to their different size. 6.5% of GDP growth in 2017, if achieved, would generate more additional economic output than last year, as this is a growth attained on the basis of RMB 74 trillion yuan, or US$11 trillion in GDP. And this growth is projected to generate over 11 million new urban jobs. The measures we take are consistent with the laws of economics, and moreover, slower growth can help us better focus on enhancing the quality and performance of China's economy. I don't think China's contribution to global growth will come down. We believe China's economy will continue to be a strong driving force in the face of sluggish world economic recovery.

With respect to risks, we are seeing growing uncertainties in the international economic and political landscape. These are the risks on the external front. As for China, stalled development presents the biggest risk. So it is essential that we maintain steady, medium-high growth and that, in itself, is China's contribution to global stability. We take very seriously the risks we face on the domestic front, including the financial sector. We will take prompt and targeted measures to prevent them from spreading. I should point out that China's financial system is generally secure and we do not foresee systemic risks. We still have a good reserve of policy options and instruments at our disposal. Our deficit to GDP ratio is below 3%. The capital adequacy ratio of commercial banks in China is 13% and their provision coverage ratio is 176%, both above the international standards for financial security. As the express train of China's economy continues to roll along at medium-high speed, we need to fasten our seat belt and ward off acute outbreaks of risks. Still less will we allow regional or systemic risks to break out.

Bloomberg: As the United States pulls back from its roles in global trade deals, such as the TPP, China seems poised to take the leadership role. You and President Xi have become advocates of free trade, open economy and globalization. At the same time, China has come under criticism for unfair trade practices and not opening its economy fast enough. Can you say what steps you are taking in the next year to convince the rest of the world that China is committed to free trade and an open economy?

Premier Li: Although globalization has encountered some bumps in the road, China has consistently upheld economic globalization and free trade. I believe such a position in itself is a good indication of China's commitment to opening-up. It is fair to say that economic globalization has benefited countries across the world. Some problems may have occurred in this process, for example, with respect to distribution of benefits. But we don't think they are the result of globalization per se but more of an issue of how one responds to it. China is ready to work with other countries to further improve the global governance system. We also believe that economic globalization has been deeply embedded in the global trend of peace, development and cooperation. A closed-door policy or beggar-thy-neighbor approach leads to no solutions.

Like many countries in the world, China has benefited from economic globalization as it has been opening up ever wider to the outside world. China needs to first run its own things well. But the truth is, this cannot be done with our doors shut. Hence we will only pursue greater openness. Naturally opening-up is a gradual process. The important thing is that we have kept moving forward for the past decades.

Last year, China was still the largest recipient of FDI among developing countries and FDI reached US$126 billion. In the World Bank's ease of doing business ranking, China moved up 18 spots in 2016 compared with where it was in 2013. We have launched 11 pilot free trade zones starting from Shanghai, and good experience gained from them will be applied across the country. This year we will hold the Belt and Road Forum for International Cooperation and more steps for opening-up will be introduced. We have proposed to many countries the building of free trade zones or the negotiating of investment and trade agreements. These will all contribute to two-way opening-up.

One thing I should point out is that when one opens itself wider and at a higher level, there will be more frictions, but we are confident that their proportion to overall economic links will only get smaller. So China will open at a higher level and remain a popular destination for investment. We welcome other partners to share in China's development opportunities.

As for liberalization of global trade, we believe all countries need to work together to push it forward. The world belongs to us all and we all need to do our part to make things better. We are open-minded toward the various regional trading arrangements, established or proposed, and welcome progress in them. When they concern China and where conditions are in place, we would follow an open-minded approach and we would be ready to work with others to push them forward. But China has no intention to reach beyond its role or get involved where we shouldn't. China will participate in and support all initiatives that will promote the liberalization of global trade. We the Chinese understand that the opportunities of economic globalization must be seized through opening-up. They should not be missed no matter what challenges we may face.

People's Daily: Mr. Premier, over the past four years, you have been highly focused on the reform to streamline administration and delegate government powers. According to this year's government work report, the target of cutting the items which require the approval of the State Council and State Council ministries by one third before the end of this government's term has been fulfilled ahead of schedule. So what about the remaining two thirds? Will the reform be pushed through, and if so, what specific steps will be taken?

Premier Li: The central goal of the reform is to transform government functions and balance relations between the government and the market. This reform cannot be accomplished overnight. You are right that my government's target for cutting the number of government review items has already been met. But in this process, we have encountered a variety of issues unexpectedly. In addition to government review and approval items, there are all sorts of procedures requiring administrative permits, certification of qualifications, and payment of all kinds of administrative fees. All these will be subject to reform. The reform will help the government focus on performing its due role more effectively and prevent government from overreaching itself, which has tied down our businesses and hurt government efficiency and credibility. It is a self-imposed reform involving sacrifices on the part of the government. I have all along called for boldness of spirit and decisiveness in action in pushing forward this reform. We will not relent until the job is done, no matter what obstacles or resistance may lie ahead. We should draw confidence from our ample strength and resilience.

Streamlining administration, enhancing oversight where appropriate and improving government services: these three tasks reflect our holistic approach. Streamlining administration frees up government energy to improve compliance oversight and provide better services. By widening market access, we can level the playing field for all market entities. At the same time, we must seriously deal with any violation of laws and regulations, such as making and selling fake or substandard goods, cheating at the marketplace, violating intellectual property rights, as well as issues of great concern to the general public such as food and drug safety and the environment. Besides, the government will leverage the Internet to make public services more accessible to the people. The government will also focus more on poverty alleviation, development of inner cities, providing compulsory education, meeting basic health care needs and all other areas that concern people's livelihood.

In a nutshell, the government should send a resounding message of "yes" to law-abiding market entities, give the green light to hard-working entrepreneurs and innovators, and show a yellow card or even a red card to violators of laws and regulations.

Nikkei: US Secretary of State Tillerson is visiting Japan starting from today and then he is coming to China and the ROK. People believe that one of the key topics for discussion is the Korean Peninsula issue. We have seen that recently the DPRK has once again test-fired missiles and has been pushing forward its nuclear weapons program. All these have heightened tensions in Northeast Asia. I would like to ask what steps will China take to help ease the situation, and how will China work with Japan and other countries concerned to resolve the Korean Peninsula nuclear issue?

Premier: China is committed to the denuclearization of the Korean Peninsula, to peace and stability there and to resolving issues through dialogue. That has been China's consistent and clear-cut position. With respect to UN Security Council resolutions, China has all along made clear its commitment to and fully complied with these resolutions. China is also a staunch supporter of the international nuclear non-proliferation regime. It is true that recently the situation on the Korean Peninsula and in Northeast Asia more generally has become tense. Tensions may lead to conflict, which would harm all parties involved. We hope that all the parties concerned will work together to de-escalate the situation, get issues back on the track of dialogue and try to find lasting solutions. It's common sense that no one wants to see turbulence at his doorstep.

CCTV: You often say that employment is the foundation of people's livelihood. And of all the economic indicators, it is the statistics concerning jobs that you care the most about. In the government work report, you pointed out that this year, the government may face a more daunting task of providing employment. My question is, do you expect large scale unemployment in particular sectors this year?

Premier Li: If you read the government work report carefully, you will notice that we have adjusted a target upward among all the major economic and social development targets for 2017, namely we will create over 11 million new urban jobs, one million more on top of the target we set for 2016. The fact is, we have projected around 6.5% GDP growth mainly to support job creation. Employment is of paramount importance for such a large country as China with 1.3 billion-plus people. Employment is the foundation of economic development. It creates wealth and is a major source of household income. Over the past four years, we have pursued a proactive employment policy and created over 13 million new urban jobs every year for four years in a roll. This year, we will continue to give high priority to employment. The goal is to achieve fairly sufficient employment and keep unemployment at a low level.

In the past several years, record numbers of job-seekers have entered the labor force, which is a big challenge for us. This year, we are going to have 7.95 million college graduates, the highest number in history. Five million will graduate from vocational schools. And several hundred thousand workers will be laid off in the process of cutting overcapacity.

The government's job is not to hand out the "iron rice bowl" or permanent jobs to the people, but to create enabling conditions for the people to use their own ingenuity and hard work to create or secure "gold rice bowls" so to speak. The employment rate in the past years has been fairly high because we have leveraged the enthusiasm for entrepreneurial and innovation activities. I would encourage the media, in particular foreign media, to report the fact that Chinese jobs are mainly created by the Chinese themselves.

The Chinese government has the ability to support more job creation. There will not be, nor will we allow mass unemployment. For those who have difficulty getting jobs or making ends meet, the government will do its part and provide for their basic needs.

Lianhe Zaobao: Mr. Premier, this year is the last year in the term of this government. My question is, what has been the most important achievement of the past four years? And what has been the greatest challenge?

Premier Li: It's a short but big question. The most important achievement of the past four years is that under the leadership of the CPC Central Committee with Comrade Xi Jinping at its core and with the joint efforts of our people, we have developed new approaches to macroeconomic management and maintained steady economic performance within the proper parameters and a medium-high growth rate. The variation in annual growth rate, for example, is only about one percentage point. We have achieved such steady growth not by resorting to massive, economy-wide stimulus, but by industrial and consumption upgrading, which has contributed to the improvement of China's economic structure. We have encouraged the new drivers of economic growth to take the place of traditional ones. Most importantly, we have generated as many as 50 million new urban jobs.

Over the years, some people have predicted, once and again, that the Chinese economy will see a "hard landing". The truth is, we managed a medium-high growth rate last year in spite of the fact that world economic and trade growth hit a seven-year low. I hope this will put an end to any more predictions of a hard landing. The Chinese economy will continue to enjoy medium-high growth and move to a medium-high level.

At the same time, we also face many challenges and difficulties, hence the need for continuous reform. This is the biggest challenge for us. The reform to streamline administration, enhance oversight and provide better services is bound to upset vested interests; it also demands a fundamental change in our mindset. There should be no more arbitrary use of government power, the government must not overreach, and the room for rent-seeking must be squeezed. This is easier said than done. We must make sure that all levels of the government move in lockstep to travel the last mile and get rid of any remaining obstacles.

During an inspection trip, I was shown that, instead of requiring a stamp of approval from 108 government departments, the streamlined process required only one. With China being so big, there may be similar situations of excessive requirements for government approval elsewhere. You may remember that a few years ago, a delegate at the Two Sessions produced a so-called Long-March matrix, showing all the intricate procedures for administrative approval. Although things have been streamlined significantly and the long march has been substantially reduced, it's still too much. Let me repeat that no matter what obstacle may lie ahead, we are determined to push the reform through. The goal is to unleash and grow productive forces, bring out the initiative of the people, and deliver greater benefits to the general public. After all, governance is all about letting go of narrow departmental interests for the greater good and always responding to the people's call.

Shenzhen News: Mr. Premier, last October, you attended the National Week of Mass Entrepreneurship and Innovation in Shenzhen. It is estimated that as many as 500,000 people participated in the national week's activities, making it a very popular event. Over the past year, this initiative of mass entrepreneurship and innovation has caught on, and the sharing economy has seen rapid expansion. But some people may see these developments in a different way. Mr. Premier, do you think this public enthusiasm for entrepreneurship and innovation will continue?

Premier Li: We believe that our initiative of mass entrepreneurship and innovation is a response to the call of this age of economic globalization and Internet Plus. The government's further reform of streamlining administration and delegating powers is also designed to boost this public enthusiasm for business start-ups and innovation. Over the past three years and more, on an average daily basis, more than 40,000 market entities have got registered, adding up to 10 million every year. When I share this figure with foreign leaders, they were truly amazed as this is equivalent to the total number of SMEs in their countries. Not only SMEs are doing entrepreneurial and innovation activities. Big companies are actively engaged in this too. They have opened up vast online makerspaces to enable a matching between the innovative capabilities of their employees with the demands of customers in the marketplace. This initiative runs through the development of primary, secondary and tertiary industries and involves businesses of all sizes. So I believe it will continue to thrive.

This initiative has generated a great deal of jobs. It is also an important means to implement the strategy of innovation-driven development. This initiative is a process of reform too because it captures the most important element in productive forces, that is, human resources. It helps bring out the wisdom and motivation of each individual and gives them an opportunity for a fair shot at success and upward mobility. It has also boosted the development of many new production and business models, like the "Internet Plus" and sharing economy. Some of the new business models appear in the synergy between old and new growth drivers. Others are the result of traditional drivers of growth being given renewed life with the application of new technologies. This initiative has, in a nutshell, responded well to market demand and individualistic needs of our customers.

The growing new business models have also created pressure on the government to enhance its capability, because after all, many of the forms of business are new things. When it comes to such new things, it's only normal for people to have different views. For the government, it needs to exercise careful regulation in an open-minded and accommodating way to promote their healthy development.

I have all along believed that China's nearly 800 million labor force, including the 170 million who have received higher education or possess high professional skills, represents a tremendous source of wealth and energy and enormous opportunities for China itself and the international market too. The Chinese people are intelligent and hard-working and they have an inexhaustible drive for pursuing a better life. The government needs to create an enabling environment for our people to stay enthusiastic for entrepreneurship and innovation. Some people and some enterprises may experience difficulties as this initiative unfolds, which is only normal for the development of new things. But we have the confidence to ensure that our initiative continue to move in the right direction.

Phoenix TV: This year's government work report, for the first time, contains a reference to the notion of "Hong Kong independence", pointing out that Hong Kong independence will lead nowhere. I wonder if this indicates a change in the policy of the central government. Does it mean that the central government, in implementing the principle of "one country, two systems", will put more emphasis on the part of "one country" and downplay the part of "two systems"? Does it mean that the central government will reduce its support to Hong Kong?

Premier Li: The principle of "one country, two systems" needs to be understood and implemented in its entirety. As I have also said in the government work report, this principle needs to be steadfastly applied without being bent or distorted. The central government will continue to enhance its support to Hong Kong's development and will introduce more measures in the interest of Hong Kong's development and its cooperation with the mainland. Last year, we launched the Shenzhen-Hong Kong Stock Connect. This year, we will actively explore greater cooperation over the bond markets. That is what the country needs, and Hong Kong has a platform for it too. We are considering establishing a bond market connect between the mainland and Hong Kong this year, allowing for the first time overseas capital to buy mainland's bonds overseas. Hong Kong stands to be the first to benefit from such arrangement thanks to its unique strengths. We believe this will help maintain Hong Kong's status as an international financial center, diversify investment channels for Hong Kong residents, and contribute to Hong Kong's lasting prosperity and stability.

TASS of Russia: Mr. Premier, how do you evaluate overall China-Russia relations? Do you think that the economic relations between the two countries will enjoy further growth in the face of uncertainties in the international economic landscape and volatility of global energy prices?

Premier Li: China and Russia are each other's biggest neighbors. We enjoy a comprehensive strategic partnership of coordination. Sound and steady growth of China-Russia relations is good for the region and good for the world. Last year, presidents of the two countries met several times and reached important agreement on many issues. And the prime ministers' annual meeting has been held as scheduled every year for many years. I believe all this is evidence of the stability of China-Russia relations.

Talking about economic relations and trade between our two countries, over the years, we have faced sluggish global economic recovery and anemic growth of global trade. So naturally our economic relations and trade have been affected by the decline in international energy prices and some other factors. I recall that last year, on the same occasion, I expressed the hope for our business relations to turn the corner and achieve strong growth by the end of the year. Thanks to our joint efforts, this has been achieved. In the first two months of this year, there was actually a big surge in China-Russia trade. This shows the tremendous untapped potential of our trade ties and the great complementarity of our economies. I am confident that the goals we set for our two-way trade can be achieved.

Caixin: China's RMB exchange rate has been under pressure of depreciation. To keep exchange rate stable, one has to either dig into foreign exchange reserves or tighten control on the use of foreign currencies. Among the three scenarios of a weaker currency, drop in foreign exchange reserves and tightened currency control, how would you weigh the costs of each scenario and what choice will you make?

Premier Li: First, on the exchange rate. Last year, there has been some volatility on international currency markets. Many currencies especially major global currencies have depreciated against the strengthening US dollar. The depreciation of the Chinese yuan against the dollar is a quite modest one. China has no intention to devalue its currency in order to boost exports, because that is not good for our companies' transformation and upgrading. China has no intention to fight any trade war either, as that is not good for the stability of global trade and the international monetary system. China will continue to push forward the market-oriented reform of its exchange rate regime, and follow a market-based, managed floating exchange rate regime. As the floating band of the Chinese yuan widens, the RMB exchange rate has remained broadly stable at an adaptive and equilibrium level. That is attributable to the sound economic fundamentals in China. By keeping the RMB exchange rate broadly stable, China will continue to contribute to the stability of global monetary system.

China still has the largest foreign exchange reserves among all countries in the world. As to what is the right size for our foreign exchange reserves, I believe that will continue to be up for exploration. All in all, China has ample foreign exchange reserves for meeting relevant needs, like paying for imports or paying off its short-term external debts. And China's foreign exchange reserves are way above the international standard.

As for our recent authenticity and compliance review of the use of foreign currency, that has been a legal provision for a long time, not something new. I want to emphasize that the need of our businesses for normal use of foreign currency and that of individuals to study or travel overseas is assured. The RMB has solid weight in the international monetary system and the RMB exchange rate will remain generally stable.

Reuters: This year, the Chinese government will further reduce ineffective supply and expand effective supply. While doing that, the government needs to ensure that laid-off workers will be re-employed and their basic living needs will be met. If I were a miner or a worker of a steel plant, what kind of new jobs can I expect to get in my province? In what sectors do you expect an increase in job opportunities?

Premier Li:You have given the employment issue a human face. Last year, we took vigorous efforts to cut excessive and outdated capacity in steel and coal sectors as a priority task for supply-side structural reform. A key concern for us in this process is the proper resettlement of laid-off workers. The central government has earmarked 100 billion yuan in a special fund to provide assistance to them and asked local governments to set up matching funds. Last year, proper arrangements were made for 720,000 workers who were laid off as a result of cutting overcapacity. For various reasons, there are still workers yet to find new jobs. In some cases, given the strong attachment between the workers and their employers, some may prefer to stay on a bit longer with their former employers. Still, their essential living needs are provided for.

This year, effort to cut overcapacity will be extended to the coal-fired power generation sector. Factoring in the number carried over from last year, we need to provide assistance to nearly one million people in total. The key is to continue to generate new jobs, including through our efforts to foster new drivers of growth. As I said before, the initiative of mass entrepreneurship and innovation has both created a lot of new jobs and stimulated job creation in traditional sectors, which has helped to revive these industries.

We will not relent our efforts and will continue to put to effective use the central government special fund complemented by funding from local governments. At the same time, businesses also need to fulfill their social responsibilities. So if you were a coal miner, your mine is going to be closed or its production suspended, and you are capable of flexible employment, I will advise you to find a job in sectors with new drivers of growth or move to new jobs generated in the upgraded traditional industries. Moreover, Chinese companies, whose corporate culture encourages close employer-employee relationships, will continue to provide subsidies to their loyal employees for some time to give them a leg-up.

All in all, easing the transition for laid-off workers will remain our top concern in cutting overcapacity and pursuing the supply-side structural reform.

ThePaper.cn: In the run-up to this year's two Sessions, the Chinese government's portal website, together with 27 online media outlets, conducted an online survey on the theme of "What I wish to say to the Premier" to solicit public comments and suggestions for the government. Viewers were further requested by ThePaper.cn and Toutiao.com to vote on entries on people's daily lives. The question of "what will happen to my home when the 70-year term of land use right expires", has received the most votes, or 21.31 million in total. My question is, what will the government do to address this public concern?

Premier Li: Our ancestors believe that one shall have his peace of mind when he possesses a piece of land. So it's understandable for internet users and other members of the general public to feel concerned about the expiry of the 70-year term land use right of their residences. The State Council had asked the relevant departments to respond to these concerns. Specifically, the term can be renewed, and no application or pre-set conditions needs to be filed or met. And the expiry will not affect any transactions over the property. Some people may wonder whether there will be legal safeguards for this right. I want to tell you that the State Council has entrusted relevant departments to speed up their study on relevant laws and come up with a proposal.

Manager Daily of Thailand: The Obama administration adopted a rebalancing policy towards the Asia-Pacific region while the Trump administration is yet to spell out its policy in Asia. Thailand and other countries in Southeast Asia hope this region maintains peace and stability. We don't want to see any conflict between China and the US here, even more reluctant to take sides. How do you view China's present role in the Asia-Pacific region? What is China's ideal order and role for the region? How can China and the US live in peace in this region?

Premier Li: The Asia-Pacific is the common home for all countries in this region. China does not want to see any party feeling compelled to choose sides under the influence of the Cold-War mentality. We believe regional affairs should be handled on the merits of each case and in a way that is conducive to continued peace and stability. As for ASEAN, we always put ASEAN in a priority position in China's neighborhood diplomacy, and support ASEAN community building and its centrality in regional cooperation. China hopes to see an Asia-Pacific that enjoys order and stability, that is able to build consensus through consultation and properly manage differences, and has the wisdom to resolve disputes.

China and ASEAN have been pushing forward the consultation on a code of conduct in the South China Sea. Substantive progress has been made in this regard and we will keep working on that. It is our hope that peace and stability in the South China Sea could be maintained, specific disputes be resolved through dialogue by the parties directly concerned and all countries in the region work together for peace, stability and development.

For years, China and the United States have been cooperating in many areas in the Asia-Pacific region. Many US multinationals place their Asia-Pacific headquarters in China. We hope that the areas of cooperation between the two countries will continue to widen, providing more opportunities for ASEAN countries instead of being a cause of concern for them.

Xinhua News Agency: We've discovered that there is growing complaint on the part of businesses about the heavy burden of taxes and fees. They say that even with hard work, they couldn't make much money. And we've also heard complaints from Chinese consumers that some high-end goods are not yet domestically made. What is your response to their complaints, Mr. Premier? And what steps will the government take to resolve the issue?

Premier Li: I devoted a significant portion of my government work report on further cutting taxes and fees, particularly the myriad of excessive administrative fees that are exacting a heavy burden on businesses. These fees are used to cover certain expenses, such as keeping up some payrolls. To cut down fees, the government must tighten its belt. I have made it clear that the central government will take the lead in doing so and cut its general expenditures by no less than 5% this year. And in my discussions with officials from local governments, they all agreed that this is what they also need to do. So we will use this painful adjustment on the part of the government to make things easier for businesses to enhance their competitiveness. Furthermore, we will take steps this year to cut broadband, electricity and logistics costs. Our goal is to bring down taxes and fees by up to one trillion RMB yuan. A most fundamental measure is to reduce government-imposed transaction cost.

As for the complaints of some Chinese consumers about the quality of domestically made goods, I believe this is an important message to all Chinese businesses to enhance quality control. It is also an important part of the supply-side structural reform. We've launched the Made in China 2025 strategy, which aims to raise the quality of Chinese products and equipment. Some people question if that means China will reduce import and retreat in its opening-up. That is a misunderstanding. On the contrary, raising our own products' quality and upgrading our own industries to a medium-high level would actually require us to open even wider to the outside world and introduce more advanced technologies and products. In this process, we will see to it that intellectual property rights will be well protected for the benefit of their proprietors. As for those high-end products which cannot be manufactured locally for the time being, we may consider lowering tariffs to boost import. In a word, we need to give our consumers more options and more benefits, and most importantly, harden the resolve of Chinese companies to win over consumers with their commitment to high quality and workermanship.

United Daily News of Taiwan: Over the past year, relations across the Taiwan Straits have become complex and grave with an uncertain future. Under such circumstances, what will the mainland do to uphold peaceful development of cross-Straits relations and safeguard the well-being of people on both sides?

Premier Li: People on the two sides of the Taiwan Straits are brothers and sisters. Blood is thicker than water. No matter how the situation on Taiwan may evolve, it cannot sever the fraternal bond between the two sides, or change the history or the reality that both sides of the Taiwan Straits belong to one and the same China. Nor will it weaken our resolve and sincerity for peaceful growth of cross-Straits relations.

Our policy towards Taiwan has been consistent and clear-cut, that is, we will stick to the political foundation of the 1992 consensus, which embodies the one-China principle, firmly oppose Taiwan independence, uphold peace across the Taiwan Straits and peaceful development of cross-Straits relations and improve the well-being of people on both sides.

The peaceful growth of cross-Straits relations has brought new opportunities for people on both sides. According to current statistics, people on Taiwan make 5 million visits across the Straits every year. We will introduce more policies to provide more convenience for people in Taiwan to work and live on the mainland as family. We welcome investment from Taiwan businesses. I recall that at last year's press conference, I was asked whether the mainland will keep preferential policies toward Taiwan businesses. I wish to reiterate here that such policies will be maintained to enable Taiwan businesses and people to share in China's development opportunities with their compatriots on the mainland. After all, we are one family.

Radio France: The European Union is China's second largest commercial partner with a trade deficit of 137 billion euros in favor of China and a large number of European businesses complain about that. What is China proposing to improve market access condition for European businesses? And what about better reciprocity of foreign investments?

Premier Li: You rightly referred to the trade deficit figure as EU statistics. The fact of the matter is, China never goes after trade surpluses. What we want is balanced trade, as unbalanced trade would not be sustainable. Talking about profits, I think European companies have not just earned profits in China, but have also taken the lion's share of such profits, as they are at the higher end of the industrial chain. If the EU could ease its restrictions on high-tech exports to China, I believe that would make a big difference in our trade balance.

China has proposed to the EU to push forward the BIT negotiations. We hope to receive a positive response. A high-standard BIT will help two-way opening-up between the two sides. And pending that, we will continue to widen market access for European businesses and ensure that European-invested companies registered in China receive the same treatment as domestic Chinese enterprises. With respect to trade frictions between the two sides, we have gained good experience in properly addressing them.

Here I want to emphasize that China has all along supported a united, prosperous and stable European Union, a strong euro, and the European integration process. We believe that is good for economic globalization, for a multipolar world and for diversity of civilizations. We feel optimistic about the future of the EU and the future of China-EU relations.

Beijing News: In recent years, smog has caused great public concern and severely affected people's lives. Yet we also discover that whenever a major event is held, the smog would disappear and people would take pictures of blue skies and post them online with much excitement. So I want to ask you, Mr. Premier, what can you do to make sure that blue skies are no longer a luxury?

Premier Li: I fully understand that the smog is a huge irritant in people's lives. Like air, blue skies treat everyone equally. We all want to see more blue-sky days. In the course of development, China is confronted with severe environmental challenges, smog in particular. In my government work report, I laid out five key measures for smog control and we will push them through with full determination to fight and win the battle on smog. But to be honest with you, that will take time.

The main targets for smog control would be to tackle coal-burning, vehicle emissions and dust. In addition, during this year's Two Sessions, I was told by a scientist that apart from these obvious causes, we have not yet fully understood how smog is formed, which is as important. He said, the smog in Northern China during winter is unique compared to that in other parts of the world. Of course, this is not the proper venue to expand on this subject, and the scientists will have to conduct further research. But one thing I can tell you is that we will set up a special fund to bring in the best scientists to dig into this matter regardless of cost and uncover the unknown factors to make our campaign against smog more effective.

We may not be able to control the weather, but we can adjust our behavior and our way of development. I feel the same way as you all do. Smog must be put under control and blue skies should no longer be a luxury, nor will it be.

China Consumer News: Today is the Consumers' Rights Day. Can you say a few words to consumers, Mr. Premier?

Premier Li: You and I are all consumers, and we all need protection of our rights. To use popular Internet language, we should give "thumbs-up" to quality products and "blacklist" those bad traders. With joint efforts, we will enjoy more quality products and a better life year after year.

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