China must rely on reforms to help maintain a medium-to-high rate of economic growth over the long term, Chinese President Xi Jinping said on Saturday, as the country undergoes structural changes, including reductions in excess factory capacity.
Speaking to a business forum on the eve of a summit of leaders of the world’s 20 biggest economies in Hangzhou, Xi said the G20 should combine monetary and fiscal policies with structural reforms to promote growth, and warned that isolationism could not resolve problems faced by the global economy.
“We must rely on reforms to maintain a medium- to high-speed economic growth rate, hanging back will lose opportunities,” Xi said.
“China has made clear the direction of its reforms and it will not waver; reform steps will go forward, not slow down.” Xi said plans to cut excess capacity in the steel and coal sectors were based on consideration of China’s long-term growth and structural adjustments.
The United States has been pressuring China to step up its efforts to reduce excess industrial capacity. “In regard to capacity cuts, China’s measure is the strongest and most practical, and we will fulfil our promises,” Xi said.
Xi pledged to break through resistance from vested interests to forge ahead with changes, with the aim of letting market forces play a decisive role in allocating resources.
China would continue to push yuan internationalisation and gradually open up the capital account, he said. The global economic recovery remained weak and G20 countries should take steps to revive trade and investment, Xi said, pointing to challenges including the refugee crisis, climate change and terrorism.
At a time when China has rattled nerves around the region with its increasingly assertive stance on disputes like the South China Sea, and ambitious military modernisation programme, Xi said China was committed to peaceful development.
“To seek harmony and coexistence has been in the genes of the Chinese nation throughout history, and it represents the very essence of eastern civilization,” he said. “The logic that a strong country is bound to seek hegemony no longer applies, and the wilful use of force will lead nowhere.”