Li Keqiang: Adjusting the structure and stabilizing growth has achieved results
September 02 01:00:47, 2025
China's economy needs to maintain stable growth while adjusting its structure. The challenge lies in balancing these two objectives, especially during economic downturns. Many local governments have returned to the old path of investment-driven growth, raising concerns about whether this will hinder the adjustment of the economic structure.
On the evening of September 10, 2013, during the Summer Davos Forum, Premier Li Keqiang addressed international business leaders and emphasized that China's strategy is to focus on reform dividends, stimulate market vitality, and prioritize structural adjustment and development model transformation. He noted that these efforts have already begun to show results.
His speech at the opening ceremony of the 7th Summer Davos Forum drew significant attention from foreign experts and media, who believed it would boost confidence in the Chinese economy. Fu Peng, a macroeconomic consultant at Galaxy Futures, pointed out that China cannot completely abandon growth for structural adjustment, nor can it adjust structure without considering growth. Finding the right balance is key to solving China’s economic challenges.
This year, China’s growth has slowed down quarter by quarter. In the first half of 2013, the economy grew by 7.6%, with the first quarter at 7.7% and the second at 7.5%. Instead of launching another large-scale stimulus package, the government implemented a series of reforms aimed at maintaining a reasonable economic range.
Premier Li warned that increasing deficits or loosening monetary policy might provide short-term relief but could harm long-term stability. His approach is to stabilize macro policies while promoting growth, adjusting structure, and advancing reform. At a meeting later that night, he reiterated that when growth slows, the focus should be on reform dividends, market vitality, and structural adjustment—combining them with steady growth.
Recent data from the National Bureau of Statistics shows signs of recovery, with indicators like PMI, PPI, and industrial output showing improvement. Li Keqiang highlighted that China’s economy is entering a phase of medium-to-high-speed growth, with more exciting developments ahead.
Wang Yiming, an executive vice president at the National Development and Reform Commission’s Macroeconomic Research Institute, also noted positive signals in the economy, suggesting that structural changes are beginning to take effect. He explained that China’s economy is in a transition phase, with slower growth compared to previous years, which has brought new risks such as local debt, financial system vulnerabilities, and overcapacity. These challenges have accelerated the need for structural reforms.
Li Keqiang acknowledged that China’s economic structure still faces issues of imbalance, inconsistency, and unsustainability. Optimizing the structure remains a major task and a source of future growth. However, local governments continue to rely heavily on investment-driven growth, which could undermine structural adjustments.
Tan Yaling, dean of the China Foreign Exchange Investment Research Institute, pointed out that local governments have strong investment incentives, often driven by investment rather than sustainable growth. If their industrial policies remain unclear, structural adjustments may not lead to meaningful change. Additionally, banks’ risk-averse and profit-oriented approaches mean they tend to invest in government-led projects, ensuring stable returns.
Finance Minister Lou Jiwei stated that China will not implement a large-scale fiscal stimulus this year, focusing instead on monetary control. The central bank continued its “stable monetary policy†approach, maintaining a firm stance even amid short-term market fluctuations.
Zhang Xiaoqiang, deputy director of the National Development and Reform Commission, admitted that adjusting the industrial structure presents three main challenges: a weak agricultural base, a lagging service sector, and an underdeveloped manufacturing industry. He called for upgrading manufacturing, accelerating emerging industries, and eliminating excess capacity through integration with information technology.
Li Keqiang also emphasized the importance of developing the service sector, which is crucial for employment. China’s service sector lags behind both the global average and similar developing countries. Experts argue that structural adjustment and growth do not have to be conflicting. By reducing unnecessary government intervention and creating a better institutional environment, the private sector can thrive, leading to sustainable growth.
Since the start of the year, the State Council has pushed for administrative reforms, canceling over 200 approval items to create a fairer business environment and stimulate market innovation. Li Keqiang stressed that reform and innovation are essential for unlocking economic momentum. The key is to define the relationship between government, market, and society, allowing the market to play its role while the government manages what it should.
In July and August, the State Council introduced eight measures to support economic development, including promoting information consumption, the "Broadband China" strategy, tax cuts for small businesses, and railway investment reforms. Fu Peng described these as “micro-stimulus†policies, combining growth support with financial market reforms to ensure effectiveness.
He believes that while macro policies matter, micro-level implementation is equally important. If funds are misdirected, such as into real estate, the stimulus may fail. However, China’s proactive approach to structural adjustment, combined with growth, ensures sufficient employment and economic stability.
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