CCTV-NEWS：赵克锋：World Economic Forum

采访视频链接：http://english.cntv.cn/2015/09/11/VIDE1441951575541420.shtml

1. What are your impressions of this year’s Summer Davos?

First, many notable speakers there remained optimistic about China’s economy in the longer run. Premier Li Keqiang again said there would not be a hard-landing of China’s growth. Peking University professor Justin Lin remained optimistic that China woud grow at 7% or so in the next five years and Tsinghua University Professor David Li predicted a strong rebound of China’s economy in 2-3 years. While China is contributing to 1/3 of world’s growth, IMF vice-chairman Zhu Min and other speakers were consistent with the view that the poor performance of the world’s economy has been dragging the growth of China.

Second, speakers were trying to second-guess in different ways what the new RMB policy would be. While the US dollars has appreciated 20% against major currencies recently, RMB remained rather stable with the US dollars until last month’s sudden depreciation adjustment by the China’s central bank. Rather than necessarily thinking it as a depreciating trend, views have been voiced that it could be a welcoming sign that the central bank has changed the mechanism to adjust RMB as well as a gesture for gaining IMF’s special drawing rights for RMB.

Third, speakers have been concerned about the slow reform of state-own enterprises.

Lastly, Premier Li Keqiang has echoed his views in recent months about government’s support of mass entrepreneurships and innovation.

2. What is your interpretation of Premier Li Keqiang’s “production capacity cooperation”?

Premier Li Keqiang correctly pointed out the importance of comparative advantage, going back to econ 101, going back to the basics of Ricardo’s view about how nations grow.

But the market itself is doing it already. It would be helpful if the government could be more specific about what new the government would be doing. Only allowing free trade and the removal of industrial policies will allow us to take full advantage of comparative advantage. But the perfect form of free trade almost never happened except a few places like Hong Kong.

The premise of the new slogan of “production capacity cooperation” is the over-capacity in industrial production.  It is a common mistake, however, that over-capacity is one-size-fits-all. China has “over-capacity” in the lower end of production but we are still very much lacking in the higher-end production capacity. And we must also ask the question if there is a barrier in price that prevents it to adjust quickly to absorb over-capacity.