Professor Klaus Schwab, Executive Chairman of the World

Economic Forum,

Distinguished guests,

Ladies and gentlemen,

Let me begin by extending, on behalf of the Chinese Government and in my own name, warm congratulations on the opening of the World Economic Forum Summer Davos 2008 in Tianjin and a warm welcome to you all!

In the 37 years since its inception, the World Economic Forum has grown into an important platform for international exchanges and dialogue and played an active role in promoting world development and progress. Last year, the Summer Davos had its first successful annual meeting in Dalian, China and now it is holding this second annual meeting in Tianjin. We applaud the Forum’s progress and achievements and are pleased with the deepened cooperation between China and the Forum.

This year marks the 30th anniversary of reform and opening-up in China. What was China like 30 years ago? At that time, we had just put an end to the “cultural revolution,” and the country was in a backward and closed or semi-closed state with the economy on the brink of collapse. “Where should China go” was a big and pressing question facing the Chinese people. Following the principles of freeing minds and seeking truth from facts, we chose the path of reform and opening-up, a critical choice that has since shaped the course of development of contemporary China.

China’s reform began in the rural areas. It spread from the country to cities and from the economic sector to the political, cultural, social and all other fields. What started as a small stream grew into an unstoppable mighty current. The opening-up endeavor started with the establishment of Shenzhen and three other special economic zones and expanded to cities along the coast, rivers and border areas and eventually became an all-directional and multi-tiered opening-up. We have achieved the historic transition from a highly centralized planned economy to a vibrant socialist market economy and from a closed or semi-closed society to one that is fully open to the outside world. We have established the basic economic system for the primary stage of socialism, a modern corporate system that meets the needs of the market economy, and a modern market system that is unified, open, competitive and in good order. We have built a macro-economic regulation system that relies mainly on economic and legal means. And we have gradually improved the system under which distribution according to work is dominant and a variety of distribution modes coexist. The social safety net has been further improved for greater equity and justice. At the same time, we have advanced reform in education, culture, science, technology, health and other areas, promoted political restructuring with the focus on expanding socialist democracy and adopted the strategy of building a country under the rule of law.

Reform and opening-up brought a fundamental change to the closed, backward and ossified situation that existed in China for years. They freed people’s minds, broke the institutional barriers to development, unleashed tremendous enthusiasm and creativity of hundreds of millions of Chinese people, injected great vigor and vitality into the nation, and greatly stimulated economic and social development. As a result, China has achieved 30 years of continued fast economic growth. Back in 1978, China’s GDP accounted for only 1 percent of the world’s total. By 2007, it was over 5 percent. China’s share in global trade jumped from less than 1 percent to roughly 8 percent during this period. Reform and opening-up have delivered real benefits to the people, whose livelihood has undergone great changes-from lack of adequate food and clothing to moderate prosperity. What is more important is that reform and opening-up have invigorated the whole society and enabled people to freely pursue a happy life through hard work, frugality and wisdom.

Ladies and gentlemen,

China’s changes over the past three decades would not have been possible without reform and opening-up. To meet the goals of the modernization drive and build China into a prosperous, strong, democratic, culturally advanced and harmonious country, we must remain committed to reform and opening-up. China is still in the primary stage of socialism and will remain so for a long time to come, and there are many economic and social issues that call for our attention. For example, there is a lack of balance and coordination in the development between urban and rural areas, among different regions and between the economic and social sectors. The pattern of economic growth remains extensive. There are heavy population, resources and environmental pressures, as well as many challenges in employment, social security, income distribution, education and health. Corruption is also a serious problem. The fundamental solution to these problems lies in deepened reform. Only by continuing reform and opening-up and unswervingly following the path of socialism with distinctive Chinese features can China have a bright future. Reform and opening-up must be carried on through the entire process of China’s modernization drive.

--We will continue to deepen economic reform. We will further improve the basic economic system and market system, deepen reform of the fiscal, taxation and banking systems and improve the macro-economic regulation system. At the current stage, it is particularly important to accelerate reform of the price-setting mechanism of resource products, bring into full play the basic role of the market in resource allocation, further deepen reform to institute the shareholding system in SOEs and improve the modern corporate system. We will build better public finance and transfer payment systems, push forward reform of value-added tax, set up and improve the compensation systems for use of resources and for damage caused to the ecosystem, and carry forward reform of the resource tax system. We will also work hard to develop financial markets of various types, promote stable and sound development of the capital market, improve the renminbi exchange rate regime and gradually make renminbi convertible under capital accounts. By deepening reform, we aim to build a whole set of systems that can better meet the needs of modern economic development.

--We will continue to promote political restructuring and reform in other aspects. People’s democracy is the lifeblood of socialism. Without democracy, there can be no socialism. We will not only improve people’s lives by developing economy, but also protect their democratic rights