Chinese Premier Li Keqiang tells WEF digital is key to China's industrial revolution

Key takeaways from Premier Li's WEF address

The world's number-two economy will cultivate new growth drivers to become an innovation-driven country, Chinese Premier Li Keqiang declared on Monday.

Addressing the World Economic Forum (WEF) in Tianjin, also known as the "Summer Davos," Li focused the bulk of his speech on promoting entrepreneurship and highlighting policies catering to the sharing economy.

"We are embracing a new round of industrial revolution," he said. "We need to implement innovation-driven development."

The measures Li touted included pushing ahead with the Internet Plus initiative, a Chinese program aimed at boosting its mobile internet, e-commerce and cloud computing sectors in the international market. China would also ensure that the Internet of Things (ioT), cloud computing and other information technologies were applied to everyday life, Li said.

These new drivers would play a bigger role in securing employment and increasing wages going forward, as well as helping the country maintain a medium-to-high growth rate and opening up new economic prospects, he added.

"The sharing economy gives everyone a fighting change to achieve their dreams," the Premier said.

Dan Starta, a partner and head of Greater China at the consultancy ATKearney, told CNBC that China had already surpassed the European Union in terms of research and development spending on technological innovations and was challenging the U.S. in terms of the number of patents it filed.

"China's Huawei took the top spot for most patents filed for the second consecutive year in 2015, while ZTE was ranked third," Starta said of the Chinese smartphone giants.

The country had also made strides in enticing multinationals to invest on innovating in China, he said, citing Ford's $1.8 billion, give-year project to add smart technologies such as autonomous driving to the vehicles it sold in China.

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Li's focus on innovation comes as Beijing move away from resource and investment-fueled growth to one led by consumption, tolerating dramatically slower gross domestic product (GDP) as a result.

In an attempt to address bubbling market concerns about a deep economic slowdown, Li reiterated that the economy remained stable.

"China will not head for a hard landing, we are capable of meeting primary targets for economic and social development this year," he told the gathering in Tianjin.

He pointed to steady rises in corporate profits within the industrial sector, service-sector expansion, stable consumer price inflation and narrowing declines in producer price inflation as justification for his faith in a soft landing for China's economy.

He also noted the government's progress in job creation, noting that 5.7 million new jobs were created in urban sectors, marking 58 percent completion of Beijing's annual job-creation target.

ATKearney's Starta confirmed that tech had already played a key role in boosting China's domestic consumption, noting that China was now the world's largest smartphone market, on track to have more than 530 million users of the high-tech phones by the end of 2016.

The ability to stay connected helped China also become the world's biggest e-commerce market, clocking up sales of $672 billion in 2015, up 42 percent on the previous year, he said.

"Mobile commerce grew 140 percent to $334 billion, or roughly half of all online sales," Starta said. "This helped in boosting overall retail sales in China, which grew 8.1 percent in 2015, outpacing GDP growth."

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Alluding to criticism that China was sitting on a bad-debt bubble, Li said that China's central government debt ratio was about 16 percent, better than its Western counterparts, and that Beijing would create conditions that would allow for lower corporate leverage ratios and financing costs.

Despite market speculation that the renminbi would depreciate further, Li repeated that the country's economic health did not warrant devaluation and said the currency would remain stable.

But Li was also quick to acknowledge the risks accompanying China's transformation.

"Difficulties can't be underestimated…We will implement proactive fiscal policy with greater efficiency, maintain prudent monetary policy and channel more resources to strengthen weak links," he said.

"Short-term fluctuations in growth are unavoidable, and there may be changes to traditional economic indicators but we should understand that the changes brought on by development of the new economy aren't fully visible yet."

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He said Beijing would continue pressing ahead with structural reforms, including streamlining state-owned enterprises (SOEs), tackling overcapacity, proving greater market access to the private sector, ensuring workers were skilled for further employment and opening up the country's services and manufacturing sectors.

"We will make more a more fair and equitable environment for investment from outside companies," Li said.

Commenting on the implications of Britain's milestone Thursday referendum, in which the U.K. voted to leave the European Union, Li said the Brexit added a new layer of uncertainty to the global economy at a time when its recovery was only tepid.

Still, he said, China remained committed to growing ties with the U.K., as well as the EU, in the future.

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