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| Address at the seminar on China Goes Global in the UK Parliament |
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| 2007-04-12 16:49 MOFCOM |
Ma Xiuhong, Vice Minister of MOFCOM
Your Honor Secretary McCartney,
Your Honor Chairman Chapman,
Your Honor Mr. Wolf,
Ladies and Gentlemen,
Good morning!
It’s my great pleasure to attend the seminar on China Goes Global at Westminster. This year the UK Parliament will have a series of discussions focusing on China’s development and economic and trade issues. I believe this exercise is vital to deepening the comprehensive strategic partnership between China and the UK. I would like to thank the Committee on Trade and Industry of the Lower House and the China Group of the Parliament for their warm invitation, for giving me the opportunity to join the discussion on China Goes Global with friends from the UK Parliament and business community. All the friends present here are people of vision, who watch closely and are committed to the development of Sino-UK economic and trade ties. On behalf of the Ministry of Commerce of the People’s Republic of China, I would like to express my heartfelt gratitude for your positive contribution to our bilateral relations as well as trade and economic cooperation.
The title of my speech is “Adhering to the basic state policy of opening up and developing comprehensive, mutually beneficial and win-win China-UK economic and trade relations”.
Ladies and Gentlemen,
Since 1978 when China started reform and opening-up, its economy has been developing rapidly and the living standards of the Chinese people have been notably improved. The unprecedented social changes and expanding liberalization have injected great vigor into China’s development and vitality into the global economy.
Opening-up is China’s basic state policy. Over the past 28 years of reform and opening up, China has witnessed remarkable achievements in economic and social development. China’s GDP has increased from 216.5 billion USD at the outset of reform and opening up to 2.6 trillion USD in 2006 with an annual growth rate of 9.6%, raising China’s global ranking from No. 15 to No. 4. China’s import and export has gone up from 20.6 billion USD to 1.7 trillion USD, up from No. 32 to No.3. China has accumulatively attracted more than 700 billion USD of FDI, ranking No.1 for 16 consecutive years among developing countries. The overseas direct investment (financial sector investment not included) by Chinese enterprises has exceeded 73 billion USD and registered at 16.1 billion USD in the year of 2006, jumping to the 13th place in the world.
China’s sustained and rapid economic growth is attributed to opening-up and effective utilization of foreign direct investment. Attracting FDI is an important element of the basic state policy of opening up. 28 years of foreign investment has resulted in nearly 600,000 companies in China, covering virtually all sectors such as agriculture, manufacturing and services. They have become an indispensable factor behind China’s economic growth. In 2006, foreign invested enterprises accounted for 29%, 59%, 51% and 21% respectively of China’s total industrial added value, import and export volume, technology transfer, and tax revenue. These enterprises directly employ more than 28 million people, or more than 10% of the total workforce in Chinese cities and towns. By the end of 2006, nearly 200 countries and regions and more than 480 Fortune 500 companies had invested in China. Over 850 R&D facilities had been set up in China with foreign investment. Opening-up in the past 28 years is a testimony that wise and active use of foreign investment has promoted sustained, rapid and sound economic development in China, and has played an important role in shaping and improving the socialist market economy.
Active FDI utilization facilitates the creation of an open economy in China. Through efficient and active use of foreign capital, China has brought in a large amount of advanced technology, talents, investment, management expertise, marketing models, international competition mechanisms, as well as international rules and standards. This has further freed and updated people’s mindset and accelerated China’s integration into the world economy on the back of technological advancement and industrial restructuring and upgrading.
China’s opening-up is a combination of “inviting in” and “going global”. As one of the two important sides of our basic state policy of opening-up, “going global” has been identified as a major national strategy by the Chinese government. To promote the development of an open economy, while boosting inward investment, the Chinese government also encourages competent Chinese enterprises to invest overseas and actively explore foreign trade and economic cooperation. Encouraged by the government, Chinese enterprises have made great strides in implementing the strategy of “going global”. By the end of 2006, nearly 8,000 Chinese-invested enterprises had been set up in some 160 countries and regions with direct Chinese investment surpassing 73 billion USD. The areas of overseas Chinese investment have expanded from import and export, shipping and catering to cover manufacturing, agricultural cooperation, resource development, project contracting, R&D and others. Meanwhile, the forms of investment have also diversified from the simple business establishment to cross-border mergers and acquisitions, equity swap, overseas listing, R&D centers and industrial parks.
Reform and opening-up has substantially lifted Chinese people’s living standards. Over the past 28 years, the per-capita disposable income in Chinese cities and towns has increased by 30 times, the per capita net income in rural areas has risen by 23 times and the population in poverty has decreased from 250 million to 23 million with more than 200 million people out of absolute poverty. Over the past 10 years, per capita consumption in Chinese urban and rural areas has increased by a large margin with housing area up by over 40% and mobile phone subscribers rising to 390 million. The public now has more choices for cultural life and entertainment. Higher education has made a historical leap-forward, reaching a population of 23 million people. In 2006, China ranked No.1 with 137 million Internet-users and No.2 with a 7.21-million-unit car sale. Online game subscribers exceeded 100 million; and tourism also grew at a high speed with inbound and outbound tourists hitting 1.39 billion person-times and 34.52 million person-times respectively.
China’s opening-up has promoted the harmonious development of the world economy. After 28 years of opening-up, the Chinese economy is now deeply integrated with the global economy. With rapid economic growth, China is becoming a new driving force for global economic growth. At present, China’s GDP takes up only less than 5% of the world’s total, yet its contribution to global economic growth is over 10%. China’s foreign trade volume accounts for less than 7% of the world’s total, but its contribution to global trade growth is 12%. As domestic demand grows, China has quickly assumed the status as the world’s third largest importer, creating more manufacturing and job opportunities for many trade partners. At the same time, high-quality and low-price Chinese goods have saved the costs for importing nations, raised the level of consumption and brought greater good to consumers in those countries. Facts have proven that China’s development is in peace and harmony, through opening-up and in the context of win-win and mutually beneficial development with other countries. China cannot develop without the world, while the world needs China for its prosperity.
China has entered a new stage of opening-up. China’s WTO accession has fast-tracked its reform and opening up, in addition to being a milestone in the whole process. Five years into accession, China has faithfully followed WTO rules, fully honored its WTO commitments and obligations, actively adjusted its foreign trade policy, consistently built on its market economy and unswervingly strengthened IPR protection.
In these five years, the Chinese government streamlined and amended about 3,000 laws, regulations and department rules, established a WTO-compatible legal framework and a fairly comprehensive IPR system, intensified law enforcement, and improved transparency. China’s opening-up has entered a new stage ruled by law. In these 5 years, China lowered its general tariff level from 15.3% to 9.8%, opened trading and distribution rights, removed non-tariff measures, and liberalized more than 100 services sectors such as banking, insurance, securities, telecommunications service and distribution. Now China is one of the most liberalized markets in the world.
China’s efforts in honoring WTO commitments and opening wider to the outside world have paid off tangibly. Over the past 5 years, China have imported commodities with worth 2.7 trillion USD from some 220 countries and regions. In 2006, the import volume reached 800 billion USD, 4.3 times that of 2001. As a result, China’s global ranking as an importer has jumped from No.6 to No.3, only after the US and Germany, and its share also increased from 3.4% to 6.5%. In the same year, 308.8 billion USD of foreign investment was channeled into China, accounting for 49.2% of the total attracted FDI for the past 28 years. Outward investment amounted to 37.73 billion USD, accounting for 51.5% of the total accumulative outward investment. Financial sector liberalization is full-fledged. In 2005 and 2006 alone, the banking sector attracted over 18.1 billion USD of FDI. By the end of 2006, 74 foreign banks had set up 312 operations in China. 28 foreign strategic investors had invested and joined stock in 21 Chinese banks. 31 overseas financial institutions had set up 31 securities and fund management joint ventures in China. 44 foreign insurers had set up 115 insurance agencies in China. And China’s top 4 commercial banks have successfully listed abroad.
In the new era, China will embrace the world with a more positive stance. At present, China is at the crucial stage of building a well-off society and a harmonious socialist society. Its economic development is at a new starting point in history. China is the largest developing country with a huge population, a less-developed foundation, a large gap between urban and rural development and among different regions. Per-capita GDP still ranks behind 100th in the world. To change under-developed productivity will be a long and arduous task for China. Given a clear understanding of its national conditions and with a view to meeting new development targets for the new era, China must stick to reform and opening-up, adapt to new trends of economic globalization, and firmly seize the hard-won opportunities in the new round of world economic restructuring, thus bringing opening-up to a new level.
China will adhere to the policy of expanding domestic demand and continue to practice a balanced trade policy. It will strengthen cooperation with international, multilateral and regional economic organizations, and carry forward trade and investment facilitation. It will intensify and expand exchanges and cooperation with other countries on the basis of equality and mutual benefits, to gear economic globalization towards common prosperity.
China has set the target of building a well-off society and reaching a 4-trillion-USD GDP by 2020. With its 1.3-billion population, fast and stable economic development, China is a source of unlimited business opportunities, and will provide its many partners, the UK and others, with a large market and greater cooperation possibilities.
Ladies and Gentlemen,
This year marks the 35th anniversary of the establishment of diplomatic relations between China and the UK. The UK was an “icebreaker” among all western countries to first recognize the People’s Republic of China, and one of the first few to start trade and economic relations with new China. Over the past 35 years of China-UK diplomatic relationship, we have made remarkable achievements bilaterally. In 2004, a comprehensive strategic partnership was forged between the two. Since then, bilateral strategic interests have been expanding. Cooperation in key areas has yielded encouraging results. The mutual understanding and friendship between the two peoples has deepened. The deepening of Sino-UK relationship has pushed our trade and economic cooperation into a new stage.
In recent years, China and the UK have witnessed frequent high-level exchange of visits. President Hu Jintao and Premier Wen Jiabao successively visited the UK. Prime Minister Blair and Deputy Prime Minister Prescott also visited China on many occasions. Exchanges and cooperation at various levels are also picking up, which not only promotes healthy relationship between the two countries, but also boosts trade and economic cooperation.
The fast development of China-UK trade and economic cooperation fully demonstrates the sound relationship between the two countries. In 2004 during Premier Wen Jiabao’s visit to the UK, he and Prime Minister Blair laid down the target of a 20-billion-USD bilateral trade within 3 years. Actually it only took us one year to meet the target. In 2006, China-UK trade was on a new page, exceeding 30 billion USD at 30.7 billion, with a year-on-year increase of 25%. In the new century, China-UK trade remains robust with average annual growth at 20%. Judging from the current momentum, the phase-II target set by Chinese and British leaderships of a 40-billion-USD bilateral trade by 2010 will hopefully be met ahead of schedule in 2008.
The UK is China’s third largest trade partner and top investor within the EU. By the end of 2006, UK-invested projects in China had reached an accumulative total of 5,359, with an actual investment of 13.9 billion USD. In recent years, many British companies have continued to expand their China business. BP and Shell have again scaled up their investment in China. British banking corporations such as HSBC, StandardChartered and RBS all participated in China’s banking sector. A number of British business giants such as AstraZeneca and Tesco are bringing new investment or projects to China. We’re also delighted to see growing Chinese investment in the UK. Some capable Chinese companies already established or are considering establishing commercial presence in the UK, first Bank of China, then the Industrial and Commercial Bank of China, both have started business in London. Huawei and China Telecom have located their European headquarters in London. Shanghai Automotive Industrial Corporation and Nanjing Automobile Corporation have partnered with MG Rover. The Shanghai automaker has also set up a R&D center in Birmingham.
Despite having an early start, a solid foundation and a robust momentum, China-UK trade and economic cooperation still leaves a lot to be desired when compared to the economic strengths and actual needs of both countries. In 2005, China and the UK ranked as the 4th and 5th economy in the world and No.3 and No.6 in terms of import and export. However, China-UK bilateral trade only accounted for less than 2% of China’s total foreign trade and less than 3% of the UK’s. The UK was the world’s third largest investor and China the third largest FDI recipient, however, the UK’s investment in China was less than 1% of its total outward investment and less than 2% of FDI inflow into China. The UK is also far behind Germany and France with regard to technology exports to China. Since China and the UK enjoy enormous potential and ample prospects for trade and economic cooperation, it is imperative that the two governments and business communities strengthen exchanges and cooperation, pass along the courage and wisdom of the former icebreakers, and elevate this cooperation to a higher level.
China and the UK share similar positions and sound cooperation in international trade and economic affairs. The UK is always for free trade and against trade protectionism. We appreciate the UK’s active push within the EU for greater trade and economic cooperation with China and we’re grateful for UK’s positive role in facilitating the EU’s recognition of China’s Market Economy Status and opposing the EU’s antidumping measures against Chinese products. China firmly believes strengthening and improving the multilateral trading system is the first and fundamental means to fair trade and global trade liberalization. The UK plays a vital role in the multilateral trading system. As a WTO member, China is ready to step up coordination and cooperation with the UK, jointly promote positive progress on the Doha round of talks and contribute to the final success of the Doha round.
Ladies and Gentlemen,
The 11th Five-year Plan China is implementing from 2006 to 2010 will bring the Chinese economy into a new phase of steady growth, in which, China will deepen its reform, and will become more open and liberalized. Over the next five years, China’s annual GDP growth is estimated at above 8%. The Chinese government uses domestic demand as one of the important engines for economic growth, and is adopting a series of measures to further expand the commodity and services markets. If the average annual growth rate could reach 13%, the total retail sales of consumer goods and production factors would reach around 4.8 trillion US dollars by 2010. If the rate could reach 16%, China’s import would achieve 1.2 trillion US dollars by 2010. China enjoys broad prospect for economic development, and offers abundant business opportunities in its opening market.
China and the United Kingdom have big differences in economic structure and development level. The two economies are complementary, and the trade and economic cooperation is mutually beneficial. This nature is the basis and driving force for the sustained development of trade and economic ties between the two nations.
Many friends present here today have witnessed and promoted the development of Sino-UK economic and trade ties. I hope that, members of the UK Parliament and business community will continue their contribution to the common development of our two countries. Let’s work together for a better future.
Thank you!
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