Remarks by H.E. Ambassador Song Zhe at the Reception of the European Union Chamber of Commerce in China
2010/09/23
President Jacques de Boisséson,
Ladies and Gentlemen,
Good evening,
I am very happy to once again meet our friends from the European Union Chamber of Commerce in China (EUCCC). Today is the first time for Mr. Boisséson to submit the Position Paper to relevant authorities both in China and the EU in the capacity as the Chamber President. On behalf of the China Mission, I wish to express my heartfelt appreciation to President Boisséson and the Chamber. I would also like to express my sincere greetings and best wishes to European entrepreneurs for your long standing contribution to China-EU friendship.
The 13th China-EU Summit and the 6th China-EU Business Summit will be held here in Brussels in a few days. As major highlights of our recent bilateral relations, these events will help us boost strategic mutual trust, expand mutually beneficial cooperation, and point out the future direction of our relations. Business cooperation, as an all-time integral part of China-EU ties, has always received constant attention during previous China-EU Summit discussions.
In recent years, we have witnessed huge progress in China-EU business ties. Our trade and investment cooperation has shown strong resilience against the financial crisis even in the most difficult moments of year 2009. There was no major tumbling falls. This year, with the recovery growth in place, our economic and trade cooperation has maintained a strong momentum of growth. Chinese statistics shows that our bilateral trade grew by 36.2% in the first eight months this year, and EU investment in China increased by 21.8%, both exceeding the pre-crisis level. The EU is China's largest trading partner, export market, and source of technology transfer. China is EU's second largest trading partner and export market.
The strong and rapid growth in China-EU business cooperation against the slow world recovery is attributable to three factors.
First, economic complementarity constitutes a solid basis for China-EU business ties. Europe enjoys remarkable advantage in science and technology, capital market, international marketing, hi-tech manufacturing, exclusive brands, energy conservation, and environment protection. In China, the abundant labor resource and low production cost make us competitive in consumer goods manufacturing and other labor intensive industries. While the EU is already in the period of post-industrialization, featuring innovation-driven economy, China is still in the process of speedy industrialization and urbanization. Such structural complementarity provides a huge room for the growth of our business cooperation.
Second, mutual benefit provides a strong driving force for the China-EU economic and trade cooperation. Capital and technology investment from Europe, while making corporate profits for European companies, has also benefited China's competitiveness, industrialization, economic and job growth, and the upgrade of economic growth pattern. With the low-price quality goods from China, European households are able to make huge savings on consumer goods, and businesses could cut a bulk of their production cost, creating a favorable market for Chinese business growth. Such mutual benefit, acting like a strong driving force, encourages businesses from the two sides to further expand each other's market. BASF plans to make 2 billion Euros investment in China over the next four years. In fact, as the survey released by the EUCCC in June suggested, 64% of European companies in China ranked China as their first or among top three destinations for future investment.
Third, coordinated policy creates favorable environment for China-EU business cooperation. Globalization has lead to a huge and complicated web of economic ties among different countries, where both positive and negative factors could produce systematic impact. Today, major economies have greater common interests and shared responsibilities to maintain world economic stability. Over the last two years, China and Europe have maintained close coordination and cooperation in joint response to the financial crisis both at bilateral level and on such multilateral occasions as the G20. Our maintenance of open market and opposition to protectionism helped promote economic recovery and growth not only in China and Europe, but also in the world at large, creating a stable and enabling environment for our economic and trade cooperation.
Ladies and Gentlemen,
Macroeconomic environment and policy support are essential for China-EU economic and trade cooperation. Although the Chinese government is still trimming the final text of the 12th Five Year Plan, which will determine China's development landscape over the next five years, it is safe to conclude that we will accelerate the pace to modify our growth pattern and economic structure. These changes will provide huge business opportunities for European and other foreign enterprises in the following four aspects.
First, consumer market. Averaging a 14.4% growth rate since 1978, China is among the world's fastest growing consumer countries-three times the world's average speed. Last year, China became the world's largest auto market and the fourth largest consumer market, only behind the United States, Japan and Germany. Over the next five years, we will work hard to boost domestic demand, and make economic growth more driven by the increase in end consumption. The boom in the consumer market and the upgrade in the consumption structure will stimulate greater high-end consumption. Some experts forecasted that China will have the world's second biggest end consumption volume of 5 trillion US dollars and become the word's largest consumer of luxury goods by 2015. We wish that European businesses will find growth out of the huge demand of the Chinese market.
Second, industrial structural change. We will optimize our industrial mix over the next five years. We will, in a phased manner, put in place an industrial structure featuring comprehensive growth in heavy, traditional, and service sectors. With hi-tech industries as forerunners for growth, such industrial mix will be built on the basis of agriculture and underpinned by advanced manufacturing and modern service industries. Priority areas for policy support will cover modern service industries such as financial, logistics, medical and health services and advanced manufacturing businesses like biomedicine and information industry. It is therefore conceivable that these sectors are most likely to enjoy a stronger prospect for growth. There are a number of world class enterprises in Europe that has both the technology and experience to make full use of such opportunity. With the purpose to boost international competitiveness of Chinese and European companies, the Chinese government is willing to actively support China-EU business cooperation through joint venture, technology cooperation, and service outsourcing.
Third, green technology. During the 12th Five Year Plan period, we will move faster in developing green economy and putting in place the growth and consumption pattern of energy and resource conservation and environment protection. Experts forecasted that China will invest 1.5% of the GDP, equivalent to more than 3 trillion RMB Yuan in environment protection between 2011 and 2015. The EU has moved ahead of China in clean energy, energy conservation and environment protection. Examples in these areas include clean coal, carbon capture and storage, smart grid, energy efficient architecture, and alternative energy automobiles. We are very happy to see that this July, German company Daimler has established a joint venture in China to develop a new generation of electric vehicles. This initiative will not only help promote innovation in the Chinese auto industry, but will also benefit the growth of Daimler itself. We hope that more European companies will make better use of their advantages and actively participate in the development of green economy in China.
Fourth, coordinated regional growth. When we follow through with the new Five Year Plan, we will work for stronger coordination in the growth between urban and rural areas and among different regions. We will continue with the strategy to develop the west, work for the rise of the central part of China, and accelerate the industrialization and urbanization in the central and western part of country. To support this strategy, the Chinese government is now studying the options of using income tax rebates and technology and capital support measures to encourage foreign investment in these regions. Recently, some European enterprises have moved their factories away from the coastal regions to the hinterland, effectively cutting down land, labor and other production costs. I believe that with the further improvement in transportation systems and other infrastructural facilities, more European companies will be able to make profit in these regions.
Ladies and Gentlemen,
Opening up is China's basic national policy. The firm commitment to an open economy and the pursuit of opening up strategy of mutual benefit and win-win progress are the most important things that we have learned from our sustained and fast economic growth over the last three decades. During the financial crisis, we have maintained opening up, expanded our market access, and continued to promote trade liberalization and investment facilitation. In 2009, with 90 billion US dollar foreign investment in-flow, China was ranked as the second largest recipient for foreign investment. According to the World Bank, foreign investment in China makes a 22% profit, far outstepping the world's average. With the continued development of China's open economy, an increasing number of multinationals are taking China as the priority in their global development strategy.
Recently, we have noticed that many foreign businesses, including those from Europe, had expressed their concerns over China's investment environment. After interviewing more than 1,400 member companies, this year's Position Paper includes some 380 key recommendations to policy makers in China and Europe over 34 items. At this point, we have already forwarded to corresponding departments and agencies in China your suggestions that are related to greater opening up, fair competition, transparency in legislation and law enforcement, and IPR protection. We will continue to talk to them and ask them to actively study and resolve these matters.
Here I wish to quote a few remarks made by Premier Wen Jiabao this April when he met with European business representatives. He said, "The shortfalls and drawbacks we have in opening up should by no means be interpreted as a change of our opening up policy. On the contrary, we will remain committed to our opening up policy." In fact, being selective on attracting foreign investment and combing attracting capital and technology investment are integral parts of China's opening up strategy. In order to attain scientific and harmonious development at home and to promote peaceful and cooperative development abroad, we will, as we have always been, make good use of both domestic and international markets and capital resources. The bottom line is to make effective use of both the foreign investment we receive and the investment we make overseas. The Opinions of the State Council Concerning Further Improving the Work of Utilizing Foreign Investment released in April clearly pointed out that there should be stronger efforts to intensify reform and innovation to create a more open and favorable investment environment. We will focus our efforts in the following four areas to ensure effective delivery of this goal.
First, we will further open up our economy. We will strike a balance between stability and effectiveness in using foreign investment. We will open up more sectors for foreign investment to diverse our portfolio. The Chinese government encourages foreign investment in high-end manufacturing businesses, hi-tech industries, modern service industries, new energy, energy conservation, and environment protection. We encourage foreign investment to participate in the reorganization, restructuring, annexation, and reorganization of Chinese companies through share-holding or merger and acquisition. Efforts will also be made to expand financing resources for the foreign invested enterprises (FIEs) in China.
Second, we will create a fair competition environment. The FIEs represent an important part of the group of "Made in China". They receive equal national treatment as locally invested enterprises and enjoy the same rule of origin. The government's policies to encourage innovation extend to all FIEs in China. What we pursue is open environment for innovation which includes extensive international cooperation. China is moving fast in the accession to the WTO Government Procurement Agreement and is working hard to remove unreasonable technical barriers to trade and investment resulting from mandatory certification and other administrative activities.
Third, we will improve our legal and policy system. We will work for greater transparency in legislation and decision making, and fully heed the views from all sectors of society, including that of the FIEs. Development plans, industrial policies, market access standards, and industrial updates will be released in a timely manner. There will also be stronger efforts to regulate law enforcement and administrative conducts so as to facilitate investment and to ensure standardized and effective enforcement of relevant laws and regulations.
Fourth, we will give stronger protection to intellectual property rights. As a part of our national strategy, China always takes the IPR protection seriously and has resolutely fought against illegal infringements. In the future, we will further shore up our IPR protection regime and work for strict law enforcement to protect the rights and interests of investors. We welcome continued coordination and supervision from European investors in our investigation.
Ladies and Gentlemen,
Stronger economic globalization means stronger interdependence between China and Europe. Since its inception ten years ago, the EUCCC has done a great deal to promote European investment in China. I hope that the Chamber will continue to engage in facilitating China-EU business cooperation, and bring more European companies to make investment in China. For China, the MES, trade remedy measures, visa facilitation for Chinese business people have long stayed on our list of concern. Speaking of such, it is also my sincere wish that the Chamber will be a positive force in talking to the EU institutions and relevant member states for the early resolution of those problems in pursuit of a fair, convenient, and stable environment for our business growth.
Business leaders like all of you have a strong influence over the future landscape of China-EU business ties. I firmly believe that with our concerted efforts and best wishes, the China-EU economic and trade cooperation will enjoy an even brighter future.
To conclude, I wish all of you greater success in China!
Thank you!