Distinguished Guests, Ladies and Gentlemen,
Good Morning. It is my great pleasure to come to the Fortune Forum. I would like to talk to you through my following speech titled China's Opening and a win-for-all World.
27 years ago, the word Opening was very novel to Chinese people. When Deng Xiaoping first put forward the initiative of opening to the outside world, the Chinese people found themselves in front of an unprecedented challenge in their mindset. Many of them were hesitating at the risks of this opening up. However, despite all the disagreements, China has been sticking to its basic national policy of opening up to the outside world through all the last 20 odd years. In retrospect, the Chinese people find to their pleasant surprise that China has made a historic leap. In 27 year's time, China's GNP increased by 1100% with an average rate of 9.4%. During the early years of the reform and opening up, people call the very rich people the ten thousanders, whereas the deposit per capita today is already over ten thousand yuan. Thus we can see, the opening policy really brings benefit to the Chinese people, and the Chinese people love this policy from the bottom of their hearts.
One of the working principles of Chinese people is to make everyone happy. The process of China's opening up is one where China has been sharing profits and benefits with foreign investors. From 1990 to 2004, foreign investors had remitted US$250 billion of their profits out of China. Among over 280,000 foreign invested enterprises in operation, two-thirds of them were profitable. According to the 2004 survey of the American Chamber of Commerce in China, three-fourth of the surveyed US invested companies in China were making profits, and 42% of American-invested enterprises saw the profit ratio in China above their global average. Profit that Volkswagen generated from its joint venture in China equaled one quarter of the company's global profit.
Through two-way trade and investment, China is playing an increasingly important role in driving the world economy. For instance, last year China took up 10% of the growth of the world economy with its GDP accounting for about 4% of the world's total; it contributed 12% to the increase of the global trade with its external trade value taking up a 6% share in the world's total. According to the Economist, it was the strong economic growth of China that saved the world economy out of recession after the American stock bubbles burst in 2000 and 2001. The UNCTAD also regarded China, together with the US, as the two powerhouses of the world economy.
Today, when we are striving for economic growth and an all-win world, China's opening drive also ushers in a new phase. Why should we call it a new phase? Because today China looks fundamentally different from 20 years ago or even 10 years ago.
The word new phase is not merely a descriptive term. Rather, it embodies concrete meanings.
First, China's opening has been lifted to a new level. Following the WTO accession, China has restructured its economy according to WTO rules and commitments within the 3-year transitional period. The overall tariff rate was brought down to less than 10%, all the non-tariff barriers have been eliminated, and the liberalization of all industries, especially the service industry, has been significantly enhanced. At present, 100 segments in the service sector have been opened, taking up 62.5% of all segments in the industry and only 5 percentages lower than that of the developed countries.
Second, the Chinese market has become larger in scale and shows a continuous, upward trend. No one doubts the fact that China is becoming the fastest-growing as well as huge market in the world, and has become the largest consumer of television, refrigerator, and mobile phone. Housing, private car and domestic and outbound tourism have become the new highlights of consumption. Last year, the domestic market consumed means of production and livelihood with a total value of more than two billion US dollars. The per capita GDP of East China where the population is nearly 500 million reached $ 2000. The latest poll released by Gallop indicates that currently households with high and medium income are defined as annual income of USD 6100, covering a population of 140 million. In addition, it is predicted that population with moderate income will increase annually by 20 million to 30 million. Chinese household savings have exceeded 1.5 billion US dollars.
Third, China not only has skilled blue-collars, but will also have more white-collars. China used to compete on the advantage of inexpensive labor force. While this advantage is maintained, high-quality talents are growing as well. With more than 3 million university students about to graduate this year, the intellectuality of China's human resources and the popularization of foreign languages among them will also be improved.
Fourth, China's infrastructure is being bettered. At present, the total length of highways in China has reached 30 thousand kilometers. 72,000-kilometer railways have been put in operation, making China the No. 3 in the world of that for the railway system. Handling capacity of Chinese ports stands at 4.1 billion tons, ranking No. 1 globally. The number of telephone users is more than 650 million, marking the largest user community in the world; the number of Internet users is 94 million, the second largest globally. China is already equipped with bettered and smooth conditions to work with the rest of the world.
Fifth, foreign invested enterprises are no longer isolated islands in China. Gone are the days when foreign invested enterprises fought by their isolated forces on this marketplace. They have forged industrial chains covering the upstream and downstream stages, shaping crisscross and interlocking industrial networks by cooperating with circulation enterprises and financial companies. Mutual penetration has made foreign invested enterprises and Chinese ones interdependent on and interwoven with each other and search for cooperation and win-win in competition.;
Sixth, China has already enjoyed a huge and continually growing import demand. China's annual import volume increased from USD 10.9 billion in 1978 to USD 561.4 billion in 2004. In the last five years, China realized an average import growth rate of over 28%. Such considerably and rapidly growing import will provide the world economy with a broad market.;
Ten years ago, some people held concerns or misgivings about whether stability could be maintained in China. Today, I am afraid that the vast majority of people in the world have no doubt about China's stability and order. As the old Chinese saying goes, sturdy grass withstands high wind and distance tests a horse's stamina. Ten years passed, China experienced no chaos, and is turning better and better. Such a long-term stable and orderly environment is a reassuring pill that set all investors' minds at rest.;
According to conservative estimates, by 2010 China's import and export volume with North America and the EU would surpass USD 400 billion respectively, with Japan and Republic of Korea, top USD 550 billion and with ten ASEAN countries, exceed USD 200 billion.
But I would like to emphasize that China is still a developing country with many difficulties and problems. By the criterion for absolute poverty, there are more than 26 million impoverished people in China's rural areas, and figure would be lifted to 80 million by the criterion for low-income population. In urban areas, there are still 20 million more people living on the minimum livelihood guarantee offered by the government. Obviously, these people are living a very difficult life.
Many industries in China, which is a developing country, are yet to be equipped with international competitiveness. However, we are not frightened by enormous pressure or by challenges from competition. With the utmost sincerity about opening up to the outside world, we eventually acceded to the WTO after 15 years' perseverance. Over the past three years, we have abided by our commitments, reviewed and revised about 3,000 laws, rules and regulations. Foreign-related economic legal system has been constantly perfected with market opening improved by a large margin. Despite the numerous difficulties and problems in China's development, the Chinese government is open-minded, the policy is open, and we are still committed to advancing the DDA negotiations and helping to build a fairer and freer global trading system.
In December this year, the Sixth WTO Ministerial Conference will be held in Hong Kong, China, which is of critical importance to the DDA negotiations. DDA is all about the new round of talks on international trade rules, which China will actively push forward with an open mindset. At the same time, we hope that the new rules for free trade should fully reflect the principle of equality, mutual benefit, opening up and win for all, be more transparent and just, ensuring all parties to be as good as their words. Once an agreement is reached, every one should live up to his commitments, otherwise, there would be no point in negotiating new rules. The attitude of pragmatism cannot be adopted to implement the favorable rules only, not unfavorable ones.
The current textile issue is a typical example. In the Uruguay Round 10 years ago, the WTO ATC explicitly provided that developed countries should eliminate their textile and clothing quotas by stages in ten year's time. However, some developed countries kept 70-90% of the most important quotas till the end of last year. They then ascribe to China the short-term rapid textile export growth following the integration, set restrictions over Chinese products and apply trade protectionism. This is unfair. WTO has been in place for 57 years since the creation of GATT. In this long historical process, it is developed countries that hold advantages in the absolute majority of industries. Though many of the WTO members are developing countries, they are not capable of competing. It took China, a developing country, innumerous trials and hardships to cultivate the textile industry with comparative advantages, which is an industry merely with low added value and has a bearing on the livelihood of tens of millions low income earners. Too difficult for us to understand is that even such a tiny comparative advantage was immediately put under quota restrictions only four months after the global integration of trade in textiles. Everybody is advocating free trade nowadays, but we should not allow the adoption of double standards. Claiming free trade and forcing others to open up the market when one is in absolute advantage while erecting restriction and closing its own market as soon as the developing countries begin to impose challenges——such practice is apparently against the principle of free trade, and will undermine the gravity of WTO rules and exert negative impact on the on-going new round of negotiations.
You are all concerned about intellectual properties in China, so are us. To be honest, China is by no means protecting IPR for any pressure. We are not doing that for anybody else, and we are doing that out of our own need of development. The resolution of China in IPR protection is consistent and firm. We are sober-minded that without a legal environment for IPR protection China could not secure a development even in 100 years. During the last decade, Chinese enterprises are more and more strongly calling for IPR protection. 70-80% of IPR violations taking place in China are directed at domestic enterprises instead of foreign ones. In recent years, we have further intensified protection of IPR, promulgated the new Judicial Interpretation, strengthened penalty for IPR infringements and brought nearly 2000 people to criminal punishment. We also look forward to seeing that IPR help enhance the core competence of Chinese enterprises and build our own independent brands.
Ladies and gentlemen,
Not long ago, the Chinese leadership put forward the objective of building a harmonious society. As the ancient Chinese saying goes, peace breeds wealth. We should cherish friendship with an even temper in doing business. China, as a land of amenity, is willing to make friends with the rest of the world and to create a better environment and generate more wealth for investors from all countries in our comprehensive, coordinated and sustainable development.