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2006-02-16 00:00

Steady Development for Mutual Benefits and Win-win Outcomes


  Honorable Deputy Secretary Sampson, Chairman Hu Deping, President Cunningham, Mr. Neil,


  Ladies and Gentlemen,


  It is my great pleasure to attend today's seminar. Let me first of all extend my sincere greetings and best regards to all the old and new friends sitting in this room, and to those who care about and support the development of China-US economic and trade ties.


  Initiated by former US President Bush Senior, the Seminar on China-US Relations is one of the biggest and highest-level bilateral conferences in the history of China-US relationship. I am convinced the Seminar will surely enhance communication and mutual understanding between the two sides and facilitate the further development of bilateral ties with economic and trade links as a part and parcel.


  Ladies and gentlemen:


  Economic and trade relations are the important basis of the China-US relationship. The development of commercial cooperation serves as a pillar bolstering this bilateral relationship. Hence it is of great significance to both countries. Both President Hu Jintao and Premier Wen Jiabao have paid visits to the US and President Bush to China. In September this year, President Hu Jintao met with President Bush, who is coming to China again. Both leaderships direct great attention to the development of the bilateral relationship and are actively pushing forward bilateral trade and economic cooperation.


  The US is the biggest developed country and China the biggest developing country. Our economic and trade relationship carries the most weight in the world. Since 26 years ago when the two countries forged diplomatic ties, bilateral trade and investment have been expanding quickly from the original single mode of commodity trade to cooperation in virtually all commercial areas. China-US trade volume jumped from 2.5 billion USD in the year of establishing diplomatic relationship to 169.62 billion USD in 2004. By the end of 2004, there had been 45,000 US-invested projects in China with real US input of 48 billion USD. According to China's statistics, bilateral trade witnessed 20% strong growth over the past two years. In the first ten months of this year, China-US trade amounted to 172.31 billion USD, up by 26.2%. The US is now China's second largest trading partner while China the third largest to the US. For the past few years, China has been the fast growing export market of the US. In 2001 China was the 9th largest export market of the US and the 5th in 2004. US exports to China between January and August this year exceeded for the first time those from Britain, making China the 4th largest export market of the US.


  Mutual benefits and win-win outcomes are the distinct features of China-US economic and trade cooperation. The strong complementarity between the Chinese and US economy means that enhancing bilateral commercial cooperation is conducive to the development of the two economies, and will deliver tangible benefits to the two peoples. For a long time, Chinese exports to the US have promoted China's development on the one hand, and on the other satisfied the US market demand, and saved money of the ordinary US people. A report from Morgan Stanley shows that in the past decade, the high-quality and low-cost Chinese products have helped US consumers save over 600 billion USD, 100 billion USD in the year 2004 alone. Take children's wear for example, from 1998 to 2003, young couples in the US saved 400 million USD from buying Chinese products. At the same time, US companies also reaped handsome profit in their trade with China, which registered 60 billion USD in 2004. Also as a result of this, 4 to 8 million jobs were created for US workers. Moreover, China's import from the US has also generated noticeable returns for the two sides. Every year China imports a big quantity of wheat, soybeans, oranges and other agricultural produce, as well as aircraft, fertilizers and machinery and equipment. China's imports from the US have not only strongly boosted US economic growth and employment, but also satisfied Chinese needs in production and consumption.


  US companies are also generously rewarded in their investment in China. Their investment covers such areas as industrial manufacturing, telecommunication, banking, insurance, transportation, science and technology, garment making, agriculture, and catering. According to China's statistics, in 2004 US-invested companies sold 75 billion USD of products in the Chinese market, and a similar worth of products to third markets. Recently, AmCham China released its White Paper titled US Companies in China. A survey among AmCham member companies indicates that 93% of the respondent companies believe China's economic reforms have improved the climate for US business, 92% are "optimistic" or "cautiously optimistic" about their five-year business outlook in China; 86% report higher revenues and 68% report profitable or very profitable performances; and 42% report China profit margins greater than their worldwide margins. The White Paper concludes that US companies indicate "strong confidence in China's business environment and are eager for constructive dialogue on resolving business challenges". It fully shows that US investment in China has not only promoted China's economic development, but also offered more opportunities than ever to the US companies themselves.


  Ladies and gentlemen:


  Over two decades of efforts have resulted in an impressively high level of equitable and mutually beneficial communication and cooperation between China and the US in trade, investment, finance and other fields. In the fast-growing and large-scaled bilateral trade, problems and frictions are commonplace, which include, among others, Chinese concerns over the textile trade, export control, and market economy status, and US concerns about the trade deficit, IPR protection, and agricultural product inspection and quarantine. We believe, to solve these problems, the two sides need to resort to consultation and intensified cooperation on an equal footing, bearing in mind the overall interests of bilateral economic and trade development with great foresight and a strategic vision. Here I would like to briefly touch upon two major issues.


  First, the issue of China-US trade imbalance. The US does run a trade deficit with China. There are many complicated reasons for this deficit, mostly in trade structure, trade diversion, statistical differences, and US export control against China. In the past few years, the US trade deficit with China was, to a large extent, a result of its deficits shifted from Japan, South Korea, and Southeast Asian countries to China. It reflects a global industry shift and a new pattern in the division of labor. 90% of US imports are no long domestically produced. This supply and demand relationship means that even if the US stopped buying from China, it would have to import from elsewhere. The US used to directly export to China through trade in goods. The situation now is that it not only exports more to China every year, but also invests, produces and sells within China gaining an expanding market share in the country. This change is not directly reflected in the trade figures. Over the years, China has always placed high importance on and made tremendous efforts in addressing the China-US trade imbalance showing its utmost sincerity. In 2004, China imported 28 billion USD of agricultural products worldwide, out of which 7.7 billion USD were from the US, much higher than the EU figure of 1.5 billion USD. The past few years also witnessed a big number of trade promotion missions China organized to the US for the purpose of importing more from the country.


  It simply won't work if we only rely on Chinese efforts in order to expand US exports to China. Sincerity and concrete steps must happen at the other end as well. The US boasts a developed high-tech industry and a lot of products badly needed in China's economic development. However, the US export control policy staying there for such a long time has cost the US high-tech industry countless export opportunities to China. As a result, China had to go to other suppliers. Take 2004 for example, China imported 5.5 billion USD of high technologies from the EU, an increase of 63.3%, while on the US side, technology import was only 2.9 billion USD, a decline of 10.6%. Refusing to export nuclear-power technology and equipment, satellite and other high-tech products cost the US at least 25 billion USD of exports to China. If the US administration relaxes its export control against China, its exports to China will be effectively boosted and China-US economic and trade cooperation will be lifted onto a higher level.


  Second, IPR protection. Protecting intellectual property right and safeguarding the interests of right holders are not only a prerequisite for China to establish its creditability globally in conducting international cooperation, but also a call to its endeavor of improving the market economic system and promoting the advancement of science and technology and economic development. With a strong sense of responsibility, the Chinese government carries firm determination, clear-cut attitude and effective actions to protect intellectual property right. Our achievements are also encouraging. From last November to this October 17, public security authorities have processed 2,268 IPR-related cases. 4,080 offenders were detained. The total value involved was 1.6 billion RMB yuan. In April 2004, a man named Chen Dingzhong was sentenced to 3 years in prison by Zhejiang Provincial Court for unauthorized printing of such trademarks as Nike. This August, Chen Jinsong's case involving the unauthorized duplication of paintings was closed. Shanghai Public Security Bureau settled the fake Nivea trademark case. In addition, to strengthen communication with the US, China has decided to send an IPR expert to the Economic and Commercial Counselor's Office of the Chinese Embassy in the US.


  It's worth pointing out that every country needs to go through a process in establishing and improving its IPR protection system and in raising the public awareness of IPR protection. It was such a demanding task for China to spend only several years setting up an IPR protection system that took developed countries over a century. At present, China still has some problems in the area of IPR protection. However, they have been given attention to and are being solved step by step. Meanwhile, we must acknowledge that IPR protection is a universal problem, and to solve it concerted efforts from all parties are needed. The jade from this mountain may be polished by stones from others. We are willing to draw successful experience from other countries to jointly promote technological advancement and economic development. I hope our US friends can clear up your doubts and worries and be confident about the developments and future prospects of IPR protection in China.


  Ladies and gentlemen:


  In this era of rapid economic globalization and trade liberalization, the Chinese market is more and more open to the world. China has been earnestly fulfilling its WTO commitments. Our general tariff level was lowered from 15.3% in 2001 to 9.9% in 2005. China's service sector liberalization reached a degree of 62% in 2004, only 5 percentage points lower than the average of developed countries. Recently, trade protectionist measures by the US have been clearly on the rise, bringing unfair treatment to Chinese products, and rendering Chinese companies dubious about the international trade environment after China's WTO accession. The US frequent imposition of restrictions on Chinese textiles has disrupted the normal and orderly growth of our bilateral trade in textiles. Today, we're delighted that after seven rounds of negotiations, China and the US finally reached an agreement on textiles. Putting the textile issue behind us is in the common interest of Chinese and US companies and conducive to smooth development of our bilateral trade and economic relationship. We hope China and the US will properly bridge existing differences through dialogues and cooperation by proceeding from the general picture of our bilateral relations and in the principles of "development, equality and mutual benefits". And I hope everyone here will use your personal influence to the effect of containing trade protectionism and creating a favorable environment for the healthy development of Sino-US trade and economic relations.


  Ladies and Gentlemen,


  Looking into the future, we're confident about the broad prospects of Sino-US trade and economic cooperation. The fast-growing economy and ever-opening market of China are presenting more opportunities to US companies than ever before.


  China is emerging as a huge and the fastest-growing market in the world. In 2004, China created a total GDP of 1.6 trillion USD and a per capita GDP of 1200 USD. Over 2 trillion USD worth of production materials and consumer goods were sold in its domestic market. Most recently, we set a target to quadruple our per capita GDP for 2010 on the basis of 2000 during the "11th five -year period". In global experience, once the per capita GDP figure reaches 1000 USD, relatively noticeable adjustments will happen to the spending rate and consumer spending structure. By this rule, China will enter a phase featuring rapid growth of spending rate and consumer spending as well as big potential of the increase in domestic consumer demand. In the area of infrastructure investment, the Chinese government has the plan of extending its total length of roads to 2.1 to 2.3 million kilometers by the year 2010 and expressways to 50,000 kilometers. Enormous developments will take place in China's energy sector and urban and rural infrastructure building. Many our US friends have realized that a growing and thriving China benefits the US and the world at large.


  Economists from the US and EU have also pointed out on many occasions that China has the most open market among all developing countries and economies in transition. China's trade volume for the first ten months of this year is 1.1486 trillion USD, which is expected to reach 1.4 trillion at the yearend. It is already one of the top FDI recipients in the world for 12 consecutive years. Along with China's economic growth are the rapid increases in its imports. For many years, China has remained the top importer of US cotton and soybeans. So, in this light, China will fully increase its openness and be more active in developing further trade and economic ties with other countries in the world. China, with a 1.3-billion population and fast and steadily growing economy, offers boundless business opportunities. It will open huge market potential and greater partnership opportunities to our friends, including those from the US.


  Ladies and Gentlemen,



  In October 2003, on his visit to the US, Premier Wen Jiabao reached five consensuses with President Bush on how to handle the Sino-US economic and trade relationship. The JCCT is an important mechanism for promoting Sino-US trade and economic cooperation and ensuring healthy development of this relationship. Positive progress has been recorded at the 16th JCCT in July 2005 where many outstanding issues of common concern were resolved. I hope both China and the US will seize the opportunities of the times and the opportunities in the market, be more actively engaged in reciprocal cooperation for win-win outcomes, and make positive contributions to Sino-US trade and economic cooperation and to our common development.

  Thank you.

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