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Speech
Given by Ambassador Wang Qiliang at the Seminar on
Sino-Danish Business Cooperation in Grenaa, Denmark
September 7, 2001
Good afternoon, ladies and gentlemen; Dear
friends,
I am very glad to have the opportunity to
meet you here in Djursland County during the ¡°China Tibetan
Cultural Event¡± and brief you on China¡¯s economic development
since the adoption of the opening-up and reform policy. I hope my
presentation will help you, especially those friends from the
industries, to obtain a better understanding of China, thus further
promoting the development of Sino-Danish economic and trade
relationship.
I. China¡¯s economic development since
opening-up and reform
China has a population of more than 1.3
billion. In the past 20 years, China has gained great achievements
that have attracted the world¡¯s attention by deepening the reform
of its economic structure and widening the scope of its opening to
the outside world. China¡¯s average annual GDP growth rate has been
around 8% since late 1970¡¯s. In the year 2000, China¡¯s GDP
amounted to £¤8.9 trillion, which equals to a little bit over 1 trillion USD, and
the overall economic volume ranked 7th in the world.
China¡¯s imports and exports volume also increased from 29.3
billion USD in 1979 to 474.3 billion USD in 2000. The average annual
growth rate of China¡¯s imports and exports reached 13.4%, placing
China on the 7th in the world. China has been the largest
foreign investment recipient among all developing countries for 7
years in a row. Out of the biggest 500 companies in the world, 400
have already made their investments in China. Up to the end of June
this year, the overall foreign investments in China amounted to over
540 billion USD, of which 360 billion USD are foreign direct
investments. By the end of June, China¡¯s foreign exchange reserves
reached $180.8 billion USD.
The more than 20 years¡¯ opening-up and
reform have improved both China¡¯s overall productivity and
demand-supply relationship. The framework of a socialist market
economy has been set up. China¡¯s economic operation has basically
become market oriented, with the open economy witnessing a rapid
growth and China¡¯s the economic relations with foreign countries
experiencing great changes. China¡¯s opening up has gradually
spread from the South to the North and from the East to the West.
Now a pattern of comprehensive open-up has taken form including
Special Economic Zones, open-up cities along the east coast and the
vast mid-west regions. The added value of the foreign industrial
enterprises occupies 22.5% of the total added value of China¡¯s
industry and 49% of China¡¯s import and export is attributed to the
foreign enterprises in China, which has been an important economic
component of China and new growth point. The massive inflow of
foreign investment into China not only vitalizes China¡¯s economy
but creates new market opportunities for the investing companies as
well.
II. China¡¯s Tenth
Five-Year Plan offers enormous opportunities for cooperation with
foreign partners.
Looking
into the future, the first decade will be of great importance for
China¡¯s economic and social development. In March 2001, the
Chinese government announced ¡°the Tenth Five-Year Plan for
China¡¯s Economic and Social Development¡± and outlined the course
of reform and open up as well as modernization. China will maintain
a high economic growth speed and engage in economic construction on
a wider scale. We will constantly strengthen our economic
cooperation with other countries and regions in the world. During
the Tenth Five-Year Plan period, we will encourage foreign
investment in the following sectors and projects: reforming the
traditional agriculture; developing information related electronics;
biological engineering; new materials; aviation and space industries
and other high tech industries; establishing research and
development centers; developing petrochemical and chemical
industries; building materials and other basic industries;
introducing and using advanced technology and equipment to reform
our traditional industries such as machinery, light and textile
industries and so on; energy, transportation, real estate and
infrastructure and investment in the Western region. We will
actively guide foreign capital to establish compatible enterprises
and export-oriented enterprises and further open the service sector.
The utilization of foreign capital will shift from general
processing industry to high-tech and new-tech industries; from
mainly on the secondary to a balance of the secondary and the
tertiary industries, especially the service sector, including
finance, trading, information, consulting, advertising, assessing of
properties, accounting, legal services and similar facilitating
services. We will further expand the utilization of foreign capital
in science and technology, education, environmental protection and
tourism.
We will actively absorb foreign capital in the reform and
restructuring of our SOEs (state owned enterprises) and encourage
foreign companies to invest in China by means of buyout. We will
actively explore ways to get foreign capital involved in financial
property management companies, to rearrange improper assets and to
promote the restructuring and optimization of enterprises.
We will actively expand ways of absorbing foreign capital,
such as investment fund and venture fund, and explore new ways of
using foreign investment by facilitating sound Chinese enterprises
to raise fund abroad by means of selling its shares or financing.
We will speed up the implementation of favorable policies
and measures in absorbing foreign capital in the Western region;
continue to open up more areas for foreign investment, and encourage
foreign investment in the areas of infrastructure and environmental
protection.
During the Tenth Five-Year Plan period, China will continue
its endeavor in improving the investment environment, especially the
¡°soft environment¡±. China shall abide by the rules of WTO,
adjust its laws and regulations concerned gradually, and establish a
legal system that suits the Chinese situation and conforms to the
international conventions. Meanwhile, China will reinforce the
administration and execution of laws, especially the intellectual
property rights; take strict measures against piracy of copy rights;
protect in real earnest the rights and benefits of the copy rights
holders and the investors. China will speed up the transformation of
government functions and improve the quality of its service,
providing a better external environment.
To sum up, along with the implementation of the Tenth
Five-Year Plan, Chinese economy will maintain a sustained growth,
propelled by scientific and technological progress, innovation of
mechanism and further opening up to the outside world. As a result,
it will provide a vast market and great impulse for the growth of
the world economy, and at the same time offers new opportunities for
Sino-Danish cooperation on a wider spectrum and higher level.
III.
China¡¯s Western Region Development strategy
At this juncture, I¡¯d like to share with you China¡¯s
Western region development strategy. There are 12 provinces,
autonomous regions and municipalities under the direct jurisdiction
of the central government in the Western region, accounting for
71.8% of China¡¯s total land space, 28.5% of its population and 18%
of its GNP. But due to natural and historical reasons, it has a
weaker economic foundation compared with the Eastern region, and is
obviously lagging behind the more developed Eastern coastal areas in
terms of economic development. The gap in foreign trade is also
considerable. However, the Western region also enjoys comparative
advantages: firstly, they have rich natural resources, such as
energy, mineral, tourism, land and other resources, some of which
are unique and could not be found elsewhere. For example, out of the
140 mineral reserves found in the country, more than 120 of them
have been found in the Western region and the reserves of some rare
metals top the national or world reserves list. Secondly, there is a
big potential market in the Western. Along with the development of
the region where one quarter of China¡¯s population live, the
enormous needs will create a huge market. Thirdly, each of these
provinces, autonomous regions and municipalities has their own
advantages. For instance, Yunnan is rich in biological resources;
Sichuan is comparatively well developed in processing industry;
Shaanxi has many high-tech industries and Xinjiang has advantage in
oil industry and cotton production.
From the above analysis, we can see that there are great
market potential and promising prospect of development in the
Western region. We hope by the middle of the 21st century, there
will be a prosperous west region thanks to the implementation of
great West development campaign. In the first decade, development
will be focused on the following areas and sectors: infrastructure;
improving and building a better natural especially biological
environment; developing a modern agriculture; and adjusting
industrial structure. To promote investment in these sectors, the
Chinese government has formulated some favorable policies and there
are still more to come. The central government will allocate most of
its construction fund, loans from banks guided by state policy and
foreign loans on favorable terms to the Western region. Investment
in infrastructure will be increased. Ten big projects have recently
started, among which six are transportation projects. More areas are
open for foreign investors, with emphasis on agriculture, water
conservancy, ecology, transportation, energy, urban public
utilities, environmental protection, mining industry, tourism,
exploration of natural resources and service trade. More forms of
raising fund will be used, such as issuing stocks, BOT and similar
project financing. Joint ventures already established in China are
encouraged to reinvest in the Western region.
In a word, the conditions for expanding foreign trade and
economic cooperation in the Western region are present, and enormous
business opportunities are waiting for you there. I believe the
Danish entrepreneurs will have a good chance there.
IV. China and the WTO
I assume you may be interested in China¡¯s
entry into the WTO. Therefore, I would like to say a few words on
this subject.
After 15 years¡¯ efforts, China will soon
gain her access to the WTO. China will exploit the opportunity of
joining the WTO to develop an open economy on a comprehensive basis:
an all-round opening-up will take the place of the presently limited
opening-up in both scope and scale; an opening-up foreseeable within
the frames of laws will substitute the current opening-up featuring
experiment under the guidance of government policies; a mutual
opening-up between China and other WTO members will replace the
unilateral and self-opening by China now.
The Chinese government is now compiling and
amending a series of foreign related laws and regulations according
to legal procedures. When admitted into the WTO, China will, in line
with WTO rules and regulations, speed up the pace of amending the
relevant laws and regulations so as to set up a system of
foreign-related economic laws, regulations and policies that will
not only accord with international practice but also fit the
specific situations in China. In order to live up to our commitments
to the outside world and meet the demand of the national economy
development, we will enhance the level of opening-up to the outside
world and participate in the economic globalization with a more
positive stance, yet on a broader scale.
Based on the commitments China has made in
the bilateral and multi-lateral negotiations, China will further
open her goods market and accelerate in a step by step but active
way the opening-up of the service sector.
When admitted into the WTO, China will open
up almost all the goods markets except a few ¡°infant industries¡±
and some fundamental resource commodities having enormous impact on
the national economy which will still be guarded under the
¡°transition measures¡±. The overall average tariff level of China
will be lowered to 9.4% from 24.6% in 1997.
According to the WTO ¡°Information
Technology Agreement¡±, China will gradually lower the tariffs on
over 200 commodities related to the information technology,
including computer, semi-conductor and equipment related to the
internet, and finally eliminate all tariffs on these products by
2005.
With regard to the automobile industry
China has committed to significantly reduce the tariffs within five
years¡¯ time after its accession to the WTO. The tariff on the
finished vehicles will be lowered to 25% from the current 80% and
the quota control will be abolished eventually. The tariff on the
auto parts will be lowered to an average level of 10%.
China has committed to open up its
agricultural sector once joining the WTO with the exception of some
fundamental food supplies and vegetable oil products which will be
under quota control in the ¡°transition period¡±. The overall
average tariff level on the agricultural products will be lowered
gradually within 5 years¡¯ time after China¡¯s accession to the
WTO.
According to WTO rules, the opening-up of
markets between WTO members is mutual. Therefore, based on the WTO
¡°Agreement on Textiles and Clothing¡± provisions, the quotas
imposed by the USA and EU on the Chinese textile exports will be
finally called off by 2005.
China once more lowered its tariffs
voluntarily at the beginning of the year 2001. The overall average
tariff is now 15.3%, lowered from a 16.4% level, covering 3,462
tariff lines. Tariff reduction will enable more foreign commodities
be sold at the Chinese markets at a lower price, bringing more
pressure on our domestic companies. However, by facing challenges
from abroad in advance, it will greatly help China build a healthy
and competitive business environment, which will benefit Chinese
enterprises in the long run.
China will further open up its service
sector. Limitations will be cancelled gradually in service sectors
including commercial business, foreign trade, transportation,
medical service, education, financial service, insurance,
telecommunications and so on.
In the field of telecommunications, the
value added telecommunication service sector will be opened to the
foreign investors. In the second year after China¡¯s accession to
the WTO, foreign investors will be allowed to hold up to 50% shares
in the value added telecommunication service. In addition, foreign
investors will also obtain more shares in the mobile
telecommunication sector within 5 years of China¡¯s entry into WTO.
In basic telecommunications, China will abide by the obligations in
the WTO ¡°Agreement on Basic Telecommunications¡± on developing
countries to gradually open up the scope of business and abolish
geographical limitations and foreign equity restrictions.
According to the ¡°General Agreement on
the Trade in Services¡±, all foreign banks will be able to carry
out partial Renminbi business within two years after China¡¯s
admission into WTO. Foreign banks will be allowed to operate
retailing five years after China¡¯s accession to WTO and the
geographical limitations on foreign banks will be called off as
well.
In the first five years after China¡¯s
admission into WTO, restrictions including investment proportion,
operation area, organization and business scope on foreign companies
in China¡¯s stock market, insurance and other financial sectors
will be gradually lifted.
The worldwide trend of merging between
multinational corporations has caused a new round of industrial
adjustments among developed countries. China must take full
advantage of this good opportunity to further open up our capital
market and explore new investments. We are now formulating
regulations on foreign companies acquiring and merging with our
state owned enterprises for capital reorganization. We will
gradually adopt the various internationally approved measures of
foreign investments and encourage foreign companies to set up
foreign-invested share-holding companies, investment companies,
cooperation funds, franchising, risk investment funds and other
effective market oriented entities.
Limitations on the proportion of shares
held by foreign companies and the scope of business in the
distribution service sector, including storage, leasing,
maintenance, packaging and other auxiliary distribution services
such as road and railway transportation, will be lifted three years
after China¡¯s admission into WTO, with the exception of such
commodities as crude oil and salt.
In the field of tourism, foreign hotels
operators will be allowed to set up 100% foreign-owned hotels within
3 years and the minimum annual turnover required to qualify as
foreign investor will be reduced.
In a word, China¡¯s willingness to join
the WTO means that China is ready to apply the fundamental
principles of market economy, further open its markets to the
outside world and abide by the international practice. China will
keep her promise; she will exercise her rights while at the same
time fulfill her obligations. A regulated opening-up procedure, in
line with the established principles and steps, will create more
opportunities for cooperation in the Sino-Danish trade and
investments.
V. Sino-Danish Economic and Trade relationship
Before I conclude, I deem it necessary to
devote a couple of minutes to the bilateral trade relationship
between Denmark and China. Over the years, our trade and economic
cooperation have enjoyed a substantial growth with the scale and
depth for cooperation expanding greatly. The overall trade volume in
2000 between Denmark and China rose to a record high of $1.334
billion, an increase of 31.4% over the previous year. Till this
June, there have been 173 Danish companies investing in China with
an overall investment exceeding 394 million USD. Many well known
Danish companies, including A.P. Moeller, Novo Nordic, Danfoss,
Grundfos and DANISCO, have established their own or joint
enterprises in China and regard China as the hub for their business
in the Asian-Pacific area. They hold a positive stance in exploring
the Chinese and Far-East markets and their efforts pay off. Besides,
more and more Danish small and medium sized companies with
technological specialty and market advantages have shown great
interest in exploring business opportunities in the Chinese market.
During the past half a year, the Danish investment in China has seen
a substantial increase, with the paid-in investment of 45.25 million
USD that almost equals the whole-year-level in 2000. Our two
countries have good financial cooperation. Exchanges and cooperation
in the fields of science and technology, education and
transportation have also been fruitful. The project involving the
joint efforts of the Chinese and Danish scientists¡ª¡°Pig-Genome
Sequencing¡±¡ªhas been officially launched. The Danish government
and research institutions have shown great interest in this project.
Many Danish companies feel confident about its market value as well.
Due to the complementary feature of the
Danish and Chinese economies, Danish companies have a strong edge in
the fields of energy, environmental protection, transportation,
electronics, chemicals, agriculture and animal husbandry, which are
also China¡¯s priority fields for development. Chinese government
will continue to attach great emphasis to developing Sino-Danish
economic and technological cooperation and promoting trade
relationship between our two countries. I believe that the trade
relationship between China and Denmark will have a broader vista and
develop to a higher level with the concerted efforts of the
governments and business people of our two countries. I sincerely
hope that companies from both Djursland County and other areas will
exploit this excellent situation to explore more investment
opportunities in China. And I wish those who have already
established themselves in China a greater success!
The Embassy of the People¡¯s Republic of
China in Denmark will continue to contribute to the further
development of the Sino-Danish economic and trade relationship.
Thank you for your attention!
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