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Speech on Doing Business with China
Peng Keyu, Governor Gary Locke, I am pleased to be here at this China Conference hosted by Saint Martin’s College. I would like to take the opportunity to give you a brief introduction to Sino-US economic and trade relations and China as an emerging market today. Some of you may remember that in 1993 the US Department of Commerce adopted an important policy named National Export Strategy, which was divided into two parts. The first part dealt with ten emerging markets in the developing countries and regions. The second part of it was related to seven major potential export products of the United State in the 21st century. China was at the top of the list of emerging markets. Eleven years have passed since and it has been proved right that China has become the number one and largest emerging market in the world. The economic and trade relations between China and the United States have maintained a general trend of rapid development. Trade flows between China and the United States grew to US$126.3 billion in 2003, about 52 times that of 1979 when the two countries established diplomatic relations. Today, the United States is the second largest trading partner of China, while China is the 3rd largest trading partner of the US. In the last few years, the US exports to China have been growing fast. While the total US exports decreased by 0.7% between 2001 and 2003, its exports to China rose by as much as 47.7% during the same period. In the last three years, China has topped the list of the ten fastest growing export markets of the US, and has become an important driving force for US exports. China was the 6th largest export market of the US in 2003. I am confident that, if the comparative advantages of American hi-tech products are brought into full play, and if US businesses, especially the small and medium-sized businesses take a more positive attitude and actions in the Chinese market, US exports to China will continue to soar. In the meantime, US investment in China has increased rapidly. By the end of February 2004, about 42,000 US-invested enterprises were set up in China, involving nearly all sectors such as agriculture, manufacturing, infrastructure, as well as financial services, insurance and other business services, with a total investment of US$44.7 billion. Most of the foreign-invested enterprises in China are performing well, and investors made considerable profits. A survey made by AmCham Beijing in 2002 shows that US-invested enterprises in China continued the outstanding sales and financial performances. 80% of the enterprises covered by the survey reported increase in sales revenue, and 44% reported substantial increase in sales revenue as compared with the previous year. The most encouraging finding of the survey is that profitability of those enterprises in China has improved significantly as compared to their global profitability in the period from 1999 to 2002. 10% of the enterprises reported “extremely good profits”. 42% of the enterprises reported profit ratios higher than their global average, and 29% said their profit ratios in China were roughly the same as their global average. Of those enterprises that are not yet making a profit, 91% expected to make a profit within the next three years. In recent years, China’s investment in the US has also been growing. Today almost 1,000 Chinese-invested enterprises have been set up in the US, involving a total investment of over US$1.5 billion. Obviously, the development of bilateral trade and economic cooperation on the basis of equality and mutual benefit is good not only for China, but also for the US. It brings tangible benefits to the businesses and peoples of our two countries. Ladies and gentlemen, Since China became a full member of the WTO on December 11, 2001, the Chinese government has made great efforts to fully implement its commitments. Chinese market has been improving and enhanced to a new level. Here I would like to mention some of the main progresses achieved: Firstly, China has built up a unified and transparent legal system. In light of the WTO rules and China’s commitments, over 30 ministries and agencies under the State Council reviewed about 2,300 laws, regulations and rules, abolished 840 and amended 336 of them over the past two years. Significant progress has also been made by local governments at all levels, as they reviewed nearly 100,000 local regulations and rules under the direction of the State Council. Within two years, China fulfilled its obligations in this regard. Secondly, China has fully implemented its commitments on reduction of tariff and non-tariff barriers. China substantially reduced import tariffs on 7,475 tariff lines on January 1, 2004, bringing the overall tariff level down from 15.3% in 2001 to 10.4%. China also abolished tariffs on most ITA products. Meanwhile, the Chinese government has significantly reduced the number of non-tariff measures. Following its commitments, China has removed more than 200 products from quota, licensing and special tendering administration and applied Tariff Rate Quotes (TRQs) to five categories of imported agricultural products and chemical fertilizer. Thirdly, China has further opened up its service sector in compliance with its commitments. China has formulated and improved laws and regulations governing foreign investment in more than 30 service trade areas, such as foreign investment in banking, insurance, telecom, aviation, foreign trade, commerce, transportation, cinema, project design institutes, printing, career orientation agencies, architecture, tourism and intermediary agencies. As a result, the service sector has become a new focus of foreign investors. Fourthly, the Chinese government has earnestly performed its obligations on notification and inquiry. It set up t he Chinese Government Notification and Inquiry Bureau for WTO in February 2002 and created “the MOFTEC Consultation Website for WTO” in September of the same year. Over the past three years, the Chinese government has made notification to the WTO Secretariat on all relevant laws, regulations and specific trade measures in a timely manner, and responded to large numbers of inquiries in oral and written forms. The website provides the general public with rich information on the WTO, such as basic knowledge, relevant legal instruments, latest developments of the New Round and trade policies, laws and regulations, economic and trade information of WTO members including China. Besides, the Chinese government engages various stakeholders in public consultations during the drafting and before the implementation of laws, regulations and rules. Fifthly, China has forcefully strengthened the protection of intellectual property rights and attached great importance to IPR protection. China’s IPR-related legislation was already quite advanced by international standard before the WTO accession. In order to fulfill its WTO obligations, the Chinese government has modified the Patent Law, Trademark Law, Copyright Law, Regulations on the Protection of Computer Software, Implementing Rules for Drug Administration and other laws, regulations and the ir implementing rules, making its IPR legislation fully compatible with the TRIPS Agreement. The government has also taken effective measures to continuously strengthen law enforcement and intensified the fight against counterfeiting and other IPR infringing activities. At the same time, China has organized public campaigns and education activities to raise public awareness of IPR protection. Last but not least, China has enhanced training and capacity building efforts in order to effectively implement the newly-amended laws and regulations across the whole country. Working in partnership with the business community, the Chinese government staged a massive campaign, perhaps the largest in the history of GATT and the WTO, to provide information on the WTO to the general public. It also organized various WTO training programs, which were attended by millions of people. For example, the former MOFTEC alone trained more than 4,000 director-general level officials for provincial and municipal governments across the country. Today, governments and enterprises at all levels are clearly aware of the WTO rules and China’s commitments. Administration according to China’s laws and international obligations has become a common practice and an important principle. China’s efforts to implement its commitments to the WTO and open up the market have produced remarkable results. In 2003, China’s GDP growth was 9.1%. Its imports reached US$412.8 billion, up by 40%, or US$117.6 billion more as compared with the previous year. As the growth of imports outpaced exports, China’s trade surplus at the end of 2003 was only US$25.5 billion, a decrease of 54% on a year to year basis. By the end of 2003, 465,277 foreign-invested enterprises were established in China, with a total contract investment of US$943.1 billion and a total realized investment of US$501.5 billion. China has been the largest recipient of FDI for three consecutive years. The above facts prove that the Chinese government is a responsible government and has fully implemented its WTO multilateral obligations. The tremendous efforts made by China to achieve that goal have been fully recognized by the WTO. China’s rapid economic development has served as a new driving force for world economic growth and contributed to the economic recovery and stability in this region and the rest of the world. Ladies and gentlemen, China has clearly set the goal of establishing a well-off society in an all-round way in the next two decades and quadrupling its GDP between 2000 and 2020. In order to achieve this ambitious goal, China will comprehensively improve the level of opening-up, further enhance economic and trade cooperation with countries and regions around the world. A more dynamic and open China will be right in front of you. China was the first and biggest emerging market in the last decade. China will be the first and largest existing market in the next decade. I am confident that a China with 1.3 billion people, rapid economic growth and stable development will present the world with a huge market of enormous potential and great opportunities for doing business. After 25 years of continuous efforts, the scope and depth of Sino-US trade and investment cooperation have reached unprecedented levels. Both China and the US are influential nations in the world. China is the world’s largest developing country. The US is the largest developed country. The two countries are highly complementary in terms of economic structure and development level and thus share huge potential for cooperation. I believe that so long as the two countries make joint efforts, adopt a positive and practical attitude in their cooperation based on equality and mutual benefit, and find solutions to issues of mutual interest through full consultation, the bilateral trade and economic relations between China and the US will see a better future. It is my sincere hope that all of you friends and business leaders present here today can make new contributions to this. Thank you.
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