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Chinese Minister of Foreign Trade and Economic Cooperation Shi Guangsheng hosted a press conference Wednesday afternoon on the sidelines of the 16th CPC National Congress, briefing the correspondents on the tremendous achievements China has made, through reform and opening-up, in the foreign economic and trade area in the past 13 years. His speech at the conference follows:
Dear friends from Chinese and foreign Press,
On the occasion of the grand opening of the 16th National Congress of the Communist Party of China (CPC), I'm pleased to have this opportunity today to meet with friends from the press and brief you on the tremendous achievements China has made, through reform and opening-up, in the foreign economic and trade area in the past 13 years, especially since the 15th national party congress.
Over the past 13 years since the 4th plenary session of the 13th Party Congress and under the strong leadership of the CPC Central Committee with General Secretary Jiang Zemin at the core, China has adhered to the basic state policy of opening-up, consistently enhanced its foreign economic and trade cooperation with other countries and regions in the world and actively participated in the economic globalization process. Those 13 years are the best period for China as its economic and trade sector realized the fastest growth. The achievements of China's foreign trade and economic cooperation are mainly reflected in the following areas:
First, foreign trade has achieved high-speed growth and China is gradually becoming a major trading nation. In 2001, China's total import and export reached $509.8 billion, 4.6 times as much as that in 1989 and 1.57 times as in 1997. It represented an annual increase of 13.6 percent, which was far higher than the 6.1 percent world trade growth and the 9.3 percent GDP growth over the same period of time. Consequently, China's ranking in world trade increased from No.15 in 1989 and No.10 in 1997 to No.6 in 2001. While trade grows rapidly in size, the trade mix is also optimizing. Electronic and mechanical products, which have high tech content and added value, are China's largest exports for 8 years in a row. Export of such products totaled $118.8 billion in 2001, up nearly 30 percentage points and 12.5 percentage points respectively from that in 1989 and 1997 and representing 45 percent of total exports. New and high-tech products are the new growth point of exports. In 2001, China exported $46.5 billion worth of new and high-tech products, 17.5 percent of the export total and 13.5 percentage points higher than that in 1991. As foreign trade expands, more and more Chinese companies have obtained trading rights to import and export. Today, about 60,000 domestic companies have trading rights, while in 1989 only more than 6,000 companies had such rights. In addition, the number of operating foreign-invested companies has increased from over 10,000 to more than 200,000.
Secondly, China has opened up a new prospect for foreign investment utilization and basically formed a comprehensive pattern featuring opening-up at various levels and in wide-ranging sectors. Foreign investment inflows to China have been constantly expanding. In 2001, China actually absorbed $46.9 billion of foreign investment. It represents an increase of 12.8 times over that in 1989, 3.6 percent over that in 1997, and an average annual growth of 24 percent. Over the past 13 years, an accumulative $400 billion of foreign investment has been utilized, taking up 97 percent of the total foreign investment utilized since the beginning of reform and opening-up. As a result, China has been the largest foreign investment recipient among developing countries for 9 consecutive years. On top of that, the foreign investment structure has been consistently optimized. The export realized by foreign-invested companies accounted for 50 percent of the total in 2001, up from 9.4 percent in 1989. The average scale of foreign-invested projects has increased from $970,000 in 1989 and $2.43 million in 1997 to $2.65 million in 2001. The focus of foreign investment has moved from general manufacturing industry to basic industries, infrastructure and high-tech industry. After China opened its service sectors, commercial retailing, foreign trade, telecommunications, banking and insurance have become the new hot spots for a new round of foreign investment. Large-scale multinationals are active in investing in China. More than 400 of the top 500 of multinationals have investment in China and have established nearly 400 R&D centers in the country.
Thirdly, China has made preliminary achievements in the implementation of the "going global" strategy, which has promoted the development of an open economy. By the end of last June, China had altogether established 6,758 overseas companies with a contractual investment of $13.2 billion, among which the Chinese side invested $8.9 billion. As to overseas engineering contracting and labor cooperation, the realized business volume reached $97.2 billion. At the end of last June, 475,000 workers were abroad working on overseas projects, up from 432,000 at the end of 1989. The areas of overseas investment and other forms of participation have expanded gradually from trading, shipping and catering to manufacturing and processing, resource development, engineering contracting, agricultural cooperation, research and development and many others. The mode of overseas investment has also diversified from opening "windows" to establishing overseas factories and bring along Chinese equipment export, cross-border merger and acquisition, equity swap, overseas listing, establishment of R&D centers, and building industrial parks. With respect to overseas engineering contracting, Chinese companies not only act as subcontractors of civil engineering projects as in the early days, but also undertake general contracts, project management contracts, turn-key projects, BOT and etc. the labor force working abroad has also developed from ordinary and skilled workers to all types of specialized technicians, high-tech and management professionals.
Fourthly, foreign trade and economic cooperation has become an important component of China's national economy, as its importance and role in the national economy undergoing fundamental changes. The rapid development of foreign economic and trade cooperation has strongly promoted national economic growth. The ratio of export to GDP has increased from 11.8 percent in 1989 and 20.3 percent in 1997 to 23 percent in 2001, 5 percentage points higher than the global average. Last year, the industrial added value originated from foreign invested companies accounted for 24.6 percent of the national total, and the actually utilized amount of foreign investment took up 11 percent of total fixed asset investment.
The rapid development of foreign economic and trade cooperation has promoted the structural adjustment of China's domestic industries and improved the quality and efficiency of economic growth. Through the establishment of contractual and equity joint ventures and the introduction of foreign technology, textile, light industry, electrical home appliances and other traditional sectors have witnessed fundamental changes in their production levels, product quality and grade. They can not only meet domestic demand but also export in large quantity. Import of electronic and mechanical products, especially new and high-tech equipment, has enabled China's design and manufacturing of IT, other new and high-tech products and important equipment to develop from scratch.
The rapid development of foreign economic and trade cooperation has also increased taxation and employment. In 2001, the taxation from import and export and from foreign-related companies took up a respective 16 percent and 19 percent of the national total. Currently, over 70 million Chinese are engaged in various forms of foreign trade and economic cooperation and other directly related activities. Over 23 million of them work directly for foreign-invested companies, effectively alleviating the employment pressure.
The rapid development of foreign economic and trade cooperation has greatly improved China's international balance of payment. The country turned around the persistent trade deficit in 1990 and has been enjoying surplus since then. The national foreign exchange reserve has increased from $5.5 billion at the end of 1989 and $139.89 billion in 1997 to $258.6 billion at the end of September 2002, the second largest in the world.
Fifthly, the development of foreign trade and economic cooperation has improved and strengthened China's external relations and pushed forward the great cause of the reunification of the motherland. Rapid foreign economic and trade growth has fostered a good international environment for China's modernization drive. Closer economic and trade cooperation with developed countries has brought both sides substantial and concrete benefits and promoted the stability and development of bilateral relations. Expanding economic and trade cooperation with developing countries and providing aid to 137 developing countries has enhanced the traditional friendship and promoted common development of all sides. Deepening economic and trade cooperation between the Chinese Mainland and Hong Kong, Macao and Taiwan has exerted positive influence on the smooth transition and return of sovereignty, prosperity and stability of Hong Kong and Macao, as well as the promotion of "three direct links" across the Taiwan Straits and the great cause of peaceful reunification.
Sixthly, China's successful accession to the WTO has moved the opening-up process into a new era and is increasingly showing its positive effect on economic development. After 15 years of difficult and complicated negotiations, China became a WTO member on December 11, 2001. The accession to the WTO is an important strategic decision China has made against the international background of economic globalization and multi-polarization and in light of its domestic need for further reform, opening and development. It symbolizes a new era for China's opening-up. The opening-up which was limited in scope, sectors and geographical coverage is becoming more and more comprehensive, covering many sectors at different levels. The opening-up process is institutionalized under a legal framework, in contrast to the primarily policy-driven approach featuring pilot projects in the past. The resulting market opening is part of the reciprocal process between WTO members rather than China's one-way unilateral action. Instead of being passively subject to international economic and trade rules, China is actively participating in the formulation of those rules. Rather than relying entirely on bilateral consultation mechanisms for the conciliation of economic and trade relations, China is using a combination of mutually supporting bilateral and multilateral mechanisms. These changes are having comprehensive and far-reaching impact on China. They will certainly open up a new horizon for national economic development, provide new opportunities for foreign economic and trade growth and create a new path for China's participation in economic globalization.
As a responsible major country, China has fully implemented its commitments in a serious and responsible attitude over the past one-year since its entry into the WTO. On trade in goods, China has substantially lowered its import duties and removed various types of non-tariff measures. On trade in services, the Chinese government has promulgated new laws, regulations and rules on the examination and approval of foreign investment in some important service sectors and taken considerable actions in opening up the service sectors in accordance with its commitments. On TRIPS, China's legislation on the protection of intellectual property rights is completely in compliance with the requirement of WTO TRIPS Agreement. On investment, China has completed its revision of basic laws and implementing rules on foreign direct investment, revised and published the latest Industrial Catalogue Guiding Foreign Investment. In order to implement its commitments, China has altogether reviewed about 2,300 laws and regulations on foreign trade and economic cooperation. The central government and local governments are taking time to reform the administrative procedure for examination and approval and accelerate the transformation of governmental functions. The TWO is reviewing China's trade policies in Geneva right now, and China's tremendous efforts in implementing its commitments have been generally affirmed by WTO member.
Meanwhile, as a new WTO member, China is also actively participating in the new round of multilateral trade negotiations. Together, with other WTO members, China is seeking balanced interests between developing and developed members and is playing a constructive role in the multilateral trading system.
Generally speaking, thanks to the full and effective work undertaken by all sides over the year, a smooth start has been secured, and membership in the WTO has exerted and is still exerting positive effect on China's economic development. The opening-up process is moving forward, new progress is being made in the building of rule of law and transformation of government functions, and the service-awareness of government agencies and competition-awareness of enterprises is being noticeably strengthened. Export and foreign investment is increasing rapidly, and the opening of agriculture, services and automobile markets has also promoted the reform and development of those sectors.
Of curse, membership in the WTO will have a long-term impact on its economic development and requires long-term and careful responses. We believe, under the correct leadership of the CPC Central Committee and based on the experience of more than two-decade's reform and opening and the improving comprehensive national strength, China's accession to the WTO will surely play a bigger role in its economic development if we are responsive to the changes.
Since the beginning of this year, China's economic and trade relationship with other countries and regions has been continuously developing. From January to October, China's imports and exports totaled $500.26 billion, up 19.7 percent. In a breakdown, exports reached $262.499 billion, up 20.6 percent, while imports amounted to $237.762 billion, up 18.7 percent. Overseas investment in China has also been increasing. In the first ten months, China actually utilized $46.44 billion of foreign investment, up 19.65 percent over the same period of last year. The contractual value of foreign investment reached $76.5 billion, up 34.87 percent.
Looking back on the past 13 years, especially since the 15th national party congress, the strong leadership of the Communist Party of China has ensured the remarkable development of China's foreign trade and economic cooperation. It is proven that the series of reform and open-up policies and development strategies of the Communist Party of China and the Chinese government formulated and implemented against complicated and changeable international economic and political situation are completely correct.
Past experience tells us that unswerving adherence to the opening-up policy is the fundamental prerequisite for China's continuous foreign economic and trade development. The CPC Central Committee with General Secretary Jiang Zemin at the core has explicitly adhered to the open-up policy against major changes in the global economic and political pattern and expanded opening-up against the background of rapid economic globalization and that has ensure the continuous development of foreign economic and trade sector. Past experience tells us that the sustained, rapid and healthy development of the national economy is the basis for sustained growth of China's foreign trade and economy, that the establishment of the socialist market economy is the fundamental driving force for continuous foreign economic and trade growth, and that maintaining the continuity and stability of favorable policies and improving comprehensive competitiveness are the basic conditions for sustained foreign economic and trade development.
In his report to the 16th CPC Nation Congress, General Secretary Jiang Zemin pointed out that in the first two decades of this century, we would strive to build a well-off society in an all-round way, accelerate the socialist modernization drive and create a new situation in building socialism with Chinese characteristics. It is our program of action and grand blueprint in the new century. Looking into the future, we will continue to hold high the great banner of Deng Xiaoping Theory, fully implement the important thoughts of "Three Representatives". According to the objectives put forward at the 16th Party Congress, we will strive for continuous development of China's opening-up and foreign economic and trade cooperation, turn China from a major trading nation to a trade power and play a greater role in China's socialist construction. A more prosperous, stable and open China will surely create more opportunities and broader prospects for China's foreign economic and trade relations with the rest of the world, and will make greater contribution to the prosperity and development of the world economy.
(China.org.cn November 13, 2002)
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