The 11thseminar of the series of seminars called the “Brilliant 12th Five Year” was held on October 19 in Beijing. Our Journalist interviewed the reporter, China International Trade Representative and Vice Minister of Commerce Zhong Shan.
Q: In recent years, China’s economy has been deeply integrated with the world economy, and plays an even more important role in the world. Could you tell us that what achievements did China’s open economy gain during the 12th Five Year?
A: During the 12th Five Year, the world economy was in a phase of deep adjustment after the international financial, its recovery was an arduous process. China’s domestic economy entered into the new normal with huge pressures of transformation and upgrading. Facing the complicated and serious situation, China adhered to the basic state policy of opening up unswervingly, and carried out more active opening strategies, promoting reform, development and innovation through opening up, and driving the harmonious development of domestic demand and foreign demand, export and import, introducing in and going out, the East and the Middle West. China’s opening up reached a new level, and the contributions of the open economy to the economic and social development were even prominent.
1. China’s status of a large trade country was consolidated and promoted, being the largest country of trade in goods in the world for two consecutive years. Affected by the depressed demand of international markets, the reindustrialization of the developed countries and the raising of trade protectionism, the international trade presented a low-speed growth after the financial crisis. The growth of China’s foreign trade slowed down, but above the average level of the world. In the first four years of the 12th Five Year, the annual growth rate of trade in goods was 9.7%, 4.2 percentage points higher than that of the world in the same period. The proportion of trade in good in the world was up from 10.4% in 2010 to 12.4% in 2014. The service trade maintained a rapid growth, and the import and export of service increased from US$ 362.4 billion in 2010 to US$ 604.3 billion in 2014 with an annual growth rate of 13.6%, ranking the second in the world while it used to be the fourth on the world list.
2. Utilization of foreign investment was enhanced continuously, ranking the first among the developing countries for 23 consecutive years. During the 12th Five Year, the foreign investment in the world was generally decreased, but China adhered to the “Three No Changes” about the utilization of foreign investment, continuously optimized the investment environment, and realized a stable development of foreign investment utilization. In the first four years of the 12th Five Year, China’s total utilized foreign investment reached US$ 497.47 billion, with an annual growth rate of 2.9%, and ranked the first in the world for the first time in 2014. The structure of foreign investment was further optimized with the proportion of utilization of foreign investment in service industry as high as 55.4%, 22 percentage points higher than that of the manufacturing industry; the industrial gradient transfer saw obvious effects. In 2014, the proportion of utilization of foreign investment in the Middle and Western China reached 18.1%, 3.1 percentage points higher than that of the end of the 11th Five Year. Over 2,000 transnational corporations set up regional headquarters and research centers in China, and the high-level links like research and development, designing and logistics quickened their transference to China.
3. Our outward investment ranked the third in the world for 3 consecutive years, and the pace of going out quickened. Since the 12th Five Year, the level, standard and efficiency of China’s going out were further promoted. China’s outward direct investment increased form US$ 68.81 billion in 2010 to US$ 123.12 billion in 2014 with an annual growth rate of 15.7%, its ranking in the world increased from the 6th to the 3rd. The two-way investment approach balanced for the first time, marking China’s transformation from goods export to capital export. The annual growth rate of the competed turnover of foreign contract projects was 11.5%, with the emphasis shifting from general projects contracting and civil construction to high value added fields including projects financing, design consultation, operation and maintenance, and final-period management. The annual growth rate of outbound contract labors was 8.1%.
4. The multilateral and bilateral economic and trade cooperation gained new achievements, and the discourse power and the leadership power in participating in international economic governance were strengthened. During the period of the 12th Five Year, international political and economic pattern witnessed a deep adjustment, and the fight for discourse power and the leadership power was even more violent. China actively participated in the mechanism construction like G20 and BRICS, and held successfully APEC Beijing Summit by making use of the platforms like UN, APEC and Asia-Europe Meeting. Its aim is to lead the international economic order to develop to the direction that will benefit China; China firmly maintained its leading role in the multilateral trading system in the progress of global trade and investment liberalization, promoted WTO Doha Round to gain the “Early Harvest” agreement, and actively drove the formulation of multilateral investment rules. The implementation of FTA strategy was speeded up, the regional and sub-regional cooperation like SCO, Pan-Beibu Gulf, Great Mekong River, Central Asia, East ASEAN Growth Area and GTI were deepened, and the multilateral, bilateral and regional liberalization and cooperation all developed together, gaining positive results and creating favorable external environment for China’s economic and social development.
Q: At present, China has become the largest goods trader in the world, and is developing from a large country of trade to a strong country of trade. Could you tell us that what new progress did China gain in structure adjustment, transformation and upgrading in the period of the 12thFive Year?
A: Since the Twelfth Five-Year Plan was made, China’s foreign trade has accelerated the transformation of developmental modes and constantly optimized its structures. Positive progress has been made and the steps towards a trade power have become more steadfast. Firstly, export-leading industry has gradually transferred from the traditional advantageous industry like the light industry, textile industry and home appliance industry into the capital and technology intensive industry like the equipment manufacturing, the old and new advantages are taking turns in international competition, and new advantages with technology, brand, quality and service as core competitiveness are coming into being. In 2014, China’s exports of mechanical and electrical products, and new high-tech products took up 56.3% and 28.2% among the total exports respectively; the export value of equipment manufacturing registered RMB2.1 trillion, taking up 17% of the total export value. Secondly, trade in goods and trade in service saw coordinate development. The trade in service took up 12.3% of China’s foreign trade in 2014, rising from 10.3% in 2010. In January-July 2015, China’s trade in service amounted to US$370.3 billion, up 14.1% year on year, taking up 14.3% of China’s foreign trade. Trade of producer service which is closely related to trade in goods such as finance, insurance, logistics, consulting design and advertising service develop quickly. Thirdly, new modes of trade such as the cross-border e-commerce, the market purchasing trade, the comprehensive service enterprises of foreign trade saw robust development. In the first three quarters of 2015, the cross-border e-commerce grew by over 30%. Fourthly, the international markets tend to be diversified. In 2014, China’s trade with new emerging markets and developing countries took up 56.8% of the total, with an increase of 3.7 percentage points compared with that in the end of the 11th five-year plan. Fifthly, the contribution of foreign trade to national economy became greater. According to the statistics, in the first half of 2015, the contribution rate of net exports of goods to national economic growth reached 25.6%, pulling the national economic growth. The foreign trade has created 180 million jobs directly or indirectly and brought 18% of the national taxation.
Q: In the period of the twelfth five-year plan, the State Council approved the (Pilot) Free Trade Zone in Shanghai, Guangdong, Tianjin and Fujian, how do they get on?
A: The main tasks of pilot free trade zone construction are to promote the mechanism innovation, to explore new ways and modes for China’s opening-up, and to accumulate experience for comprehensively deepening reforms and expanding opening-up. Over recent years, positive progress has been made in pilot free trade zone construction. Firstly, the foreign investment management system focusing on the negative list was basically established. Items on the negative list have been reduced to 122 from 139 in China Shanghai Pilot Free Trade Zone in 2014 and the opening measures in finance, shipping, commercial trade, professional service, cultural and social service have been implemented comprehensively. Secondly, the trade monitoring system centering on trade facilitation runs well. Efforts were made to innovate the monitoring system of “opening up the first-tier port, effectively control the second-tier port”, to promote over 60 innovative measures including “enter the free trade zone before customs clearance”, to launch and carry out the “single window” management system, and to establish a comprehensive service platform of trading, transporting, processing and warehousing. Thirdly, the financial innovation system aiming at capital account convertibility and the opening-up of financial service sector was stepped up orderly. By August 2015, 36 institutions within the China (Shanghai) Pilot Free Trade Zone were incorporated into separate accounting unit system, over 26,000 free trade accounts opened with a total balance account value of more than RMB1 trillion. Fourthly, steadily promote the pilot free trade zone nationwide. So far, the China (Shanghai) Pilot Free Trade Zone has made a series of fruits in system innovation, 27 of which have been popularized nationwide, and 28 will continue to be popularized, and 6 have been popularized in the special customs supervision zone..
A: What achievements were made in promoting international capacity and equipment cooperation in the period of the twelfth five-year plan?
A: In recent years, China’s equipment manufacturing has maintained sustainable and rapid development, with size, technical level and international competitiveness being improved greatly. International capacity and equipment manufacturing cooperation were accelerated, clustered cooperation overseas increased, and a batch of large investment cooperation projects sprang up. In 2011-2014, China’s overseas investment in manufacturing accumulated to US$32.49 billion, taking up 8.3% of the national total over the same period of time, involving over 2,000 overseas equipment manufacturing enterprises. The contract value of rail transit construction projects overseas in 2014 registered US$24.7 billion, with an increase of over three folds year on year. Among these, the coastal railway projects in Nigeria hit an all-time high with a contract value of US$11.97 billion among the overseas contracted projects. By the end of June 2015, the total investment of 68 overseas trade and economic cooperation zones which are under construction accumulated to US$16.26 billion, incorporating 870 enterprises, of which 602 were Chinese holding companies. It has helped to lead equipment manufacturing to transfer overseas.
Q: Since the financial crisis, the ways of economic globalization have faced profound changes, multilateral cooperation became difficult and regional cooperation like the free trade area was still growing. So what achievements we have made in free trade area construction since the twelfth five-year plan was released?
A: Since the twelfth five-year plan, China has accelerated the FTA strategy and made fruitful results. We have signed free trade agreement with Switzerland, Iceland, South Korea and Australia, launched and stepped up the Regional Comprehensive Economic Partnership (RCEP) negotiations, the China-Japan-ROK FTA negotiations, China-ASEAN FTA upgrading negotiations, the 2nd phase of China-Pakistan FTA negotiations, China-Sri Lanka FTA negotiations and the China-Maldives FTA negotiations. Besides, active efforts have been made to negotiate on FTA construction with the EU, BRICS, Canada, and other emerging economies. So far, the number of FTAs that China has signed reached 14, involving 22 countries and regions. With the increase of FTA partners, our FTA level is also improved. Among the FTA that have come into force, most trade in goods have higher rate of trade liberalization, and the number and import value of zero-tariff products take up over 90% basically. The FTA plays a greater role in promoting trade and investment cooperation. In 2014, China’s trade value with 22 FTA partners amounted to US$1.62 trillion, taking up 37% of China’s foreign trade, with a growth rate of two percentage points higher than that with other countries and regions and with an export growth rate of five percentage points higher than that to other countries and regions.
Q: In 2013, when President Xi visited Central Asia and Southeast Asia, he proposed the cooperative initiative of “the Belt and Road”. How is the progress and situation of the construction of “the Belt and Road” promoted by China?
A: The construction of “the Belt and Road” is a significant strategic decision made by Comrade Xi Jinping as the General Secretary of the Central Party Committee to plan and coordinate the domestic and the international situations. In the recent two years, according to the general deployment of the Central Party Committee and the State Council, efforts have been made to fully promote the pragmatic cooperation with the countries along the line of “the Belt and Road” by adhering to the principle of common discussion, common construction and common sharing and closely focusing on “the five connection”, and the phased fruits have been obtained. Firstly, the cooperation scale has been constantly expanded. In 2014, the trade volume between China and the countries along the line of “the Belt and Road” reached US$1.12 trillion, accounting for 26% of the total trade volume of China. The foreign direct investment totaled US$12.5 billion, accounting for 12.1% of the total FDI. The turnover of the completed project contracting was US$64.3 billion, accounting for half of the total amount. Secondly, the cooperation fields were continuously expanded from mainly depending on the traditional commodities and the export of labor service to advancing commodities, service and capital export together, from enabling the single enterprise to go abroad to letting enterprises go abroad in group by the means of the overseas trade and economic cooperation zones. Thirdly, a batch of major cooperative projects was strongly promoted. Projects such as the D line of the China-Central Asia natural gas pipeline, the China-Russia east gas pipeline, the China-Kazakhstan Lianyungang Logistics Cooperation Base, the Pakistani Gwadar Port, the Hungary-Serbia Railway go smoothly. The construction of industrial parks was accelerated, such as the China-Belarus Industrial Park, the China-Malaysia Qinzhou Industrial Park and Malaysia-China Guandan Industrial Park, the China-Indonesia Comprehensive Industrial Park, the China-Egypt Suez Trade and Economic Cooperation Zone. These projects promoted the development of the economic society of the relevant countries, drove the employment, improved the people’s livelihood and showed the broad prospective of the construction of “the Belt and Road”.
Q: How is the progress of the regional integration of the cross straits four places during the Twelfth Five-Year period?
A: Since the Twelfth Five-Year period, the economic connection between the mainland and Hong Kong, Macao and Taiwan has been further strengthened; the institutional arrangement has been deepened, and the opening up and cooperation have attained important progress. The Closer Economic Partnership Arrangement between the mainland and Hong Kong and Macao has been further deepened and the liberalization of the service trade of these three regions will be basically realized by the end of 2015. Hong Kong is the mainland’s fourth largest trade partner, maintaining the position of the largest overseas investor and the largest overseas investment destination. At present, the market value of the mainland enterprises listed in Hong Kong has exceeded half of the total value of the Hong Kong stock market. The mainland and Taiwan signed the follow-up investment protection agreement of the Economic Cooperation Framework Agreement (ECFA) and the service trade agreement to promote the institutional cooperation of both sides to obtain new results. The mainland is Taiwan’s largest trade partner and investment destination and Taiwan is the mainland’s seventh largest trade partner and the sixth largest source of foreign investment.
Q: What kind of work of foreign assistance has been done during the Twelfth Five-Year period?
A: China always insists the principle of not interfering the recipient countries’ internal affairs and initiates the assistance mode with Chinese characteristics, setting the example of the South-South cooperation. Since the Twelfth Five-Year Plan, we adhere to the correct ideas of morality and profit, carry forward friendship, blend interests, steadily expand the assistance scale, broaden the assistance field and improve the assistance level so that the foreign aid cause develops with steady steps. From 2011 to August 2015, China had accumulatively assisted 820 projects, set for more than 120 developing countries, provided 692 batches of goods and materials, held more than 5,300 training classes at home, cultivated 120,000 officers and technicians for developing countries, provided more than 115,000 scholarship quotas for the international students studying in China, and sent more than 40,000 experts and volunteers of medical treatment, agriculture and education. China pays more attention to the assistance fields such as improving the people’s livelihood and the sustainable development, reinforces the assistance in the fields such as agriculture, education, medical treatment and public health, infrastructure and talents training, and helps the recipient countries improve their livelihood conditions and their independent development ability. A batch of assistance projects has been widely acclaimed by the recipient countries and the international community. For example, China provides four rounds of assistance to the Ebola affected areas with a total value of RMB750 million and three rounds of assistance to the earthquake stricken areas in Nepal with a total value of US$140 million. China makes efforts to help these regions overcome disaster and restore their production. These actions have been widely praised by the international community.
Q: Since the financial crisis, the global trade investment protectionism has picked up somewhat, China faces more trade frictions. What achievements have been made in dealing with the trade frictions and maintaining the economic security during the Twelfth Five-Year Plan period?
A: Since the Twelfth Five-Year Plan, it’s normal that China has been facing multiple trade frictions. China suffers from 394 trade remedy cases in total with an amount of US$52.9 billion. We adhere to the idea of general national security, strengthen the risk prevention and control, actively deal with the trade frictions, enhance the trade remedy capabilities, make good use of the manners such as the national security review and anti-monopoly, and vigorously promote the coordinated development between opening up and safety while deepening the opening up. Firstly, efforts have been made to properly deal with a batch of complex and influential cases with a number of huge amount of money, such as the trade remedy investigation of European photovoltaic products, the American tyre safeguard cases and the anti-dumping and countervailing investigation on China’s wireless telecommunication equipment posed by the EU Commission. These efforts properly coped with the trade frictions in the emerging market and successfully handled the anti-dumping case of clothing and accessory of Peru against China for three years and the countervailing investigations of South Africa, India, Malaysia, Pakistan, Mexico and Eurasian Economic Commission. Secondly, the capability of trade remedy has been enhanced. From 2011 to September 2015, China has launched 41 anti-dumping investigations and 3 countervailing investigations. China has been the WTO member who can use three trade remedy manners such as an-dumping, countervailing and safeguard measures. Thirdly, the anti-monopoly work has been strengthened. From 2011 to the first half of 2015, there have been 1,050 registered concentration of undertaking cases and 990 concluded cases, among which 971 have been approved without conditions, 18 with conditions and 1 has been banned. Fourthly, the overseas rights and interests have been better safeguarded. The overseas risk prevention and control system of the foreign investment cooperation has been constantly improved and the institutional framework centered on “prior prevention, daily supervision, emergency disposal and service assurance” has been basically formed. The governmental service has been intensified; the information service system of foreign investment cooperation has been built and perfected, covering about 90% of the overseas enterprises and projects. The emergency disposal mechanism has been perfected and dozens of overseas safety emergencies involved China have been properly dealt with every year.
