V.Sino-US Economic and Trade Co-operation
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Lasting economic and trade co-operation between China and the United States requires sustainable and balanced growth in bilateral trade. The Chinese side has always paid great attention to the need and taken active measures to increase imports from the United States. China's market is open to US goods and services. Over the past years, China has purchased a great amount of US products. Investment sectors in China for US businesses have widened and the scale of US investment in the country has been growing continuously. All these have brought US enterprises huge profits.
-- Trade in commodities: Between 1979 and 1996, China bought 69.476 million tons, or 11.62 billion US dollars worth, of wheat from the United States. Now, China is the largest buyer of US wheat. In the period, China also bought 46.243 million tons, or 9.56 billion US dollars worth, of chemical fertilizers and 308 aircraft worth 8.72 billion US dollars from the United States.
-- US investment in China: US investment in China has been increasing rapidly. Among the top-500 US enterprises listed by the Fortune magazine, more than 100 have so far invested in various fields in China.
-- Banking and insurance: Five US banks have altogether set up eight branches in China. Three out of the six foreign insurers operating in China are US companies, respectively set up by American International Assurance Co. and the AIU Insurance Co. -- both subsidiaries of American International Group Inc. (AIG).
-- Shipping services: APL (China) and Sealand (China) are the ear"iliest wholly foreign-owned shipping companies to start operating in China, where they already have nine subsidiaries at present.
-- Retailing: US retailers, including the renowned Walmart Co., have also entered the Chinese market.
In order to open China's market wider, China and the United States signed the Memorandum of Understanding Between the Government of the People's Republic of China and the Government of the United States of America Concerning Market Access in October 1992. In the following years, China has made earnest efforts to fulfill the various obligations as stipulated in the memorandum, and has taken a series of active measures in line with its reforms and opening drive. Take sanitary and phyto-sanitary quarantine as an example: After joint research and analyses by experts from both countries, China not only abolished its import control over apples from the Washington State and wheat from California, but has signed with the United States new quarantine protocols on such imports as pigs, horses, dogs and genetic materials. In April 1994, China and the United States reached an agreement on hygiene quarantine provisions on cherry imports from the Washington State and imports of relevant species of apples grown in Idaho and Oregon. All these have helped further development of Sino-US economic and trade ties.
China is now in a period of rapid economic growth, estimated to average at least 8% a year in the run-up to 2000 and maintain above 7% in the first decade of the 21st century -- promising broad market potentials. An example is the market demand for energy and communications construction. In the next five years, China will increase its installed power-generating capacity by 80,000 megawatts and build 16,000-kilometres-long new railways plus another 2,800 kilometres of freeways. It also plans to build another 150,000 kilometres of optic fibre cables and increase telephone switching capacity by 70-80 million lines. China will continue to introduce overseas capital, technologies and equipment in an active, rational and effective way. China's imports increased to 138.8 billion US dollars in 1996 from 10.9 billion US dollars in 1978, representing an annual average growth of 15.2%. Between 1997 and 2000, cumulative imports to China will top 700 billion US dollars. China's economic growth will offer a massive market for world trade and investment. Back in 1994, the United States' Department of Commerce had put China on the top of ``top-10 emerging markets,'' reflecting its high evaluation on potentials of the Chinese market. The Chinese market is opening wider while the competition is also getting tougher. We are willing to see that US enterprises win more chances to compete on the Chinese market.
Chinese exports to the United States are mainly labour-intensive products. These products pose no threat to the production of US enterprises. An economist from the US-based Institute of International Economics was quoted by a Washington Post story in June 1996 as saying: It is true that the United States imports more and more toys and shoes from China, but these industries have almost vanished in the United States. Clyde Prestowitz, president of the Economic Strategy Institute of the United States, pointed out in an article in a December 1996 issue of the US News & World Report that China's exports to the United States are large in industries where the United States does not make things anymore. Labour-intensive Chinese exports to the United States will neither affect industrial production and employment in the United States, nor affect international market shares for US products. Instead, they are beneficial complements to the economic structure of the United States and can help the United States to readjust its economic structure.
Paralleling with the gradual deepening of its economic reforms in recent years, China has increasingly amplified its foreign-related legal system, steadily improved its trade and investment environment and enforced the intellectual property rights protection system. On the issue of trade system transparency, China has sorted out and publicized all management documents that used to be deemed confidential and publicly abolished 744 of them. In 1993, the Bulletin of the Ministry of Foreign Trade and Economic Co-operation of the People's Republic of China was launched to exclusively carry laws and regulations on the management of foreign trade and economic co-operation. Import restriction was further eased and by the end of 1995, China had rescinded import licensing and quota control over 826 tariff lines. Since the past year, China has again taken a series of imortant measures in improving its foreign-related economic regime and policies as follows:
-- A massive cut in the import tariffs of more than 4,000 tariff lines was introduced in April 1996, bringing average tariff from 35.3% down to 23%. It has also pledged to further lower overall tariff rate to 15% by the year 2000.
-- China has taken active steps to phase out non-tariff measures. Only 384 items of imports are subject to the measures today as compared with 1,247 before. China has also set forth a timetable to further lift such measures.
-- In 1996, the Chinese currency Renminbi became freely convertible under the current account, enabling foreign-invested companies to be free in international settlement and transfer under the current account.
-- China has started, on a trial basis, to open its market to foreign investors in such service sectors as domestic retailing, finance, insurance and foreign trade. Some foreign companies and financial institutions have already entered these markets. In the Pudong New Area of Shanghai, some foreign banks have begun handling Renminbi business.
By the year 2000, China will have initially established a system of socialist market economy and built up a unified and standard foreign-related economic regime, which will create better conditions for the world's business communities including those from the United States to develop economic and trade co-operation with China.
Equality and mutual benefit are the cardinal principle of international trade. It is normal that countries will seek to protect their own interests, which may lead to trade frictions and disputes. The key lies in how to cope with these issues correctly in a cool and wise way. China has always advocated that parties involved should adhere to the principle of mutual respect and settle bilateral or multilateral trade disputes, reasonably, through friendly discussions. Having experienced a winding course in their bilateral relations, China and the United States should cherish the mainstream in the two-way trade development, look to the future and face the reality with a constructive attitude. Bullying, forcing unacceptable demands on the other through constant threats of trade sanctions and even actually imposing sanctions will not help solve problems but cause damage to the interests of both sides.
It is China's sincere wish and also to the interest of the United States to expand bilateral trade and economic co-operation. Both governments are obliged to provide a sound and stable climate for the long-term development of the bilateral trade and economic co-operation. It is their duty to substantially improve bilateral trade ties and lay a solid foundation for developing and balancing trade between the two countries. We welcome the business communities from the United States to play an active role in fair competition on the Chinese market. We wish the US Government will take forcible measures to fuel stronger growth in two-way trade and economic co-operation.
We are happy to note that, when they met on the sideline of the summit meeting of the Asia-Pacific Economic Co-operation (APEC) forum last November in Manila, the Philippines, Chinese President Jiang Zemin and US President Bill Clinton reached a wide range of consensus on the comprehensive, healthy and stable development in bilateral ties. Following the summit, three Sino-US joint committees on commerce and trade, economy and science and technology were convened in succession. The active and pragmatic attitude as reflected in the meetings helped promote the development in bilateral trade ties, reinforce exchange and co-operation, enhance mutual understanding and inject new vigour into bilateral ties. Looking to the future, China has confidence in the development of Sino-US economic and trade co-operation. China and the United States have every reason and should strive together to open new and better prospects in their trade ties. It serves the fundamental interests of both peoples.