The China-US Business Forum, jointly sponsored by the American Chamber of Commerce in China and the People's Daily, was held in Beijing yesterday with an aim to enlarge bilateral exchanges and cooperation, and achieve mutual benefits and win-win situation.
Senior officials, economists and entrepreneurs from China and the US attended the forum and discussed a wide range of topics like intellectual property rights protection, transnational mergers and acquisitions, and trade imbalances.
US told not to politicize trade issue
China is willing to work with the US to seek a balance in their trade, but it will not help if political elements are embedded in the issue, a top Chinese legislator said yesterday.
Cheng Siwei, vice-chairman of the Standing Committee of the National People's Congress, said China and the US should work towards easing frictions in their trade ties and find win-win solutions through consultation.
"We are equal partners and we should deal with the problem calmly, and not politicize it," Cheng said.
There has been rising criticism of China in the US of late. The US last week reported an all-time-high trade deficit of US$725.8 billion for 2005. Congressmen are pressuring the Bush administration to resolve the issue with China in particular because it registered an annual deficit of US$201.6 billion, the largest ever recorded with a single country.
US senators Byron Dorgan and Lindsey Graham introduced legislation last week to repeal the normal trade relations status between the two countries. The US Congress granted China permanent normal trade relations status in 2000, paving the way for its entry into the World Trade Organization.
Another piece of legislation proposes to impose across-the-board tariffs of 27.5 percent on Chinese imports unless Beijing revalues its currency.
Cheng admitted that China has a big trade surplus with the US, but emphasized that wasn't the aim.
"What we should bear in mind is that both sides reap benefits from trade cooperation," he said.
He quoted a study by US investment bank Morgan Stanley that estimates US consumers had saved US$600 billion in the past decade by buying cheaper China-made goods.
China had also used a significant chunk of its foreign exchange reserves, partly earnings from its trade surplus, to buy US bonds. At the end of 2005, China held US$300 billion in US treasury bonds.
Cheng called on the US to help reduce its deficit with China by relaxing restrictions on high-tech exports. Only 10 percent of China's high-tech imports come from the US.
"I would say if you could sell a space shuttle to China, the situation would be greatly improved," Cheng said. "That's a joke. But China has to be allowed to buy more than Boeing airplanes."
Vice-Minister of Commerce Yi Xiaozhun told the forum that China had done a lot to reduce the trade deficit, with imports from the US witnessing the highest growth in 2005.
China reported that its surplus with the US last year was US$114.2 billion. Different statistical standards caused the discrepancy with the US figure.
Foreign investors 'no security threat'
Wu Xiaoling, deputy governor of the People's Bank of China, dismissed worries that the growing equity investment by foreign banks might erode the security of the local financial system.
"Making the state-owned banks healthier on the precondition of state control and ushering in strategic investors will not affect financial security," she said.
"The important thing is we ensure the structural balance of the national economy at a macroeconomic level, so as to make our economic system more flexible and give the performance of the economy greater adaptability," she said. "If not, the performance of specific financial institutions will be affected."
A number of foreign financial institutions such as HSBC and Bank of America have invested more than US$20 billion in local banks in the last few years, as local financial authorities seek foreign expertise and capital to help reform the sector before it is fully opened to foreign competition at the end of this year.
In the latest development, Goldman Sachs, Allianz and credit card company American Express last month agreed to invest a combined US$3.78 billion in the Industrial and Commercial Bank of China, the nation's largest bank.
As foreign equity investment increased, particularly when the biggest four state-owned lenders started to sell shares, worries grew that foreign banks might seize control of the local banking sector.
The worries have been repeatedly refuted by Chinese officials, chiefly citing reasons like strict criteria in selecting strategic investors and a 25 percent ceiling on foreign ownership of any Chinese bank.
The fragility of China's banking sector, plagued by high bad loan rates and low capital bases, is a major concern when the authorities ponder changes such as exchange rate regime reform.
"The opening-up of China's financial market provides investment opportunities for global capital, enabling investors from different countries to share benefits from the rapid growth of the Chinese economy," Wu said.
"The reform and development of China's financial industry also needs an international environment with relative forgiveness and mutual understanding," she added, citing factors such as the structural imbalance of the world economy and sharp fluctuations of oil prices that are currently posing a severe challenge to China's financial industry.
Chinese banks saw their profits grow to 253 billion yuan (US$31 billion) last year from 23.2 billion yuan (US$2.8 billion) in 2001. Their non-performing loan ratio dropped to 9.8 percent last year from 25.4 percent in 2001.
The profits of foreign financial institutions, meanwhile, rose to US$446 million last year from US$196 million in 2001.
US$40 billion on US Planes
Of the 863 operating civil planes in China by November 2005, 534 are Boeing aircraft, according to Li Jiaxiang, president of the China National Aviation Holding Company.
"Based on catalogue prices, China has spent nearly US$40 billion buying these planes from the US."
He said that the growth of China's civil aviation industry has contributed tremendously to development of Sino-US economic and trade relations. "The greatest beneficiary is the US plane manufacturing business," Li added.
"China purchases a large number of plane engines, aero-electric equipment, accessories and advanced navigating devices each year and engages maintenance services provided by US companies," Li said.
Meanwhile, tens of thousands of employees of China's airplane companies have received various forms of professional training in the US, which have brought more profits to the US aviation field, Li said.
"The growth of China's civil aviation has provided hundreds of thousands job opportunities to the US aviation industry, which proves that the two nations have win-win economic and trade relations," Li stressed.
China's airline companies ordered 60 B787 aircraft and 70 B737 aircraft in 2005 alone, with a total price of more than US$11 billion, ranking 2005 as China's largest plane purchasing year.
China has entered the development of transportation in the 11th Five-Year Guideline (2006-10) and will need over 2,600 new planes in the coming 20 years, valued at more than US$213 billion, according to the latest analysis by Boeing.
At a press conference in Beijing on Tuesday, Gao Hongfeng, deputy director general of China's General Administration of Civil Aviation, said that China will purchase more than 100 airliners each year from 2006 to 2010.
However, official statistics show that the number of Chinese air travelers is still quite small, with each Chinese only flying 0.06 times per year on average, while each North American flies up to 2.2 times a year.
China signed an agreement with the United States in December 2004 to promote bilateral travel and tourism cooperation and the US should be completely open to Chinese tourists in the foreseeable future.
Li said, the huge potential consumption by Chinese tourists in the US will be conducive to narrowing the Sino-US trade deficit.
The number of air travelers in China soared to 138 million in 2005, doubling the 2000 figure, due to increases in disposable income and economic activities, Gao said.
(China Daily, Xinhua News Agency February 15, 2006)