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Remarks by Consul General Zhao Weiping at the Luncheon Hosted by Hong Kong Business Association of the Midwest
2013/09/05

President Kelty,
Director Anita Chan,
Director Wing Sham,
Distinguished Members of Hong Kong Business Association of the Midwest,

It is my great pleasure to join you today for discussion on China-US economic and trade relations.

I want to start by sharing with you my observation on the status of China's economy.

China's robust economic growth has been the most important engine in driving the expansion of China-US economic and trade relations over the past 30 years. The future of China-US economic and trade relations will also depend very much on how China's economy will perform.

There has been an obvious slowdown in China's economy since the first quarter of 2011, which is caused by many external and domestic factors. However, one of the major reasons is the deliberate policy choice by the Chinese government.

China is determined to push forward economic restructuring and improve the quality of the economy and has adopted a more tolerant attitude towards a slower economic growth. In the meantime, there is a bottom line for the economic slowdown. So long as the economy keeps growing above the bottom line, the priority will continue to be the economic restructuring. Although there has been no official announcement on where the bottom line lies, it is commonly believed that an annual growth rate above 7% should be maintained for China's economic growth.

There are many reasons to believe that China's economic slowdown is fully under control. Enormous potential exists in China's economy as China presses ahead with its industrialization and urbanization. Most importantly, further reforms will provide ever-lasting driving force for China's economic growth.

In the last several months, the Chinese government has introduced a series of vigorous reform measures. China announced its plan to cut the existing 1,700 administrative approval items by at least one-third in five years, which will give the market a bigger play in the economy. China has recently cancelled the floor limit for lending interest rates and the financial institutions in China can decide their own lending rates following commercial principles. Several days ago, the State Council approved the establishment of the Shanghai pilot free trade zone, which is viewed widely as another milestone in China's opening up to the outside world. As the Third Plenary Session of the 18th CPC Central Committee is going to be held in November this year, China is widely expected to embrace another wave of reforms.

China's economy has certainly not lost the direction or is floating in the air as some people have suggested. And the theory on the so-called hard landing of China's economy will surely be proven wrong once again.

In fact, recent statistics has shown that China's economy has been stabilizing. China's Purchasing Managers Index (or PMI) in July was 50.1 as recently released by HSBC, which surpassed 50 for the first time in 4 months. China's export in July performed much better than the previous months. Inflation remained low. The CPI was up 2.7 percent year on year in June. Employment situation has been encouraging against the backdrop of economic slowdown. 7.25 million new jobs were created in the first six months this year against a 9-million-target for the whole year. It is expected that China's economy will achieve a stronger growth in the third quarter.

The further growth of China's economy will provide important opportunities for the future development of China-US economic and trade relations. I will not elaborate on the critical importance of this relationship or how much we have achieved. Instead, I want to talk about what we can do to further advance this important relationship.

First, it is necessary to strengthen mutual trust and create a more favorable environment for bilateral economic relations. For the Chinese perspective, China-related trade and investment issues have been politicized in America from time to time. Harsh restriction on US export of high-tech products to China has been one of the major causes for the bilateral trade imbalance. Undue security scrutiny has prevented more China's investment from entering America. Encouragingly, China and the US have established effective high-level consultation and dialogue mechanisms on bilateral economic relations, such as the Strategic and Economic Dialogue which was successfully concluded recently. Both sides should continue to enhance mutual understanding on difficult issues, appropriately handle differences and refrain from resorting to protectionist measures of all kinds.

Second, it is necessary to increase mutual investment and elevate bilateral economic cooperation to a new level. Although China's investment in the US has been expanding fast in the last several years, its total size is still very small, which does not match the status of China as the world's second largest economy as well as the second largest trading partner of the US. The US has been one of the leading investors in China for many years, but its ODI stock in China only accounts for around 5% of the total foreign investment China has received. There clearly exists large space for expansion in mutual investment between the two countries. However, both the governments and the business communities need to make more efforts in turning the potential into reality. The good news is that, at the recent Strategic and Economic Dialogue, both sides agreed to start substantive negotiations on China-US bilateral investment agreement on the basis of Pre-Establishment National Treatment and negative list. The Chinese side is ready to work with the US side in pushing forward the negotiation process in a proactive and pragmatic manner.

Third, it is necessary to encourage the local governments of the two countries to play a bigger role in promoting China-US economic partnership. All politics is local. It is also true that all economy is local. Since I came into office as Chinese Consul General to Chicago, I have visited all the nine states in my consular area. I was deeply impressed with the fact that all the Governors and Mayors are working very hard in improving their local economies and creating jobs. They are all very interested in attracting Chinese investment and exporting more products to China. Likewise, the delegations from the Chinese Provinces and Cities I have received are all enthusiastic in establishing or deepening business partnership with America. There have been many successful examples of joint commercial projects being accomplished with the help of the local governments of our two countries.

In recent years, several Governors of the Midwest led business missions to China. So far this year, Governors of Iowa, Wisconsin and Kansas have visited China. And the Governor of Michigan will visit China very soon. On the Chinese side, senior delegations from several Provinces and Cities visited the Midwest this year. Along with the frequent exchange of visits between the local governments of both sides, China-Midwest economic ties have been growing rapidly. The bilateral trade between China and my consular area has increased by 53.8% in the last four years. Chinese investment in my consular area has jumped to 7.039 billion US dollars in the second quarter of this year. In my opinion, China and the Midwest should make more efforts in expanding their cooperation in such fields as agriculture, bio-science, hi-end manufacturing, pharmacy and clean energy. The Chinese Consulate will work hard to contribute its part to this end. With the joint efforts by both sides, China-US economic relations will surely yield more tangible benefits to the people of our two countries.

In closing, I wish to take this opportunity to say a few words on the Chinese dream as announced by Chinese President Xi Jinping. It is a dream about the great rejuvenation of the Chinese nation with the aims to bring about economic prosperity and people's well-being. It is a dream of peace, development, cooperation and win-win results, identical to the beautiful dreams of people in other countries. The realization of the Chinese dream requires a peaceful and stable international and neighboring environment. In the process of the realization of its own dream, China will make contributions to the peace, stability and prosperity of the Asian-Pacific region as well as the whole world.

Thank you.

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