|Speech by Consul General Zhao Weiping at the Luncheon hosted by Naperville China Committee and Sikich LLP|
Distinguished Guests, Dear Friends, Ladies and Gentlemen,
First, I wish to thank China Committee and Sikich LLP for organizing this wonderful luncheon and thank every one of you for your gracious presence.
It is my great honor to visit this wonderful city of Naperville at the kind invitation of Honorable Mayor Pradel.
I met with the Honorable Mayor for the first time almost one year ago at a Chinese community event here in Naperville. Although we only had a brief conversation, his beautiful and friendly smile left me with very deep impression. Every time I think of the Honorable Mayor, I feel very warm in my heart.
I later heard that Honorable Mayor has another great name, the "Happy Buddha". Yes, he is indeed our Happy Buddha. His vision and leadership has not only led to the growing prosperity of Naperville, but also benefited the development of Naperville's friendly relationship with China. I look forward to seeing him at the City Council later today.
Being here today, I'm very encouraged to see the growing connection between China and Naperville. Tens of thousands of Chinese immigrants came to live and work here, and Chinese investment in the city has been increasing. I was so delighted to learn that Tri-Ring Group from Hubei Province of China has decided to set up an auto-parts factory here. I wish to congratulate Naperville on that and I hope more Chinese investors will follow suit.
As China's economy continues to grow, there will surely be more and more encouraging news for China-U.S. economic ties as well as China's friendly relations with individual U.S. cities.
After more than three decades of almost two-digital high-speed growth, China's economy began to slow down in recent years. This was caused by many factors including unfavorable international economic environment. However, the main reason was the deliberate policy choice by the Chinese government.
China's new strategy is to focus more on improving the quality of the economy rather than seeking a high growth speed. It is necessary to slow down the economy to a certain extent so as to alleviate pressure on natural environment and resources as well as create conditions for economic restructure. In the meantime, China will not allow its economy to grow too slow, because job creation through economic growth has always been our top priority.
The set goal of the Chinese government is to keep China's economic growth rate within a proper range. The upper limit is to prevent inflation running high while the lower limit is to ensure steady growth and employment. In line with this thinking, China has set the target goal of economic growth rate at around 7.5% since 2012. The government is comfortable with this kind of growth speed.
Generally speaking, currently China's economy is sound and stable. Last year, China's GDP achieved an increase of 7.7%, a little bit higher than the target goal. The GDP growth rate for the first quarter of this year was 7.4%, better than market expectation. The employment situation has been good and inflation rate is low. There is certainly no such possibility of so-called "hard landing" of China's economy in the foreseeable future as suggested by some economists.
By saying the above, I don't want to deny the fact that the downward pressure on China's economy is still huge. China is confronting with daunting economic problems such as overcapacity of production in certain industrial sectors, real estate bubbles in some areas of the country, ill-managed shadow banking systems and rising local government debts.
The Chinese government is aware of the economic challenges it faces and is adopting proper measures to deal with the situation. There are adequate financial resources and policy tools available. However, China will not resort to short-term massive stimulus policies just because of temporary economic fluctuations. Instead, China will seek solutions to economic problems through deepening reforms in an all-around manner.
Last year, more than 330 reform items were announced by the Chinese government. The purpose is to transform government functions and ensure the market play a decisive role in national economy. We should not have any doubt on the resolve of the Chinese government in this regard. China is embracing another wave of reform and opening-up, which will unleash immeasurable power in advancing the country's economic and social development.
Here, I want to touch upon the Shanghai Pilot Free Trade Zone which was launched last September. The purpose for this FTZ is to conduct trials of reform for two to three years in areas such as transforming government functions, expanding opening-up of the service sector, changing the management model of foreign investment in China, expediting RMB yuan's convertibility under capital account and a full-scale opening-up of the financial service sector so as to find new ways to deepen reforms and accelerate opening-up in whole China.
This is indeed a historic decision by the Chinese government, which has fully demonstrated China's strong will in pushing forward reform and opening-up. As President Xi Jinping of China recently pointed out, the establishment of the FTZ is a national strategy and it requires bolder steps in carrying out relevant trials so as to develop as early as possible a series of new systems which can be duplicated and promoted in other parts of the country.
China has a firm belief in its own judgment on the health of its national economy and is fully confident in the prospects of its economic development. Further economic growth of China will not only benefit the Chinese people, but also present huge new opportunities for China-U.S. economic cooperation.
In spite of the stunning achievements already made, China-U.S. economic relationship still has great potential to be tapped.
In the area of bilateral trade, as China is building a consumer society, its demand for U.S. products and service will increase accordingly. Over the past eight years, the growth of China's import of goods from the U.S. has already outpaced that of its export, and China has now become the third largest export market of the U.S., only after your two neighbors, Canada and Mexico. In terms of service trade, the U.S. has enjoyed a huge surplus with China for many years. The trend for the increase of U.S. export to China will continue. China has a long shopping list and rich foreign reserve in its pocket. It will continue to buy more agricultural products, Boeing aircrafts and machinery. In the meantime, China hopes that the U.S. can loosen its export control on high-tech products and also give permit for exporting natural gas to China.
Regarding mutual investment, although China's investment in the U.S. has been growing very fast, its total size is still very small, accounting for only 2.4% of China's overall overseas investment and 2% of all the foreign investment the U.S. received. It certainly does not match the status of China as the world's second largest economy as well as the second largest trading partner of the U.S. Many Chinese companies regard the U.S. as an important part of their global investment strategy. Their interest in the U.S. will continue to grow. However, China's investment in the U.S. has been politicized from time to time. We wish this situation could be changed.
The U.S. has already made significant investment in China, but it still lags behind several other economies in terms of total investment volume. Many U.S. companies are enjoying high returns of their investment in China and are expanding their presence there steadily. It is true that some U.S. companies are experiencing certain difficulties in their operation in China due to China's changing economic environment, increasing competition from native Chinese companies and some other factors. So far as I know, most of them have chosen to readjust themselves to suit the new reality of doing business in China rather than withdraw from China. The majority view is that the difficulties those U.S. companies have met are temporary.
It is indeed fair to say that China remains a most popular destination for international investment because of its huge domestic market, world-class infrastructure, well-developed manufacture sector, still low labor cost and stable social environment. In addition, China is adopting a proactive attitude in further opening up its economy to foreign investors. As the establishment of Shanghai FTZ has indicated, China is willing to eventually give foreign investors pre-establishment national treatment. China is also serious in China-U.S. Bilateral Investment Treaty negotiation and hopes more progress can be made at an early date.
This year marks the 35th anniversary of the establishment of diplomatic ties between China and the U.S. Despite ups and downs, China-U.S. relations have in general maintained a good momentum of development in the past three decades. China and the U.S. share huge common interests not only in the bilateral area, but also on many major international issues. Mr. Robert Zoellick, former President of the World Bank and U.S. Deputy Secretary of State as well as a Naperville man, creatively described China and the U.S. as "stakeholders" back in 2005. I think he was right.
Last June, President Xi Jinping and President Obama held their first summit meeting in California. Both leaders agreed to build a new model of major-country relations between China and the U.S. featuring "no conflict or confrontation", "mutual respect" and "win-win cooperation". With the two countries moving forward together in this direction, China-U.S. relations will surely have a brighter future.
The Chinese Consulate is just 30 miles away from Naperville. We are close neighbors. I hope we can visit each other more often. My staff and I myself stand ready to provide our best service to all of you. I sincerely wish there would be more fruitful cooperation between China and Naperville in the years to come.