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Ambassador: China-EU Economic and Trade Relations Enjoy a Bright Future

Remarks by H.E Ambassador Zhang Ming At the Luncheon Hosted by The EU-China Business Association

25 April 2018

Ladies and Gentlemen,

I am glad to meet friends from the EU business communities. It is wonderful to speak to you, because you are the non-governmental ambassadors between China and the EU, sometimes even more important than me. The Association, as a link between Chinese and EU companies, has contributed greatly to the China-EU trade and investment cooperation. Thank you very much for what you have done.

Since my arrival, I have talked to many friends from different sectors. My impression is that the EU places great importance on China and on the China-EU relations. This is particularly true for the business communities, which are now “looking east” and have even gone ahead of the government in some areas, like the Belt and Road cooperation.

Many of you are interested in the future developments of China and China-EU economic and trade relations. Your companies may have a stake in that. My views can be summed up in three points:

First, China will continue to open up.

Second, China-EU economic and trade relations have a bright future.

Third, we need to work together to keep the China-EU relations in the right direction.

Let me expand on each of them a little bit.

First, China will pursue greater openness and mutual benefit. I had the privilege to attend the 19th Party Congress last year and the NPC and CPPCC annual sessions last month. They were of great significance to the future of China and China-EU economic and trade relations. The most important signal is that China’s policy will remain stable and consistent. In other words, China will stay committed to reform and opening-up, and that will bring about more opportunities to the world.

Two weeks ago, Chinese President Xi Jinping made an important speech at Boao Forum, in which he made major announcements to broaden market access, improve the investment environment, strengthen the IPR protection, and expand import. This is in line with the spirit of President Xi’s speech in Davos last year.

Shortly after the Boao speech, the Chinese government announced 11 measures to further open the financial sector. All of them will be put in place by the end of this year. Many of you closely watch the car industry. This year, we will remove restrictions on foreign equity shares in special vehicle and new energy vehicle companies, and in five years, we will lift restrictions on the whole industry. A new negative list on foreign investment will be published and take effect in the first half of this year. I’m sure you all understand how significant these measures are. They all have clear timeframes, and will be turned into reality sooner rather than later.

President Xi also announced the plan to build the Hainan island, China’s southernmost province, into a free trade zone, and then gradually into a free trade port. Building on that, we will develop more mature policies and institutions on free trade port. Starting from May 1, travelers from 59 countries, including 28 EU member states, will be able to enter and stay in Hainan for 30 days without a visa.

All this shows that China’s reform and opening-up is never an empty slogan. Rather, it is supported by concrete actions. China never pursues development at the sacrifice of others’ interest. We want to achieve win-win outcomes. This is not only what we say, but also what we do. The logic is simple and clear. We want to achieve sustained development in the long term. That is impossible without a win-win approach.

Many European friends are asking whether China’s business environment is getting worse, and whether China’s opening-up is slowing down. I guess you have already got the answer from what I have just said. I also want to point out that in 2017, China received US$136 billion of foreign investment, ranking the second in the world and the first among developing countries. In the first quarter of this year, China’s FDI inflows kept growing. The number of foreign companies in China rose by 124.7%, the actual utilization of foreign capital up by 0.5%. Such a growth would not have been possible without a good business environment.

That being said, we know very well that no country can claim to have a perfect business environment. China is now making great efforts to foster a world-class business environment. This is for the good of foreign investors, and more importantly, for the sake of our own development. For that to happen, your views and suggestions will be much welcomed and appreciated.

Second, China-EU economic and trade relations are now facing new opportunities. With our joint efforts, we have achieved good progress in trade, investment and technical cooperation. For 14 years consecutively, the EU has remained China’s largest trading partner, while China the second largest trading partner of the EU. We are the largest source of imports and the second largest export destination for each other. According to Chinese statistics, in 2017, our trade stood at US$616.9 billion, up by 12.7% year on year. Investment is growing rapidly in both ways. Chinese data show that by January this year, the EU had made US$120.8 billion of investment in China in accumulative terms, while China had made US$79.6 billion.

European capital, technology and management expertise have given a boost to China’s industrialization. The vast Chinese market has generated huge profits for the 16,000 EU companies in China. Chinese investment in the EU has created a large number of jobs and tax revenues. China and the EU are already highly inter-dependent economically.

The future is even brighter. Apart from the new measures of opening-up that I just mentioned, the Belt and Road Initiative is another source of driving force for our cooperation. The initiative will help promote connectivity and infrastructure construction. The costs of transportation will be much lower as a result. It will certainly boost trade.

In terms of investment, currently, the EU investment in China only accounts for 4% of the EU’s total overseas investment. Chinese investment only takes up 2% of the FDI received by the EU. It is not commensurate with the big size of our economy. There is huge potential to be tapped.

In the coming 15 years, China is expected to import US$24 trillion of goods, attract US$2 trillion of FDI, make US$2 trillion of overseas investment, and make 2 billion outbound visits. All this means new opportunities for our cooperation.

Third, to keep our economic and trade relations in the right direction, it is important for us, governments and business communities, all of you included, to work together.

We need to find more converging areas of our development strategies, and have more flagship projects. We need to make the best of the 2018 China-EU Tourism Year. In addition to the exiting areas of cooperation, we may explore more possibilities in such areas as green economy, digital economy, finance, agriculture, aviation and ocean affairs.

The bilateral investment treaty (BIT) is a priority. Some European friends say that China does not pay enough attention to the BIT talks. I’m afraid such a perception is not right. As the Chinese Ambassador to the EU, I know very well how important the BIT is to China. In order to make breakthroughs, it is crucial for both parties to show flexibility and act in good faith.

We must keep differences under control. We could use the High-level Economic and Trade Dialogue and other mechanisms to build trust and properly handle differences. We need to follow the principles of openness, transparency, and fairness, observe the WTO rules and uphold the multilateral trading system. China will keep its door open to European investors and we expect the EU side to do the same.

Ladies and Gentlemen,

The business community will be an anchor for a stable China-EU relationship. I believe that the Association and its members will have a bigger role to play in our economic and trade relations. I look forward to working together with you for a brighter future for all of us. Thank you.

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