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Remarks by H.E. Ambassador Zhang Ming At the Transatlantic Trade Conference Organized by the College of Europe
2020/11/18

Professor Sieglinde GSTÖHL,

Your Excellencies,

Dear faculty members and students,

Good afternoon. It is a great pleasure for me to join this panel discussion. The topic—“Building the future together”—is a forward-looking one, giving us two questions to answer. First, what is the future like? Second, how to build it together?

The COVID-19 is pushing globalization to another crossroad. Lately, the WTO forecast a 9.2% decline in global trade this year, with trade in certain types of goods even devastated. With the pandemic, free trade and multilateral cooperation are further called into question. Unilateralism and protectionism are having their way. There is a growing tendency to artificially bring manufacturing back home and localize production. Politicizing business decisions and abusing the concept of national security are increasingly taking a toll on the healthy growth of the 5G markets. All this has cast a shadow over the future of global economy and trade.

Yet we should not lose direction in the mist or lose faith in free trade and multilateralism. Humanity has always been able to forge ahead despite risks, disasters and headwinds. To jointly shape the future of global economy and trade, we must stick to openness and cooperation, and keep pace with the times.

Openness and cooperation conform to the fundamental norms for market economy. A European think tank pointed out in a recent report that global trade has expanded in the past decades, taking up 60% of global economy. With a growing number of countries involved in global trade, global industrial chains are being reconfigured, and more intermediate products and services rather than finished products are being traded. In terms value, intermediate products and services account for about 70% of global trade.

Such developments show that openness and cooperation have optimized resource allocation, enhanced efficiency and improved people’s well-being. This trend cannot be stopped. From January to October this year, China-EU trade rose by 1.6% despite the difficult situation, which shows, in a sense, that mutual benefit and cooperation prevails. Of course, we need to draw lessons from the pandemic, and make more efforts to increase the resilience of our respective economy and global supply chains. Yet no one should turn a blind eye to market rules and business choices, or aim for absolute self-sufficiency of each region or country, still less slide into protectionism. Nor should anyone selectively follow market rules like fairness, justice, non-discrimination, out of fear of competition or external political pressure.

Openness and cooperation are what China and the EU both stand for as strategic partners. Under the current circumstances, it is all the more important to turn consensus into actions. Since the start of this year, the negotiation on a China-EU investment agreement has notably accelerated, with major progress made in terms of the text and the negative list. Leaders of both sides have reaffirmed on several public occasions the shared commitment to concluding the agreement at an early date. Both sides are expected to be pragmatic and flexible and strive to reach a high-level and balanced agreement within this year.

Openness and cooperation evolve with the times. The WTO-centered multilateral trade system also needs to evolve with the times in order to be fit for purpose.

To keep up with the times, we need to promote WTO reform as necessary to enhance its authority and efficacy. We need to pinpoint the problems and seek remedies accordingly. The root cause for the current WTO crisis is unilateralism and protectionism which endangers the rules-based multilateral trading system. To restore confidence in WTO, the key is to revere the existing rules and to deliver on the existing commitments. Reform is not about putting specific countries into straitjackets, but about promoting trade and investment liberalization and facilitation. Development remains the core mandate. New rules need to be written in a balanced way.

In response to the new landscape in global trade, we need to formulate and improve multilateral rules in digital, green and other emerging areas. The app store of a big tech company could produce an annual turnover of more than 500 billion US dollars. Relevant rules should not be absent or lag behind for too long. New rules must faithfully reflect the realities. There needs to be a balance between protection and development, between regulation and inclusion. We must commit to multilateralism and openness, and avoid widening the digital divide and putting up green barriers, under the pretext of digital and green transitions.

In updating the multilateral trading system, China and the EU are partners. The two sides have established a joint working group on WTO reform, and have worked together to bring the MPIA into fruition. This year, the two sides launched the high-level dialogue on environment and climate and the high-level digital dialogue, which could serve as platforms for more cooperation and exchanges in the relevant areas, including efforts on the formulation and improvement of multilateral rules.

Many are closely watching China’s new development paradigm, or “dual circulation” as is often called. Many are asking what it means for the world economy and global trade, and what it means for China, the EU and other global partners in building the future. Let me make a few points.

In the new development paradigm, domestic circulation is the mainstay, while the domestic and international circulations reinforce each other. We aim to increase the resilience of the domestic economic cycle which could lend more impetus to the international cycle.

The key is to advance the supply side structural reform, and expand domestic demand. We will step up innovation, optimize income distribution, enlarge the middle-income group, and build modern logistic systems. We will improve the environment for consumption upgrading, and fully harness the strengths of China’s super-sized market. In this process, we not only boost our own economy, but also generate more opportunities for other countries.

The dual circulation is not a single circulation behind closed doors. We will expand opening-up at a higher level, broaden market access for foreign-invested enterprises, and foster a world-class and market-oriented business environment governed by a sound legal framework. We want to achieve mutual benefit between China and its global partners.

Earlier this month, the third China International Import Expo in Shanghai saw the intended turnovers exceeding 72 billion US dollars. Last weekend, 15 Asia-Pacific countries, including China, signed the RCEP, leading to the world’s most populous and diversified free trade area. These are the latest examples for China’s commitment to openness, cooperation, free trade and multilateralism in keeping pace with the times.

I wish to stop here for the opening remarks. Please excuse me as I have to leave this session for now due to a prior commitment. I would like to ask my colleague, Minister Xia Xiang for Economic and Commercial Affairs, to stay involved for the rest of the discussion.

I wish you a most productive discussion. Thank you.

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