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Remarks by H.E. Ambassador Song Zhe at the Luncheon Hosted by the European Union Chamber of Commerce in China (EUCCC)

President Cucino,

Ladies and gentlemen,

Good afternoon!

First of all, I wish to congratulate President Cucino for taking up this important post. I’m very happy to once again participate in the event organized by the EUCCC and meet new friends from the Executive Committee and representatives from the European business community. In less than a month, China will host the 14th China-EU Summit. So I find an occasion like today especially fitting as our exchange today will definitely offer our leaders useful perspectives and ideas on the further promotion of China-EU business cooperation.

For today’s presentation, I’ve gathered some figures to give a general idea of what’s going on between our business communities. Last year, our bilateral trade registered a record high of 479.7 billion US dollars, fully recovering the lost ground from the financial crisis. In the first eight months of this year, our trade has maintained fast growth momentum and increased by 21.8% year-on-year to 372.1 billion dollars. Mutual investment and technical cooperation are also growing rapidly. By the end of June this year, EU has a total of 34,061 investment projects in China with an actual investment portfolio of 76.17 billion dollars. Chinese direct non-financial investment in Europe was up by 99.3% year-on-year in the first half of this year. By the end of June, China has in total imported 36,730 items of technology worth of 139 billion dollars of contract value.

The encouraging growth of China-EU business ties has been a truly remarkable achievement against the larger backdrop of the international financial crisis, the European sovereign debt crisis, slow world economic recovery, and slackened trade growth between EU and its other trading partners. In my view, the strong momentum we enjoy in our trade links are mainly underpinned by three elements.

First, mutual benefit. It is estimated that in 2009, European businesses in China earned 2.5 trillion RMB Yuan of sales revenue, two times of the same year EU export to China, and higher than Chinese export to Europe. Moreover, European companies earned over 100 billion Euros patent fees through its technology transfer to China. Sales of Audi, Mercedes, and BMW continued to soar in the first half of this year, respectively up by 28%, 52% and 61%. Today, tens of thousands of European SMEs are sharing business growth and boosting competitive strength by doing business with China. On the part of China, Chinese companies are benefiting immensely as well in technological and industrial upgrade from Europe’s advanced technological, machinery and managerial expertise. High-end label products from Europe also effectively helped uplifting the living standard of the Chinese people.

Second, strong complementarity. The fast growth of the Chinese economy doesn’t mean the fast disappearance of complementarity between China and Europe. While Europe has already entered the post industrialization period featuring a knowledge-based and innovation-driven economy, China is still striving hard on the road of industrialization and urbanization. There is strong comparative strength on the EU side in high-end manufacturing, environment protection, energy conservation, and luxury goods. Europe’s export of special machinery, electronic device, and general machinery fit especially well with China’s pursuit of industrial and technical upgrade. China’s strength, on the other hand, mainly rests in labor intensive industries. Our export of low-priced quality products has brought concrete and substantial benefits to European households.

Third, quick adaptability. Business cooperation between China and Europe started with a humble beginning. However, over the years, because of our ability to adapt to the changing external environment, and because of our ability to jointly pursue shared benefits through stronger cooperation, we have redefined a broad and multi-tiered business link between China and Europe underpinned by trade, investment and technology transfer. Looking ahead, the changes in the international trading environment and our respective development policies will require constant adjustment and fresh ideas to facilitate our business cooperation.  There are before us historical opportunities to break new ground for cooperation. China’s 12th Five Year Plan and Europe’s 2020 Strategy will offer us huge potential of cooperation for common progress in green economy, clean energy, and urbanization.

The Chinese government has put forward a number of important goals for the next five years as we continue our efforts to build a comprehensive moderately prosperous society. We will speed up the shift of economic growth pattern, progress steadily with comprehensive development, and integrate ourselves further with the world economy through extended cooperation. We firmly believe that these efforts will bring about more opportunities for Europe to participate in China’s growth and to share China’s economic prosperity. In the next five years, China will remain committed to expanding domestic demand and will import an estimated 8 trillion dollars of commodities. It is expected that by 2015, the total retail sale of consumer goods in China will top 31 trillion RMB Yuan. We will continue to encourage innovation and consolidate the role of technology in economic and social development by focusing on information technology, biology, high-end machinery, new energy, and new materials. In the area of environment protection and resource conservation, we will work for a green, low-carbon, and sustainable development path. We’ll improve energy efficiency, strengthen capacity to tackle climate change, and reform urban and industrial planning to cut carbon emission. These efforts will generate over 3 trillion RMB Yuan of business in the environment protection and energy conservation market over the next five years. The priorities of development for China will, to a great extent, define the direction of future China-EU cooperation. And we are excited that these priorities match very well with Europe’s advantages. China will encourage more foreign businesses, including European companies, to become involved in the development of our hi-technology, advanced machinery, environment protection, energy conservation, alternative energy, and modern service industry. People in Europe should have full confidence in their new business growth in China in finance, insurance, consulting and green and circular economy.

Ladies and gentlemen,

This year’s European Business in China Position Paper has to some extent objectively reviewed China’s contribution to the world economic recovery. The Paper recognized the efforts of the Chinese government to improve investment environment. It also expressed confidence in the new opportunities for European companies during the 12th Five Year Plan. At the same time, we’ve also noticed the mentioning of problems of market access, legal environment transparency, and IPR protection. Now, I wish to use the remainder of the time to share with you my views on these problems.

The fact is that the Chinese government has indeed, over the past several years, gradually adjusted some policies that may bear influence on foreign businesses in China. However, the purpose of this change is to further deepen reform and opening up, accelerate the shift of economic growth model, and optimize investment environment. And what we’ve done are essentially to remove some super national treatment for foreign companies in an effort to create an equal business environment. These policies shouldn’t be misinterpreted as China no longer welcomes foreign investment. We always believe that as China shifts towards a healthier growth pattern, we’ll feel more strongly about opening up, and we’ll benefit more effectively and efficiently from foreign investment. With respect to the legal environment, to put in place a transparent legal environment has long been an important goal of our pursuit for a law-based society. In recent years, the Chinese government has invested heavily in promoting law-based administration. Public opinion is highly valued during the drafting of laws and regulations. In addition, we’ve taken concrete steps to improve the legal procedures of prior notification and grace period. But our work is obviously not over. We will continue to strengthen inter-departmental coordination, intensify the training and supervision of local government employees, and work unceasingly to make sure that all administrative measures will have fair and just legal grounds. On the issue of IPR protection, the Chinese government takes the problem very seriously and has accordingly formulated a national strategy on the protection of the intellectual property rights. China stands fully ready to work together with EU and other partners to do a better job on this matter through exchanges and cooperation.

To be fair, as an emerging economy, China is still lagging behind in terms of market environment and legal institutions, which we find is nothing but natural, because no country, not even developed ones, could boast a perfect market environment. The problems met by European companies in China won’t be there forever. They are growing pains of a socialist market economy, and they will gradually go away as the system matures. European companies are no doubt major beneficiaries of China’s policy of reform and opening up. Many European companies wouldn’t be even near where they are today without the growth of the Chinese economy. I believe that all of you here today have very good knowledge of the Chinese economy and of what the government has been doing to improve the market economy. China has been asking Europe for the market economy status for a very long time. We’ve been doing so because we believe it will create new opportunities for our cooperation by facilitating more comprehensive and fair development of our respective markets. We hope that the EU side, when viewing China’s market economy, will keep away exaggeration and bias, proceed with fairness and reason, and bring a more just and constructive mind to promote China-EU business cooperation.

Ladies and gentlemen,

We are living in a world of profound changes. With fast and overwhelming power diffusion and international adjustment, China and Europe have become more interdependent than ever before. China-EU relations matters more strategically, and there is unprecedented urgency and necessity for China and Europe to cooperate more closely. Thanks to our joint efforts, we have seen since this year encouraging momentum in our already strong ties. Premier Wen Jiabao, Vice Premier Li Keqiang and Wang Qishan have paid respective visits to Europe. President Van Rompuy paid his first official visit to China as the President of the European Council. These visits have furthered deepened our mutual trust, promoted practical cooperation, and sent to the world a positive message that China and Europe are committed to work together to tide over the difficult moment. We have earned through our efforts fresh development opportunities for China-EU relations at a new and higher level.

Business cooperation holds an important place in China-EU comprehensive strategic partnership. It is an indispensable basis and driving force for the sustained and steady growth of the overall China-EU ties over the long run. The EUCCC is an important actor and stakeholder of our business cooperation. It has from its first day contributed actively to promote knowledge of China, facilitate European investment, and push for bilateral cooperation. Over the years, it has accumulated great strength and influence. We hope that in the future, the EUCCC will continue to use its positive influence, let people know more about the benefit of doing business in China, remove political and policy barriers and people’s outdated bias, and give them more confidence and hope to invest in China. We believe that by doing so, the EUCCC will become a major champion of China-EU mutually beneficial cooperation.

Thank you!

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