How would you assess the foreign trade position so far this year, given the target of 6% growth?
Premier Li Keqiang set a goal of around a 6% increase in foreign trade this year in the Government Work Report, delivered on March 5. So far, we have seen a fall in foreign trade of 10% since January. There was also negative growth in February, but the rate of decline had fallen, and we expect China's imports and exports will return to positive growth in March.
To put this in context, you will recall that the economic outlook in 2014 from both the domestic and international perspectives was not strong, yet if we remove non-comparable items, China's import and export trade increased 6.1%, with exports growing by 8.7%. This followed an average annual foreign trade growth rate of 9% for several successive years since 2008. The reason we did not hit the growth target of 7.5% last year was mainly due to the sharp decrease in the prices of imported goods. So far this year, there has been no rapid price change in international resources, energy or bulk goods, so if the general domestic and overseas environment does not change dramatically in 2015 compared with 2014, international demand will still grow slightly. In this context, are confident we can reach our goal of 6.1%.
To do this, however, we must perform well in the following four areas. First, we must keep implementing long-established policy measures aimed at sustaining steady foreign trade growth, transform the export-sharing mechanism between central and local governments, establish a positive list of charges and fees, and further boost trade facilitation.
The second effort is to strengthen support for transformed, upgraded and restructured enterprises - in particular, add value to China's export products and consolidate the competitiveness of Chinese companies through innovation.
The third area is to continuously develop and encourage new export marketing models - for instance, international e-commerce, market procurement and comprehensive foreign trade service firms.
The fourth is that we continue to improve the transnational competitive environment to stabilise and maintain foreign trade export growth for China's enterprises.
What is the strategic view regarding the establishment and development of free-trade agreements (FTAs)?
The heads of state of China and South Korea jointly have agreed that a high-level, high-quality and balanced FTA between our two countries should be established. So, we have achieved that goal. This treaty contains openness in traditional goods, services and investment. It includes areas such as finance, telecommunications as well as so-called ‘twenty-first century new issues' related to the environment, labour and competitive neutrality. China has also set up an FTA with Australia - a vital trade partner. This stipulates that China's market access, investment and trading rules and related standards, as well as all management systems and frameworks, are close to full accord with those of developed western nations. China's ability to reach a high-level FTA with Australia indicates we can be confident in our ability to carry out FTA negotiations with any nation or region.
According to the outcome of the Third Plenary Session and the requirement raised in the premier's Government Work Report, China's FTA development will radiate our ‘One belt, one road' vision by establishing a high-standard FTA network. So far, we have signed FTA treaties with more than 20 nations and regions, covering nearly 30% of China's total foreign trade. Currently, China is engaged in FTA development in south Asia, central Asia, Africa, Latin America and Europe. There are three categories: those where we are engaged in feasibility studies; those where we are engaged in consultations; and those where we have already started the development of FTAs.
In 2015, the most important FTA is the ‘FTA-plus' with the Association of Southeast Asian Nations (Asean). The other important FTA is related to the Regional Comprehensive Economic Partnership (RCEP) negotiations, also known as the ‘Asean+6' negotiations, including China, Japan, South Korea, India, Australia and New Zealand. According to targets set at the East Asia Summit (EAS), we will try to complete these negotiations by the end of the year.
How will China move to realise the vision of its ‘One belt, one road' project this year? What will it mean for the countries along the routes?
President Xi Jinping put forward the idea of constructing the ‘Silk Road Economic Belt' and the strategic concept of a ‘Twenty-first Century Maritime Silk Route Economic Belt' (the Maritime Silk Road) when he visited Kazakhstan and Indonesia respectively in the latter half of 2013. The major goal is to enhance a full range of interconnection and co-operation among nations via policy co-ordination, facilities connectivity, unimpeded trade, financial integration and person-to-person bonds, so as to construct a community of shared interest, direction and responsibility, based on mutual political trust, economic integration and cultural tolerance.
China's ‘One belt, one road' initiative is not exclusive, and instead is designed to be open and inclusive to promote co-operation. It is not based on any individual nation's development model or path, but adheres to the principle of openness and inclusiveness. Any nation, region, regional organisation or international organisation that is willing to participate is permitted to take part based on the principles of consultation, joint development and benefit sharing.
China views it as favourable to have a comprehensive opening-up and development of both land and sea routes in both the east and west. This would result in China's southwestern, northwestern and northeastern regions being transformed from interior regions to frontier regions. Nations along the way include both advanced nations and undeveloped nations. Whatever their state of development, China will aim to co-operate with them in regional and bilateral co-operation under the principles of consultation, joint development and benefit sharing, and act according to the circumstances of different countries.
China took the lead in creating the Asian Infrastructure Investment Bank (AIIB) and set up a $40 billion Silk Road Fund. China's commercial banking sector, insurance companies and commercial financial institutions as well as related funds will offer financial support for the ‘One belt, one road' project, as the initiative will be not only be beneficial for China's development, but also for the economic growth of all nations and regions along the road.
What is China's role when it engages in international economics and trade?
Given our economic scale, no new investment and trade rules should be introduced in the international community without China's involvement. China should not be excluded from the negotiation and creation of new trade agreements negotiated by some of the developed countries. In addition, investment and trade activities are incomplete without China's participation, regardless of whether they are under regional arrangement, bilateral arrangement or multilateral arrangement. This is not only because of China's economic size, in terms of it accounting for 12% of global trade, but mainly because emerging countries such as China should be duly represented. In the past, other nations made the rules, and we submitted to those rules and obeyed. Now we want to be consulted so we can make the rules together. This illustrates the changing role of China during recent decades and how we want to be involved in the definition of new international trade and investment rules.
What is the role of the Shanghai Free-Trade Zone?
The Shanghai Free-Trade Zone (SHFTZ) is a stress test during the opening-up process. For a long time, our economy has maintained a double-digit growth rate. This is particularly true for foreign trade. In the past 30 years, we have maintained a growth rate of 17% on average, even during the global financial crisis (with the rate of 17.8%, -13.8% and 34.7% in the years of 2008, 2009 and 2010 respectively).
Will our management system still be able to adapt after the economy slows down? The SHFTZ was set up as an experiment to assess if we can pass the test. It has been a year since the SHFTZ was established, and it looks clear that China can withstand such challenges and tests. When China first joined the World Trade Organization (WTO) in 2001, there was a lot of room for manoeuvre with regard to our reform and opening-up policy. We could say for sure that a double-digit increase could be achieved easily after a measure came out. As the premier said, all the low-hanging fruit have now been harvested. Now we have to further open up, build a business environment that is governed by law, stimulate innovation and build an environment for fair competition. The first step to all this is the transformation of government functions and reform of administrative systems. For example, we can see that the new government is now focused on transforming government functions and decentralising approval power.
At the informal Asia-Pacific Economic Cooperation leaders' meeting that China hosted on November 11, 2014, president Xi Jinping announced the launch of the process of the Asia-Pacific FTA zone. What is the significance of this announcement?
President Xi said in the speech that calling it the Asia-Pacific Free-Trade Zone Beijing Road Map marks a historic and symbolic event, which fully reflects the importance of forming a greater free-trade zone area for this region. At the Informal Leaders' Meeting in November, this vital agreement was approved after leaders' consideration. It was a landmark event that indicated the beginning of the process.
The formulation of the Beijing Road Map during this meeting not only addressed the problem of the lack of substantial progress in the FTA process, but also set the future direction and work for building the Asia-Pacific FTA zone.
Many commentators are comparing the creation of the Asian Infrastructure Investment Bank (AIIB) and the Silk Road Fund to the US's Marshall Plan after World War II. What is your view?
There is nothing to compare between the two. The AIIB is actually a supplement to the global financial governance structure. The fact that Asian countries and ‘One belt, one road' countries need infrastructure is indisputable. But the AIIB is open, with more than 20 nations negotiating to join, including developed nationals outside the region. So it is an open mechanism. This is no aid programme, as the Marshall Plan was back then. The aim is to promote co-operation and win-win development with complementary advantages and mutual prosperity.
What are the future prospects for Chinese exports?
There will continue to be a qualitative change in China's exports because China has entered an era of capital export. China's foreign investment and trade will become more closely connected.