IV. Seeking Mutual Benefit and Common Development with Other
Countries
China cannot develop independently without the rest of the world. Likewise,
the world needs China if it is to attain prosperity. Following the trend of
economic globalization, China is participating in international economic and
technological cooperation on an ever larger scale, in wider areas and at higher
levels in an effort to push economic globalization towards the direction of
common prosperity for all countries. Today, the mainstream of international
trade is to share successes, with all as winners. China adheres to its
opening-up strategy for mutual benefit. For this, it has made conforming to
China's own interests while promoting common development a basic principle
guiding its foreign economic and trade work, develops its economic and trade
relations with other countries on the basis of equality, mutual benefit and
reciprocity, and makes constant contributions to the sustained growth of global
trade.
China has exerted itself to push forward multilateral economic and trade
relations and regional economic cooperation, actively participated in the
formulation and execution of international economic and trade rules, and joined
various other countries in settling disputes and problems emerging in their
cooperation, so as to promote the balanced and orderly development of the world
economy.
China has been an active supporter of and participant in multilateral trade
system. Since its accession to the WTO in December 2001, China has strictly kept
its commitments to create more favorable conditions for international economic
and technological cooperation. China has sorted out and revised some 3,000 laws,
regulations and department rules, continually improved its foreign-related
economic legal system, and enhanced the transparency of its trade policies.
China has cut its customs tariffs step by step, as promised, and by 2005 its
average tariffs had been reduced to 9.9 percent, and most non-tariff measures
had been cancelled. Banking, insurance, securities, distribution and other
service trade sectors have opened wider to the outside world. Of the 160-odd
service trade sectors listed by the WTO, China has opened more than 100, or 62.5
percent, a level close to that of the developed countries. China has actively
pushed ahead with a new round of multilateral trade negotiations, participated
in talks on various topics, especially on agriculture, market access of non-farm
products and the service trades, and played a constructive role in helping
developing and developed members reduce disputes through talks. China, together
with other WTO members, has done a lot of work to spur substantial progress to
reach early agreement among the negotiators.
China has continuously stepped up participation in regional economic
cooperation. The building of the China-ASEAN Free Trade Area is going full steam
ahead. Following the practice of zero tariffs on farm products under the "Early
Harvest Program," the Agreements on Trade in Goods and the Dispute Settlement
Mechanism Agreement were formally signed in November 2004, and in July 2005 the
free trade area launched its tariff concession program, clearing the way for
realizing its goals. At present, the building of the Shanghai Cooperation
Organization is proceeding with comprehensive and pragmatic cooperation, and its
process to facilitate trade investment has been launched in an all-round way.
China has also initiated negotiations on such free trade areas as the
China-Southern African Development Community, China-Gulf Cooperation Council,
and China-New Zealand, China-Chile, China-Australia and China-Pakistan, and
signed relevant agreements with its partners. China is also an active and
pragmatic participant in the activities of the Asia-Pacific Economic
Cooperation, Forum on China-Africa Cooperation, Sino-Arab Cooperation Forum,
Asia-Europe Meeting and Greater Mekong Subregion Economic Cooperation Program.
China advocates the liberalization and facilitation of investment in bilateral
trade, and has signed bilateral trade agreements or protocols with more than 150
countries and regions, bilateral investment protection agreements with more than
110 countries, and agreements with over 80 countries on the avoidance of double
tariffs.
China sticks to the principle of mutual benefit and win-win cooperation,
tries to find proper settlement of trade conflicts and promotes common
development with other countries. Trade conflicts are quite natural in
international economic exchanges. Following international practice and WTO
rules, China has tried to resolve such conflicts through dialogue on an equal
footing and through the WTO dispute settlement mechanism. When promulgating and
implementing domestic economic policies, it tries to take international factors
and influences into account as well as the impacts its own economic growth
imposes on the outside world. Based on its reform and development, China is
serious in judging the effects its exchange rate reform may bring to surrounding
countries and regions, and the global economy and finance. It has thus advanced
the reform in a steady way, adopted a managed floating exchange rate regime
based on market supply and demand, and linked and adjusted it according to a
basket of currencies, so that the Renminbi exchange rate will remain stable at a
reasonable and balanced level. China has intensified its protection of
intellectual property rights, improved the relevant legal system, and tightened
up law enforcement to crack down on all kinds of violations.
Growing China is active in international economic and technological
cooperation, and provides good opportunities and a huge market for the rest of
the world. All countries, the developed countries in particular, have reaped
lucrative benefits from investment in and service trade with China.
China's active involvement in the international division of labor and
cooperation is conducive to the reasonable and effective distribution of global
resources. As the largest developing country in the world, China boasts an
abundant labor force, the quality of which has been constantly improving. It is
a natural advantage of China in developing labor-intensive industries and some
technology-intensive ones. Along with economic and social progress, as well as
the improvement of the living standards of its people, China's demand for
capital-, technology- and knowledge-intensive products keeps increasing,
offering great opportunities for foreign products, technologies and services, as
the country has now evolved into an internationally acknowledged big market.
China's foreign trade is mutually supplementary with many countries. About 70
percent of China's exports to the US, Japan and the Europe Union (EU) are
labor-intensive, while 80 percent of its imports from the three are capital-,
technology- and knowledge-intensive. In the new structure of international labor
division, the country has become a key link in the global industrial chain.
By importing cheap but good-quality products made in China, the importing
countries can reduce their expenditure and pressure caused by inflation while
satisfying the demands and enhancing the welfare of their consumers. China's
labor-intensive products enjoy unique comparative advantages in the global
market. Since 1997, US consumers have saved billions of dollars every year by
buying Chinese commodities - US$600 billion in the past decade and nearly US$100
billion in 2004 alone.
The expansion of China's reciprocal economic and trade relations with other
countries has benefited both in a tremendous way. China's imports have kept
growing by a yearly 16 percent since 1978, and the country imported commodities
worth US$1,270 billion in the three transitional years following its WTO
accession. In 2004, China became the world's third largest importer, next only
to the US and Germany, with US$148.47 billion of increased imports or 9 percent
of the world's total growth of imports. Also in 2004, China's trade volume with
the EU, the US and Japan totaled US$177.3 billion, US$169.6 billion and US$167.8
billion, respectively, making them China's top three trade partners and main
sources of foreign investment. In the same year, China's trade volume with Asian
countries and regions amounted to US$664.9 billion, 34.2 percent up over that of
the previous year. This figure accounted for 57.6 percent of China's total
foreign trade value. In addition, China has become the fourth largest trading
partner of and a fast-growing market for ASEAN.
The huge market of China offers such great opportunities for international
capital that investors around the world have benefited from China's rapid
economic growth. From 1990 to 2004, foreign investors repatriated US$250.6
billion in profits from China. In 2004, US-funded enterprises in China generated
US$75 billion in sales revenue in China, and their products earned another US$75
billion elsewhere. A 2005 survey by the American Chamber of Commerce-People's
Republic of China shows that 70 percent of American firms are making profits in
China, and about 42 percent report a higher profit rate than their global
average.
China's growing investment abroad has also fueled the economies of the
destination countries. At the end of 2004, China's net non-banking direct
investment abroad amounted to US$44.8 billion, spreading to 149 countries and
regions. Among which, US$33.4 billion, or 75 percent, went to Asia.
China's foreign economic and trade cooperation has tremendous potential and
boosts bright prospects. In the post-WTO era, China imported US$500 billion
worth of commodities annually during the period from December 2001 to September
2005, which meant 10 million jobs for the countries and regions concerned. In
the next few years, it will import US$600 billion worth of goods annually, and
the amount will exceed US$1,000 billion by 2010. By 2020, the scale and total
demand of the Chinese market will quadruple that in 2000. During the process,
the rest of the world will find development and business opportunities in their
reciprocal cooperation with China, which will greatly accelerate the growth of
the global economy.
