Chinese Minister of Commerce Bo Xilai

China's foreign economic and trade work has witnessed new progress this year, total import and export volume will top US$1.1 trillion, making China hopefully to leap to the third place in the world. At yearend, Minister of Commerce Bo Xilai accepted an exclusive interview given by People's Daily, during which he talked freely about the situation of China's foreign economy and trade over the year and the future opportunities and challenges facing the country.

Reporter: The Party Central Committee called for balancing domestic development and opening to the outside world. What main work has the Ministry of Commerce done this year in the utilization of domestic and international markets and recourses to boost economic development?

Bo Xilai: Since the beginning of this year, the Commerce Ministry has conscientiously implemented the requirements of the Party Central Committee and State Council, carried out work based on the utilization of two markets and two kinds of resources, and has thus advanced development of the national economy. First of all, we have focused on the domestic market to enlarge the scale of internal consumption. By the end of the first half of December, total retail sales of consumer goods had topped 5 trillion yuan.

Meanwhile, the scale of imports and exports had also been steadily enlarged. It is estimated that the import and export volume will exceed US$1.1 trillion in the whole year, up by about 30 percent. It is noteworthy that the mix of export products is being constantly optimized. In the Jan.-Nov. period, the export of hi-tech products increased 52 percent year-on-year, accounting for 28 percent of China's total exports. The import of crude oil, finished oil, minerals, and other domestic-deficient resource products as well as advanced technologies and equipment experienced a marked increase.

China has also made new progress in the absorption of foreign capital and investment cooperation overseas. China's actual absorption of foreign capital in the year is estimated to be well over US$60 billion, remaining in the front ranks of the world. In the first 11 months this year, China's non-financial direct investment made overseas stood at US$1.8 billion, with the accumulated total reaching US$35 billion. China is emerging as an important growth engine," said Rubens Ricupero, secretary- general of United Nations Conference on Trade and Development (UNCTAD).

Reporter: Currently, China's foreign trade has exceeded US$1 trillion. What influences have the rapid development of foreign trade exerted on the national economy and the world economy? And what's the situation confronting future development?

Bo Xilai: It is estimated that China's total import and export volume in the whole year will top US$1.1 trillion, making it hopeful for China to be in the third place in the world. The country's foreign trade has advanced to a new stage. In terms of growth rate, from 1978 to 2004, the world trade grew by about 6.5-fold, with the average annual growth rate standing at 6.6 percent; while China's trade by 57-fold, average annual growth rate at 16.8 percent. Over the past three years since China's entry into the WTO, its import and export scale has doubled, the import and export of high- and new-tech products have grown 4-fold, in the first 11 months, the proportion of the export of electromechanical products to total export value reached 54 percent.

The proportion of export to GDP (gross domestic product) will exceed 30 percent, with economic growth being 2 percentage points higher. The import and export tax revenue accounts for about 18 percent of the nation's total. The tax revenue of foreign-related enterprises makes up over 20 percent of the national total. The number of employees working in the field of foreign trade has topped 80 million and the processing trade has become the export of labor service provided within China. It is estimated that China's contribution to the growth of global barter trade will amount to 12 percent this year.

Some relevant international organizations predict that the world economy will grow by 4.3 percent, and world trade volume by 7.2 percent next year, a year of rapid growth. The good momentum of China's national economic development and the positive results achieved in its macro-control will provide favorable conditions for China's foreign trade development. However, we still face many uncertain factors, particularly the continued rise of oil price, the increasing trade protective measures and the fluctuation of exchange rates of major currencies. China's foreign trade development faces arduous tasks of changing the growth pattern and enhancing the competitiveness of industry and products, and we are confronted with many challenges and difficulties.

Reporter: What are the characteristics of China's absorption of foreign investment this year? How to seize the opportunity to further improve of quality and level of the use of foreign capital?

Bo Xilai: Since the beginning of this year, China's absorption of foreign investment has five characteristics. First is the steady enlargement of scale. The actual amount of foreign capital absorbed is estimated to be over US$60 billion in the whole year, with the scale continuing to be in the front ranks of the world. The total amount of paid-in foreign capital exceeds US$500 billion. Second is the marked improvement in the structure and quality of investment. Foreign investors have set up more than 700 research and development centers distributed mainly in electronic and communication equipment manufacturing industries, etc. Transnational corporations have established over 30 regional headquarters in China.

Third is the absorption of foreign capital by key industries under national macro-control has been kept down. The foreign capital actually used by iron and steel and cement industries in the first three quarters dropped by 3.6 percent and 62.7 percent respectively.

Fourth is the big improvement in the regional structure of foreign investment. From January to November, the amount of foreign funds actually used by the three provinces in northeast China increased by a big margin and the amount of contracted foreign capital in the western region increased at a rate of 46 percent.

Fifth and last is the further development of state-level economic and technological development zones. In the first three quarters, the growth rates of industrial

added value, exportation, and actual absorption of foreign investment in such development zones were 26 percentage points, 34 percentage points and 20 percentage points higher than the national average.

The Central Economic Working Conference this year clearly stated that the absorption of foreign capital is an important part of China's basic national policy of opening up to the outside world. The conference also called for efforts to improve the quality of the utilization of foreign capital, steady optimization of foreign investment structure, promotion of national economic development as well as the upgrading and technological innovation of domestic industries. Currently, the pace of the shift and adjustment of international industries has quickened, with high increment, the transfer of high-tech manufacturing links and outsourcing of service as the distinguishing features.

The survey conducted by UNCTAD on 335 large transnational corporations shows that the global foreign direct investment will witness a new round of growth in the 2004-2007 period. We should firmly hold this opportunity to better absorb foreign investment and promote readjustment of the economic structure and sustained and healthy development of the economy.

Reporter: What has the Ministry of Commerce done for the implementation of " going global" strategy this year?

Bo Xilai: The first 11 months this year witnessed a fairly big increase in the investment China directly made abroad. The contract foreign projects registered a turnover of US$14.5 billion, up 29 percent from last year. Foreign cooperative labor service achieved a turnover of US$3.2 billion, up 10 percent. The number of Chinese contract workers overseas reached 530,000 by the end of this past November.

Some enterprises have made outstanding achievements in implementing the "going global" strategy, for example, Shanghai Baosteel Group Corporation, China Minmetals Corporation, PetroChina, Sinopec, Citic Group, China State Construction Engineering Corporation, Huawei Technologies, Zhongxing Communication Corporation, Lenovo, TCL, China National Machinery Import & Export Corporation, China National Machinery and Equipment Import& Export Corporation and Shanghai Automotive Industry Corporation. The quickened implementation of the "going global" strategy has brought about closer economic and trade relations between China and some countries and regions, enlarged the space for China's economic development, and boosted common development.

To facilitate implementation of the "going global" strategy, the Ministry of Commerce has mainly done the following work: First, the ministry vigorously spurred the facilitation of investing abroad, delegated to lower level the power to approve of making investment abroad, simplified relevant formalities and encouraged enterprises of different ownerships to invest abroad. Second, the ministry formulated a series of important policies and measures, for instance, it further improved the statistics releasing system for China's direct investment made abroad, and accelerated the earliest publication of the Regulation on Contract Foreign Projects and the Regulation on Foreign Cooperative Labor Service. Third, the ministry strengthened the promotion, service and support system, improved and implemented related incentive policies and measures and, through various methods, spurred enterprises to "go global". Fourth, the ministry provided effective guarantee for implementation of the "going global" strategy.

The ministry made full use of the exchange of high-level visits as well as the mechanism of multilateral economic and trade ties and the consultation mechanism to support and promote the signing and implementation of various large projects, and to guarantee the safety of foreign-aid personnel and service workers abroad.

Reporter: China has achieved new progress in multilateral and bilateral economic and trade ties as well as regional economic cooperation. Meanwhile, it has also created a favorable international environment to actively cope with trade frictions. Could you say something about this?

Bo Xilai: Since the beginning of this year, China has taken an active part in the new round of WTO multilateral trade negotiation, through which China's interests were effectively safeguarded on the issues such as the market access of farm produces and non-farm produces as well as national agricultural trade.

Currently, China maintains close economic and trade ties with more than 220 countries and regions across the world. Since the beginning of this year, China has successively held bilateral economic and trade conferences and the mixed committee member conferences with 43 countries, which resulted in concentrated solutions of the outstanding problems concerning China's enterprises in their development of foreign trade, mutual investment, and cooperation between medium and small enterprises. In recent years, regional economic cooperation has become increasingly active and regional trade arrangements have also been on the rise, particularly the construction of free trade zones.

Currently, China's participation in the regional economic cooperation has taken a substantial step forward. The Chinese inland and Hong Kong and Macao have successfully implemented the CEPA (Closer Economic Partnership Arrangements) and have signed a complementary agreement, thus opening wider to HK and Macao. A major breakthrough was achieved in the negotiations on China-ASEAN free trade zones, during which the two sides signed Commodity Trade Agreement and Disputes-Solving Mechanism Agreement. The normal tax-reduction plan will be officially carried out from July 1 next year. What have been set to motion are the tariff alliance consisting of China and some south African countries, the Cooperation Committee of the Gulf Region, the Chile-New Zealand free trade zone negotiation as well as the feasibility study on the free trade zones between China and Australia, India and Pakistan.

Along with the rise of China's trade status in the international arena, China has entered the period of frequent occurrence of trade frictions, which calls for high attention and positive measures to deal with this situation in order to effectively safeguard the interest of Chinese enterprises and industries.

Up to Dec 23 this year, a total of 16 countries and regions had launched 57 anti-dumping and anti-subsidy cases, safeguard measures and special protection investigations against China. To deal with the trade frictions and maintain a sound external environment, we have done a lot of work to properly solve the coke dispute, achieved positive results in wooden furniture anti-dumping cases and won the first countervailing case.

Additionally, major progress has been made in solving the "non-market economy status" problem. The Party and state leaders have attached great importance to and personally accelerated the solution of this issue. Through multi-level and multi-angle endeavors, 37 countries and regions including ASEAN nations of Malaysia, Indonesia, the Philippines and Thailand, and other countries such as New Zealand, South Africa, Russia, Brazil, Argentina, Chile Peru and Pakistan have acknowledged the status of China's market economy.

By people's Daily Online