August 29, 2023
Dear Mr. Mike Federle,
Ladies and Gentlemen,
It is a great pleasure to join you via video link at the fifth U.S.-China Business Forum held by Forbes. We are gathering at a critical time, as the world and the China-U.S. relationship are again at a crossroads. The theme this year, “New Paths Forward”, is highly relevant. I hope the forum will build bridges of communication, open up windows of cooperation, and bring China and the United States together in the same direction to jointly find a path forward.
We need to find a path for the turbulent world to restore stability. This is a challenging time. Global recovery remains sluggish, and every country has its own problems to tackle. All are in the same boat. No one can stay aloof, still less profit at others’ expense. Bloc confrontation will not bring peace or security, and decoupling will only backfire. Only by pulling together can we tide over the difficulties.
China and the United States are the world’s two largest economies and P5 members. Any conflict or confrontation between us would produce no winner, but only spell disaster for the world. The only right choice for us is to combat global challenges together, and provide more peace and development dividends to the world.
We need to find a path for China and the United States to get along in the new era. Over the past few years, China-U.S. relations ran into serious difficulties. This does not serve the fundamental interests of our two peoples, nor does it meet the common expectation of the international community. Recently, our two countries have had a series of high-level interactions, and Secretary Raimondo is visiting China right now. The two sides have agreed to return to the Bali agenda, and jointly sent out a signal of enhancing dialogue, exchanges and cooperation to stabilize the bilateral relationship.
President Xi Jinping pointed out that the world needs a generally stable China-U.S. relationship. The Earth is big enough for our two countries to develop respectively and prosper together. We need to seize the opportunity, work in the same direction, clear obstacles and manage differences with concrete actions, and enhance dialogue and expand cooperation in good faith. Most importantly, we need to follow the principles of mutual respect, peaceful coexistence and win-win cooperation.
We need to find a path for expanding mutually beneficial economic cooperation and trade between China and the United States. China is the third largest trading partner of the United States and the largest market for U.S. agricultural exports. It is also in the top three markets for 38 American states. Exports to China have supported more than 1 million jobs in the United States.
Over 70,000 American companies are doing business in China, earning a profit of US$50 billion annually. Half of Tesla’s global deliveries came from its Shanghai gigafactory last year, which rolls out one electric vehicle every 40 seconds on average. Starbucks now operates over 6,500 stores in China, opening one nearly every 9 hours. Our two countries enjoy economic complementarity and deeply intertwined interests. Our economic ties simply cannot be cut off. We need to renew such success stories of cooperation, and continue to cultivate economic and trade ties for the benefit of our peoples.
Ladies and Gentlemen,
This is my third posting in the United States. Safeguarding the interests of China is my sacred responsibility, and enhancing China-U.S. exchanges and cooperation my important mission. It has been 13 years since I last worked here. A lot has changed in both the world and our two countries. But the importance of China-U.S. relations to our countries and the world has not changed. The fact that we share extensive common interests and are interdependent has not changed. Our peoples’ enthusiasm about greater exchanges and cooperation has not changed. Nor has the international community’s expectation for a sound and stable China-U.S. relationship.
Over the years, friends from the business community, including all of you here, have made positive contribution to enhancing China-U.S. economic cooperation and promoting the well-being of our peoples. In order to keep abreast with the times, find new paths forward, and fully leverage the role of economic ties as a ballast and propeller, we need to firm up confidence, remove disruptions, and pool strengths.
China’s openness and development prospects are our greatest source of confidence. This year, the Chinese economy has maintained the momentum of recovery and growth. Our GDP grew 5.5% in the first half of the year, faster than the 3% growth rate last year and outdoing major developed economies. Solid progress has been made in high-quality development, and the growth is greener and more innovation-driven. Investment in high-tech industries and the new type of infrastructure grew 12.5% and 16.2% respectively year over year. The export of new energy vehicles, lithium-ion batteries and solar cells increased 61.6%.
Of course, post-Covid economic recovery will be characterized by undulating progress with twists and turns sometimes. But it is important to see both the trees and the wood, both the present and the long run. China has the most complete industrial system, a market with the most dynamic domestic demand, and a rich pool of high-caliber workforce and entrepreneurs. Our middle-income group is over 400 million strong. More than 100 cities have a population of over 1 million, and nearly 900 million people are of working age. There is ample room in our policy toolkit. The fundamentals sustaining China’s long-term growth remain unchanged.
Spreading doom and gloom about others will not make oneself any better. When China fares well, the world will also be better off. China will continue to “follow the path of opening-up and eat from the bowl of reform”. In recent months, China has rolled out policy packages to revive and expand consumption, boost the private sector, and attract more foreign investment. More efforts will be made to protect foreign investment and ensure national treatment for foreign-invested enterprises. These are great boons to the business community, and you are most welcome to share in the new opportunities brought by China’s new development.
Any decoupling between China and the United States would be the greatest disruption. In the first half, China-U.S. trade fell by 14.5% from the last year. This is a direct consequence of U.S. moves to levy Section 301 tariffs on Chinese imports, abuse unilateral sanctions and further tighten up export controls. Livelihoods of many families have been affected, and businesses from both countries have born the brunt.
It is simply confusing that the United States, which repeatedly urged China to expand access for foreign investment in the past, is now imposing restrictions itself. The outbound investment review executive order, for instance, is a violation of the principle of free trade. Instead of containing China, it will only curtail the right of American businesses to develop in China.
Also, the United States called on China to level the playing field before, but now it is depriving Chinese businesses of the right to compete. More than 1,300 Chinese entities and personnel are on U.S. sanction lists. Average U.S. tariffs on Chinese products are at 19%, while China’s tariffs on American goods are only 7.3% on average. Is this fair? Does this truly serve U.S. interests?
China is the world’s largest trader in goods and largest market for chips and electric vehicles. It is also a popular destination for investment. In the recent five years, the return rate of FDI in China reached 9.1%. Some 24,000 foreign-invested firms were established in China in the first half of this year, and investment from France, the UK and Japan into China in the same period went up 173%, 135% and 53% respectively. Therefore, the biggest risk is any decoupling between China and the United States, and the largest source of insecurity comes from any confrontation between the two. To shut out China is to close the door on opportunities, cooperation, stability and development.
To pool strengths, we need friends from all sectors to pitch in. As a Chinese saying goes, “When a nest is toppled, no egg will stay intact.” Only when China-U.S. relations are sound can practical cooperation be smooth and investors be at ease. Over the past three months since I arrived in the United States, I have reached out to American people from all walks of life. My deep impression is that the hope and foundation of China-U.S. relations lie in the people. One of my important tasks is to seek out supporters of China-U.S. relations, reduce differences and disagreements, and expand dialogue and cooperation, so as to jointly bring our relationship back to the right track and move it forward.
Recently, we have made heartening progress in facilitating travels and people-to-people exchanges. China has resumed group tours to the United States, and the two sides have agreed to increase passenger flights. Going forward, we need to continue taking concrete steps, no matter how small they may look. We can explore more tangible cooperation outcomes and inject more positive energy into bilateral relations, for instance, by adjusting the China travel advisory, renewing the agreement on cooperation in science and technology, holding the Tourism Leadership Summit, and facilitating visa application and border entry for each other’s citizens.
All of you here are important “stakeholders”. I am happy to engage with you as often as possible, and I count on you to continue building bridges of friendship and cooperation, and play a vital role in deepening bilateral exchanges and stabilizing China-U.S. relations.
Thank you very much.