We Need More Trade For Our Common Future

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We Need More Trade For Our Common Future
Jianjun GUO

LL.M.in Intellectual Property Law

Economic and Commercial Counselor

Embassy of the People's Republic of China to the Kingdom of Belgium

Event Organized by the Belgian-Chinese Chamber of Commerce

October 25, 2012, Sheraton ZAVENTEM, Brussels

Dear Chairman DEWIT, Dear Friends, Ladies and Gentlemen,
First I wish to express my highest appreciation to Belgian-Chinese Chamber of Commerce and Belgian-Chinese Economic and Commercial Council for its active involvement in and great contribution to the development of economic cooperation between Belgium and China. Trade is not just about making money. By trade, we become friends. Since its establishment in 1980s, BCECC has always been helping us make friends with each other by way of trade, including this event today, for which I also wish to express my heart-felt gratitude.
I first came to Brussels in the summer of 2006, when the European Union initiated anti-dumping investigation on leather shoes made in China. The Ministry of Commerce which I work for sent a delegation to carry out consultations with the Commission and I was a member of that mission. My first impression about Brussels was outweighed by the tense atmosphere between Chinese and European trade officials. Harsh words were exchanged, hard position expressed. It looked as if a trade was imminent.
But the trade war didn't break out. China-EU trade was in the expansion track at the time and the anti-dumping case couldn’t stop its pace of advancement. Between 2007 and 2011, EU's exports to China grew at an annual average of 17.4%, three times the speed of EU's overall exports growth during the same period. China is now EU's second largest export market. Last year, EU-China trade totaled 428 billion Euros, only 20 billion less than EU-US trade. China is poised to become EU's largest trade partner. Measured by China's statistics, Europe is China's largest trade partner, largest import origin and second largest export market. China-EU trade in 2011 reached 567 billion dollars, twice the 2006 level when the anti-dumping on shoes was launched.
China-Belgium trade also boomed, up by 31.5% in 2011 to nearly 30 billion dollars, seven times the level ten years ago. As an important distribution hub for Europe, Belgium has obviously benefited from trade with China, especially its logistics and services sectors.
European Companies’ outsourcing, in many cases in-house outsourcing to China as well as offshore investments to China, especially following China's accession into the World Trade Organization in 2001, explains in part the stunning growth rate of China-EU trade in the past ten years and also shed some light on the issue of China's trade surplus.
China is now the world's No.1 exporter. But most of its exports are made by foreign companies established in China. In 2011, 53% of China's overall exports were made by them. What’s more, China’s trade surplus is just a tiny share in the global value chain. I can give you two examples. Nokia smart phone is "made in China", but 54% of its added value comes from Europe. The IPod is "made in China", but China only retains 4 dollars out of its market price of 299 dollars.
Exports from China roughly represent one quarter of foreign companies’ annual turnover in China; the remaining 75% comes from domestic sales. In 2010, domestic sales by European companies established in China totaled 2.8 trillion RMB, or 314 billion Euros equivalent, three times EU's exports to China, and higher than EU's imports of 282 billion Euros from China in the same year. If we put together exports from EU to China, exports from China by European companies settled in China plus their domestic sales in China, we can see Europe is losing, European companies are rewarded with very decent financial revenues by cooperating with China.
We still hear complaints from European business communities. This is natural provided that China’s market is rapidly changing and expanding. Both foreign companies and Chinese enterprises have to adapt to this reality. Foreign companies settled in China are also part of China’s economy. We pay a lot of attention to the concerns of European companies and try our best to accommodate the need to regulate our economy and market and the obligation to ensure a sound business environment for foreign companies.
Ladies and Gentlemen,
The crisis strikes again and its impact to trade has already been felt. In 2012, the world trade will slow further still to 3.7%. In the first nine months this year, China-EU trade shrank by 2.7% on yearly basis. China-Belgium trade also fell by 8%.
But what worries me more is not the drop in trade. Europe must address this crisis and China is making efforts to maintain its growth. Sooner or later, China-EU trade will be back on the growth track. The question is, can we still enjoy the high speed growth in our trade that we all witnessed in the last decade?
90% of China-EU trade since 1975 concentrated in the past ten years. Since 2001, bilateral trade has increased by 6 times. From 2003, it took less than two years for our trade to expand by another 100 billion dollars. It took two days in 2011 to overpass the whole year trade between China and EEC in 1975, the year when we started trade record.
The explosive growth of China-EU trade last for such a longtime that we all take it for granted. But where can we find new sources of energy to fuel the juggernaut of China-EU trade? This is a difficult question to answer. But at least one thing is clear to me; we need more trade, not less, for our common future.
China can still contribute significantly in this connection. China is the second largest economy, but China's per capita GDP in 2011 was still less than 5500 dollars, far from EU's 25,100 Euros and Belgium's 33,700 Euros. China's per capita GDP increase from 1135 dollars in 2002 to 5432 in 2011 has already created huge opportunities for the entire world. Think about China's per capita GDP increase by another 1000 or 2000 dollars in the next couple of years, times China's 1.3 billion people. I am not good at math. But I know that means yet another huge wave of opportunities will be generated.
China's urbanization process could also provide a boost to our cooperation. In 2011, China's urbanization rate stood at 51%, barely equaling the world average and China plans to bring it to the region of 65% by 2030. I don’t know exactly how many cities are there in China but I know we have huge amount of things to construct to achieve this goal. During his visit to Brussels this spring, Vice-Premier LI Keqiang encouraged Europe to take part in China’s urbanization process. Chinese people love Europe because you have beautiful cities and I think they also wish to add some European elements to their own cities.
The entire world is in deep reflection and adjustments. This happens not only in Europe, but also in China. To make adjustments and to restructure is always painful. But in the past, we have had even harder days. Think about China fifty years ago or one hundred years ago. Success belongs to those who never give up. Through adjustments and even sacrifices, we lay the foundations for future prosperity. This also makes a strong case for China and Europe to stick together.
Europe is still strong. Europe’s strength lies in its high technology and knowhow, its understanding of quality and brand, its design and style, its awareness of environment protection and last not the least, its social safety net that guarantees stability and encourages people to innovate. Since I took office less than one month ago, I’ve already visited dozens of Belgian companies. I am very much impressed by their technologies and their determination to cooperate with China. Belgian companies are working very hard to find a way out of current difficulties. Belgium is not a big country, but it is very important in international trade and investment. This is a reward to your hard work. It also holds true for Belgium’s and Europe’s future.
Ladies and Gentlemen,
It is a great pleasure for me to meet you today. I myself and my office will always be happy to meet you, to help you, to listen to your ideas and to get inspirations from you. I look forward to our cooperation and friendship in the years to come.

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