|Ambassador Qu Xing's Remarks at FCCC Spring Festival Reception|
Mr. Minister-President Bourgeois,
Mr. Chairman De Graeve,
Ladies and gentlemen,
I still have fresh memories of us getting together here last year for celebration of the Chinese Year of Goat. Today, we are here again, to celebrate the Year of Monkey. How time flies! In the Chinese culture, Monkey symbolizes wisdom, vitality and promotion. So on this occasion, I would like to wish every one full of wisdom and vitality with your business，and full of promotion with your professional career. As you mainly come from the business world, I’m sure you care a lot about China’s economy. So let me spend more time today on China’s economic situation in 2015.
At this year's annual meeting of the World Economic Forum, China’s economy has received high levels of attention. People are concerned about China’s economy for three things that had happened last year.
The first thing was the volatility in China’s stock market. In the beginning of 2015, China’s stock market in Shanghai and Shenzhen kept going strong, up by 60% and 122% respectively within six months. Then in June, there was a sudden market plunge, causing people to panic. The second thing was the depreciation of RMB. From last November to this date, the Chinese currency has depreciated against US dollar by 5%. The third thing was China’s economic growth rate falling below 7%. According to our National Bureau of Statistics, in 2015, China’s GDP only grew by 6.9% percent. Although this is by no means a low speed, and although the increment alone equals to the GDP of a world top-20 country, this is after all the lowest speed in 25 years. And it is only natural that it draws attention.
There are in fact multiple reasons for what happened. Firstly, the world economy was suffering. According to IMF and World Bank, economies in the world, especially the US, the EU and Japan were slowing down. As a result, China’s economy was also in the face of downward pressure. Secondly, government regulation over the stock market could have been more adequate. Thirdly, business cycle takes its toll after 30 years of high-speed growth. The larger size the Chinese economy becomes, the more difficult it is to keep up the speed. Lastly, and most importantly, this is a result of China’s proactive management to promote structural reform and transform the mode of development. China has eliminated outdated production capacities for green and sustainable development.
As a matter of fact, the overall situation with China’s economy is rather desirable. There are several facts that we should not overlook.
Firstly, the Chinese government has achieved its growth target. The target growth rate for 2015 was set at around 7%. Thus, 6.9% has met up with the expectation. As long as China’s growth stays above 6.5%, China will be on the right track to achieve the goal of doubling its 2010 GDP and per capita income by 2020.
Secondly, China has completed all the tasks set out in the Twelfth Five Year Plan. The year 2015 is the concluding year for the Twelfth Five Year Plan. We are glad to see that all the 24 mandatory indicators have been secured, including energy conservation, emission reduction, urbanization, high-tech production capacity, and social security. Compared with five years ago, China enjoys more economic dynamics and social fairness.
Thirdly, China’s economic structure has been improved. The service sector now accounts for half of China’s GDP, and contributes 54% of entire tax revenue, and 80% of the increased tax revenue. High-tech industries grew by 10.2%, new-energy cars rose by 60%, industrial robots increased by 42%, and e-commerce went up by 31.6%. The industries that went downwards were especially the energy-intensive ones, including steel, chemical and oil refining industries. And that is the price China has to pay in order to upgrade its economy.
Fourthly, China's independent innovation capability has been enhanced significantly. China’s technology level in certain key areas ranks top in the world. And breakthrough progress has been made in such areas as manned spaceflight, lunar exploration, manned deep submergence, new regional aircraft, large LNG ships, and high-speed rail transportation.
Fifthly, China’s share of global exports went upward. Although China's exports in absolute value declined due to sluggish global trade, China's share in global exports market reached 13.4%, which was one percentage point higher compared with 2014. In 2015, China's overseas direct investment was more than 118.02 billion US dollars, a year-on-year increase of 14.7%. China’s accumulated overseas non-financial direct investment reached 863.04 billion dollars. Chinese citizens made over 100 million trips overseas in 2015, spending about 2,000 dollars per person on average. China's contribution rate to world economic growth was up to 25%.
Sixthly, China has effectively carried out the three key projects: the initiative of "One-Belt-One-Road", the project of promoting coordinated development of the Beijing-Tianjin-Hebei region, and the project to build an economic development belt along the Yangtze River.
In particular, through the “Belt and Road” initiative, we can combine China’s manufacturing prowess with the cutting-edge technologies of the developed economies, so that we can, together, supply good equipment at good prices to the developing world, sustaining robust growth with supply-side innovation. If development for 1.3 billion Chinese has helped buoy world growth, imagine what such growth spurts for many more billions could do for the commodities market, manufacturing and many others.
Seventh, in 2015, employment and people’s income have both increased. We have created 13 million new jobs. Per capita disposable income of rural residents grew by 7.5%, while that of urban residents grew by 6.6%. The Engel coefficient has decreased from 31.2% from 2013 to 31% in 2014, and further decreased to 30.6% in 2015. In that context, Chinese tourists spend more money to enjoy life. During the coming Spring Festival next week, six million Chinese tourists will travel around the world to enjoy themselves. China's social stability has provided favorable conditions for deepening reform, and keeping economic and social development on right track.
We are of course aware of the challenges ahead. There will be five major challenges for China’s economy in 2016. Firstly, as the global economic downturn is unlikely to reverse in the short term, China’s economy will continue to face downward pressure. Domestically, China will have to deal with excessive production capacity and high-polluting industries, which is no easy thing to do. Secondly, China’s manufacturing industry is suffering a declining output and efficiency. Steel production has fallen by 50%. A friend with the steel industry told me that the steel they are producing are now cheaper than cabbage in the market. Thirdly, there are a number of so-called "zombie entreprises" which have neither vitality, nor profits, but to phase them out will be difficult considering employment and social stability. Fourthly, government revenue growth slows down while social demand grows stronger. Structural reform has led to a falling GDP growth rate, which further resulted in reduction in government revenue. A loss of 0.1% of the10-trillion-dollar GDP will be 10 billion dollars. At the same time, social demand is increasing, for instance, as the aging population increases, demand for pension will also grow. Fifthly, other challenges include over capacity of production, surplus inventories, increasing bad loans, local government debt, etc.
Bearing this in mind, we do have many favorable factors to address these challenges. Firstly, the United States and other major economies have phased out the quantitative easing approach. Secondly, China and other emerging economies have improved their economic structure. Thirdly, commodity prices including oil, gas and mineral went back to normal level after the bubble burst. These factors are conducive to China's economic development. China will continue to let market play a dominant role in resource allocation, to substantially reduce items requiring government review and approval, to deepen the SOE reform, and continue to implement the proactive fiscal policy and prudent monetary policy. The Chinese people’s entrepreneurship has been greatly encouraged. In 2015, 12,000 new businesses have been registered on a daily basis. The “Belt and Road” initiative have also created conditions for international cooperation on production capacity, and will promote common development between China and neighboring countries.
In 2015, China-Belgium trade maintained stable growth despite of sluggish global demand and the euro falling against the dollar. In the first 11 months, bilateral trade stood at 19.64 billion euros, an increase of 2 percent. China remains Belgium’s second largest trading partner outside the EU, and Belgium remains China’s seventh largest trading partner in the EU. China remains to be Belgium’s most important investment destination in Asia, and Chinese companies have great confidence in Belgium. A few days ago, the world's largest bank, namely the Industrial and Commercial Bank of China opened a branch in Antwerp, which is perfect proof to my point.
In view of the above analysis, we have full confidence in the prospects of China's economy. So are international investors. According to the latest report by UNCTAD, in 2015, while the global transnational investment declined, China had attracted foreign direct investment of up to 136 billion dollars, an increase of 6%. China’s economy will not have a so-called "hard landing", let alone "collapse" as some people predict.
This year of 2016 marks the 45th anniversary of establishment of diplomatic relations between China and Belgium. A series of celebration activities will be held. In three days, that is on February 6, the Chinese Embassy and Brussels city government will jointly hold the Chinese New Year Parade and Chinese New Year Reception at the Grand Place and the City Hall, which is unprecedented in the history of China-Belgium relations. This year, Belgian Prime Minister Michel will pay an official visit to China, and will attend the Asian Forum in Boao, enhancing the link for business opportunities between Belgium and Asian countries. I believe this will be your opportunity to strengthen cooperation with China.
Last but not least, I wish you greater success in the new year!