|Ambassador Qu Xing's Remarks at BCECC Chinese New Year Reception|
Ladies and gentlemen,
Dear friends of BCECC,
I still have fresh memories of us getting together last year for celebration of the Chinese Year of Goat. Today, we are again getting together 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 everyone full of wisdom and vitality with your business，and full of promotion with your professional career.
I would like to share with you my observations in three areas, namely, the development of China-Belgium relations of this year, China's current economic situation, and China’s "Belt and Road initiatives".
Firstly, the development of China-Belgium relations in 2015, which is now in the best period of history. Following President Xi Jinping’s state visit to Belgium in 2014, H.M. King Philippe and H.M. Queen Mathilde paid a return visit to China in 2015, which is the King’s first state visit to a foreign country. As Chinese ambassador to Belgium, I had the honor to accompany H.M. the King for the visit. I heard with my own ears when President Xi Jinping, Premier Li Keqiang, among other Chinese top leaders expressed China’s desire for further cooperation with Belgium. I personally experienced the grand hospitality and warm welcome which H.M. the King and H.M. the Queen received in different Chinese cities and provinces. Among the members in the King’s delegation, there were three Minister-Presidents of Belgium's three regions, three Ministers of the Federal Government, and more than 140 entrepreneurs and university headmasters. I would say that this delegation of elites fully represents Belgium’s national strength and consensus of Belgian society. I was glad to be there to see the King and Queen witness the signing of over 90 cooperation agreements.
Shortly after the King's visit to China, Chinese Premier Li Keqiang came to Brussels for an annual meeting between China and the EU leaders. Although he only had one day in Brussels, and the schedule was extremely tight, Premier Li still had a fruitful meeting with Prime Minister Charles Michel, and witnessed together the signing of 12 cooperation agreements, which were worth of over 20 billion US dollars.
In September, Chinese Vice-Premier Liu Yandong, who is in charge of education, culture, science and technology affairs, came to Brussels. Vice-Premier Liu inaugurated Chinese Cultural Center in Brussels together with Deputy Prime Minister Didier Reynders, witnessed the establishment of two new Confucius Institutes at VUB and ULB and had a field tour to remote sensing, geothermal and nuclear energy projects at the VITO, Flemish Institute for technological research. After her visit, Premier Liu made specific instructions about further bilateral cooperation in these areas.
In terms of trade between China and Belgium, 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 (ICBC) opened a branch in Antwerp, which is perfect proof to my point. This year, we expect new breakthrough with China Belgium Technology Center in the Louvain-la-Neuve Science Park.
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. On February 6, the Chinese Embassy and Brussels city government jointly held 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, and underlines the sound development momentum of bilateral relations. This year, Belgian Prime Minister Michel will pay an official visit to China, and will address 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.
Now the second area I would like to expound on is China’s economic situation in 2015. In a nutshell, medium-high rate growth will become the "new normal" of China’s economy. In 2015, three things caused great concern of the international community. The first is the volatility in the Chinese stock market. The second is China’s economic growth rate falling below 7%. And third is the depreciation of RMB against US dollars. There are concerns about whether China’s economy is having a big problem. Since China is now the second largest economy in the world, taking up 15% of the world economy, and with a contribution rate of 25% to the global economic growth. People wonder if China sneezes, the world could not catch a cold.
From June to August last year, China's stock market did experience dramatic fluctuations. Within one month and a half, Shanghai and Shenzhen stock index were down by 35% and 40% respectively. Philosophically speaking, the stock market's vitality lies in its volatility. The previous volatility in the Chinese stock market was in 2007, when short-term stock index rose by 50%, exceeding over 6000 points. Anyone can make money until the bubble burst, and the stock fell to about 2000 points. From then on, a lot of people who were "stuck" in the bubble burst, began to wait for a new bull market. In the beginning of last year, the stock market went all the way up to 5178 points on June 12, which constitutes a new bubble. Therefore, volatility is bound to arise, sooner or later. The causes include the rules of stock market itself, the major context of international economic situation, speculations, and lack of government regulation. The Chinese government has adopted a series of "rescue" measures to avoid the so-called "stock market crash". Now the stock market is relatively stable, the Shanghai index fluctuates steadily around 3000 points.
As for China’s economic growth in 2015, China’s economic growth rate was 6.9%, the lowest in 25 years. This is partly because China now has a big size of economy, therefore it is harder to maintain a high growth rate. From 1978 to 2013, China's economy maintained an average growth rate of 9.8 % for 35 years. Never before has the world seen an economy keeping such a high rate of growth in four consecutive decades. China's GDP increased from 0.37 trillion Yuan in 1978 to 67 trillion Yuan in 2015, and its portion to the world economy rose from 1.8 % in 1978 to 15% in 2015. Economics tell us that the larger an economy becomes, the harder it is to sustain a high growth rate.
More importantly, the current growth rate is result of the Chinese government’s measures to adjust the economic structure and transform the mode of development. Over the past 30 years, China's economic development was mainly driven by foreign trade, now we are trying to shift to an economy driven by domestic consumption and innovation. Ten years ago, Chinese economy’s dependence on foreign trade was nearly 70%. In 2015, the figure dropped to 45%. In the past thirty years, China’s economy grew at the cost of energy and environment, which has caused a lot of problems. Now that we have realized this problem, the Chinese Government has decided that we would rather sacrifice a little speed of development for a green, environmentally friendly and sustainable development. In recent years, the government has made a lot of investment in new energy to replace outdated production capacity, which also affected the current pace of economic development.
Meanwhile, we should also see that 6.9% is still a very high growth rate. It equals to an annual increase of 700 billion US dollars, which is adequate for China’s economic and social development and improvement of people’s lives. In fact, a GDP of $ 700 billion can rank top 20 among countries in the world. In other words, the annual increase of China's GDP is equivalent to the total sum of GDP of a world top 20 country.
As for the depreciation of RMB against US dollars, that is a temporary phenomenon which happened when all the emerging economies had their currencies fall against US dollars due to the Federal Reserve’s raise in interest rates, which allows the dollar-denominated assets to flow back to the US. There is no basis for continued depreciation of the RMB, because we have a top growth rate in the world, with a contribution rate of 25% to the world economy. Last year, our trade surplus stood at 3.68 trillion Yuan, a year-on-year increase of 56.7%. We have ample foreign exchange reserves. Last year, our RMB was included in the basket of currencies which make up the IMF's Special Drawing Right, or SDR, pushing up market demand for RMB. Therefore, although the RMB depreciated a bit against the US dollars, it has actually slightly appreciated against the basket of currencies.
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, and will become the “new normal” of China’s economy.
Secondly, China has secured all the 24 mandatory indicators set out in the Twelfth Five Year Plan, including energy conservation, emission reduction, urbanization, high-tech production capacity, and social security.
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.
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.
Seventh, in 2015, employment and people’s income have both increased. We have created 13 million new jobs. Per capita disposable income grew by 7.4%. The Engel coefficient has decreased from 31.2% from 2013 to 31% in 2014, and further down to 30.6% in 2015. In that context, Chinese tourists spend more money to enjoy life.
In the past 30 years, people have got used to China’s economy growing at a "normal" rate of 9-10%. But in the future, China's economic growth of around 7% will become a "new normal", a healthier, environment-friendly, and sustainable "normal." It is a very important perspective to view the current economic situation in China.
Now the third area I would like to touch upon is about China's "Belt and Road initiatives”. This is a systematic project which should be jointly built through consultation to meet the interests of all. In September and October of 2013, during his visit to central Asian and Southeast Asian countries, President Xi Jinping put forward the "Silk Road economic belt" and "21st Century Maritime Silk Road" initiatives which raised great interest of the international community. I think you may want to know what China wants to achieve through "Belt and Road initiatives", how to achieve it, what are the specific plans, and what progress it made till now.
Well, China put forward the "Belt and Road initiatives" for the following purposes:
First, to cultivate new economic growth point of the world economy, in order to reverse the weak world economic recovery from the 2008 financial crisis, rising protectionism, and fragmented trade agreements. China firmly believes that in the context of globalization, the mankind is living in the community of shared interests. Only through common development can every individual country achieve real development.
Second, to promote regional cooperation, the connectivity of Asian, European and African continents and their adjacent seas, tap market potential in this region, secure favorable position in the global supply chain, industrial chain and value chain. Compared with Europe, the current transport infrastructure connectivity among Asian countries is still lagging behind. China believes that the "Belt and Road initiatives" will help narrow the gap and create better conditions for the stability and development of Asia.
Third, to strengthen the connection between Chinese economy and the world economy, promote integration of China's economy with market, resources and investment in the world. It is also to create better conditions for the development of China's western region, narrow the gap between China's eastern and western regions.
China’s "Belt and Road initiatives" is a five-way progress in policy communication, infrastructure connectivity, trade link, capital flow, and understanding among peoples. The key lies in infrastructure connectivity. The Silk Road Economic Belt focuses on enhancing the connectivity between China and three destinations, that is from China to Baltic Sea, through Mongolia, Russia, Central Asian and Eastern European countries; from China to Mediterranean Sea through Western Asian and Middle-East countries, and from China to Indian Ocean through Southeast and south Asian countries. The 21st-Century Maritime Silk Road is designed to go from China's coast to Europe through the South China Sea and the Indian Ocean in one route, and from China's coast through the South China Sea to the South Pacific in the other.
How do we achieve this goal? "Belt and Road" is not a Chinese strategy that requires support from other countries, but rather a Chinese initiative that welcomes participation of all. This project will only succeed when it is jointly built through consultation to meet the interests of all. The Asian Development Bank estimated that Asia needs to invest US$730 billion in overall national infrastructure each year, which is a huge number, but not inaccessible. The "Belt and Road initiatives" will be funded by AIIB ($100 billion), Silk Road Fund (initiated by China and already has $40 billion), government investment of concerned countries and public-private partnership program (PPP). China's new overseas investment over the next decade will reach $ 1.5 trillion, which will mean a lot to "Belt and Road initiatives". China’s current investment to countries along the Belt and road only accounts for 17% of its overseas investment. We believe that in the coming years, this ratio will be greatly improved.
So what progress has been made so far?
At present, "Belt and Road initiatives" has received positive international response. 60 countries along the Belt and Road have expressed a positive attitude. Over a dozen countries have appointed special envoys to work with Chinese side. International organizations such as ASEAN, SAARC(South Asian Association for Regional Cooperation), the Arab League, the SCO, the GCC(Gulf Cooperation Council), UNESCAP(UN Economic and Social Commission for Asia and the Pacific), Eurasia Economic Commission and the International Road Transport Union have agreed to joint cooperation with the Chinese side. China has signed “Belt and Road" cooperation agreements with countries in Central Asia, and West Asia.
This year, The Asian Infrastructure Investment Bank (AIIB) has been open for business since January 16. All together 57 countries (including 14 EU member states) have become founding members. Besides, the Silk Road Fund has been officially established and set out for fund-raising.
Under the "Belt and Road" framework, a number of cross-border infrastructure has started construction this year, some even has been put into use, such as China-Laos Railway, China-Thailand Railway, Hungary-Serbian Railway, Jakarta - Bandung high-speed rail, the second phase of the Karakoram Highway between China and Pakistan, Gwadar Port Expressway, China-Myanmar gas pipeline, C line and D line of gas pipeline between China and Central Asia.
I would like to conclude by emphasizing that Belgium is located in the western end of the Eurasian continent, and enjoys convenient transportation and well-developed logistics, thus has great advantage in carrying out cooperation in this regard. During President Xi Jinping’s visit to Belgium in 2014, the two sides agreed to strengthen cooperation under the framework of "Belt and Road initiatives", especially connection between China's western railway and the port of Antwerp. Currently, Belgium is undertaking feasibility study on railway connectivity between Belgium and China. I hope our Belgian friends will continue to contribute your talents and efforts to promote bilateral cooperation in the field of connectivity, and inject new vitality for the development of bilateral relations.
Last but not least, I wish you new progress in your cooperation with China in the year of Monkey. Thank you!