Mul­ti­lat­er­al­ism pro­tects global trade

CIIE boosts China’s strate­gic arse­nal com­pris­ing open­ing-up pol­icy and BRI

China Daily (Latin America Weekly) - - 13 Business - By ZHONG NAN zhong­nan@chi­nadaily.com.cn

As global trade threat­ens to de­gen­er­ate into a mines-laced eco­nomic bat­tle­field, the dark forces of uni­lat­er­al­ism and pro­tec­tion­ism find them­selves ar­rayed against the righ­teous whose weapons are mul­ti­lat­er­al­ism, a strong sense of jus­tice and fair play, a func­tional moral com­pass and a com­mit­ment to pro­tect­ing growth, no mat­ter what, said in­sti­tu­tional of­fi­cials and busi­ness lead­ers.

China has been un­re­lent­ing in its ef­forts to op­ti­mize its in­dus­trial struc­ture, launch new trade boost­ers like the China In­ter­na­tional Im­port Expo (which be­gins in Shang­hai on Mon­day), and bring about tan­gi­ble transcon­ti­nen­tal de­vel­op­ment through the Belt and Road Ini­tia­tive. These moves will in­ject more growth mo­men­tum into the trou­bled global econ­omy, they said.

“China’s for­eign trade is set to con­tinue its steady run for the rest of the year as it is on track to reach its an­nual trade growth tar­get, de­spite on­go­ing trade dis­putes with the United States,” said Li Kui­wen, di­rec­tor-gen­eral of the De­part­ment of Sta­tis­tics, which is part of the Gen­eral Ad­min­is­tra­tion of Cus­toms.

Li was re­fer­ring to China’s trade vol­ume that surged 9.9 per­cent year-on-year to 22.28 tril­lion yuan ($3.22 tril­lion) in the first three quar­ters of this year.

Of­fi­cial data showed the al­most 10-per­cent rise was pos­si­ble due to the coun­try’s di­ver­si­fied trade ac­tiv­i­ties with emerg­ing economies, rapid growth in pri­vate com­pa­nies’ trade, and a surge in trade vol­ume on the back of the BRI.

Eco­nomic sta­bil­ity and healthy growth in China are good not just for the coun­try but the world as well, be­cause the main­land is a very im­por­tant part of the global value chain.

The BRI has proven to be a win-win propo­si­tion for China and the coun­tries and re­gions par­tic­i­pat­ing in it. But it is by no means the coun­try’s first win-win at­tempt in global trade.

In 1950, when China Im­port Co was es­tab­lished, it her­alded the coun­try’s broad­minded ap­proach to global trade.

In 1951, China Im­port Co mor­phed into China Im­port and Ex­port Co. Its job was to build trade ties with var­i­ous coun­tries and trade China’s goods, mainly coal, tim­ber, agri­cul­tural prod­ucts, porce­lain and silk in the global mar­kets. As it tran­spired, China Im­port Co was to be the pre­cur­sor of Sinochem Group, the State-owned chem­i­cal firm.

The six decades since then — it was a pe­riod that saw China adopt­ing the re­form and open­ing-up pol­icy in the last 40 years — have shown the hum­ble be­gin­nings laid a strong foun­da­tion for what is

Source: The Gen­eral Ad­min­is­tra­tion of Cus­toms

to­day a man­u­fac­tur­ing, ser­vices and in­no­va­tion pow­er­house.

That’s not all. China has also emerged as a strong sup­porter of mul­ti­lat­er­al­ism un­der the frame­work of the World Trade Or­ga­ni­za­tion.

This holds the key to fu­ture global eco­nomic growth, ex­perts said.

To be sure, the rise of pro­tec­tion­ism, and si­mul­ta­ne­ous fluc­tu­a­tions in the global fi­nan­cial and com­mod­ity mar­kets, have hurt China in some ar­eas. But, the fourth-quar­ter data at the year-end or early next year will likely again con­firm the coun­try’s trade-sus­tain­ing re­silience.

Not just the cur­rent quar­ter, even in the long run, China’s trade will be un­der­pinned by di­ver­si­fied channels, and com­mit­ment to the re­form and open­ing-up pol­icy, said Li Yong, vice-chair of the ex­pert com­mit­tee at the China As­so­ci­a­tion of In­ter­na­tional Trade.

He fur­ther said China has been giv­ing “great im­por­tance to risk pre­ven­tion and steady

MA XUEJING AND SU JINGBO / CHINA DAILY

growth. Its over­all lever­age level is not very high, but at a mod­er­ate level glob­ally”.

Of­fi­cial data showed that China’s im­ports of ma­jor com­modi­ties in­creased in terms of both vol­ume and price in the first three quar­ters. For­eign ship­ments of crude oil to China in­creased by 5.9 per­cent, nat­u­ral gas by 34 per­cent, re­fined oil by 9.8 per­cent year-on-year and cop­per by 16.1 per­cent year-on-year be­tween Jan­uary and Septem­ber.

“The in­crease in com­mod­ity im­ports in­di­cates that the coun­try’s de­mand for man­u­fac­tur­ing and en­ergy raw ma­te­ri­als re­mains large,” said Li. “Af­ter all, the global de­mand for Chi­nese goods re­lated to in­fra­struc­ture, man­u­fac­tur­ing, ur­ban­iza­tion and mod­ern agri­cul­tural sec­tors has kept grow­ing, es­pe­cially in coun­tries and re­gions in­volved in the Belt and Road Ini­tia­tive.”

China’s to­tal trade with coun­tries and re­gions re­lated to the ini­tia­tive ex­ceeded $5 tril­lion over the past five years, with an an­nual av­er­age growth of 1.1 per­cent, in con­trast to fall­ing world trade, said Qian Kem­ing, vice-min­is­ter of com­merce.

The na­tion’s out­bound di­rect in­vest­ment has amounted to over $60 bil­lion in economies in­volved in the BRI, cre­at­ing over 244,000 lo­cal jobs over the past five years. China has be­come the largest trade part­ner of 25 part­ner economies, data from the Min­istry of Com­merce showed.

“We have seen pop­ulism, na­tion­al­ism and pro­tec­tion­ism ris­ing and they in­evitably led to in­tol­er­ance and iso­la­tion in re­cent years. The world must find a new equi­lib­rium to com­bat poverty and create pros­per­ity for all. The Belt and Road Ini­tia­tive, in this sense,

Im­port vol­ume

can be a ro­bust driv­ing force for global eco­nomic growth,” said Lothar Her­rmann, pres­i­dent of Siemens Ltd China.

While col­lab­o­ra­tion be­tween Chi­nese and for­eign com­pa­nies in pro­jects in in­fra­struc­ture, re­sources and man­u­fac­tur­ing re­mains key to un­lock­ing the eco­nomic de­vel­op­ment po­ten­tial of many coun­tries and re­gions re­lated to the ini­tia­tive, dig­i­tal con­nec­tiv­ity will create more busi­ness op­por­tu­ni­ties for Chi­nese and for­eign com­pa­nies in these mar­kets, and in other parts of the world as well, said Vaughn Bar­ber, global chair for KPMG Global China Prac­tice.

“New and cut­ting-edge tech­nolo­gies are pro­vid­ing a range of new pos­si­bil­i­ties for Chi­nese com­pa­nies, in both tra­di­tional and high value-added in­dus­tries,” Bar­ber said, adding they are help­ing “boost pro­duc­tiv­ity, fur­ther un­lock new de­mand and in­crease their com­pet­i­tive­ness in do­mes­tic and global mar­kets”.

Bar­ber’s view is shared by Xin Guobin, vice-min­is­ter of in­dus­try and in­for­ma­tion tech­nol­ogy. He said China will ac­cel­er­ate the pace of de­vel­op­ing high-end man­u­fac­tur­ing and dig­i­tal tech­nolo­gies to fur­ther en­hance the coun­try’s ex­port ca­pa­bil­i­ties.

China has al­ready taken mea­sures to im­prove its ex­port struc­ture, with ex­ports of au­to­mo­biles ex­pand­ing by 16.3 per­cent year--on-year and ma­chine tools by 18.7 per­cent year-onyear be­tween Jan­uary and Septem­ber.

Ex­ports of elec­tri­cal and me­chan­i­cal prod­ucts rose by al­most 8 per­cent to 6.91 tril­lion yuan, ac­count­ing for 58 per­cent of the coun­try’s to­tal ex­port value, ac­cord­ing to the GAC.

In ad­di­tion to mar­itime trans­porta­tion, over 10,000 rail­way trips had marked the China-Europe freight train ser­vice from 2011 to the end of Au­gust. The freight trains trans­ported nearly 800,000 con­tain­ers of goods. The cargo rail net­work so far links 48 Chi­nese cities with 43 cities in 15 Euro­pean coun­tries such as Ger­many, Spain, Poland and the United King­dom.

“The com­bi­na­tion of China’s com­pet­i­tive la­bor costs, and for­eign cap­i­tal and tech­nol­ogy since the coun­try’s re­form and open­ing-up drive, has helped fa­cil­i­tate its trade growth and se­cure its pric­ing ad­van­tage,” said Long Guo­qiang, vice-pres­i­dent of the De­vel­op­ment Re­search Cen­ter, which is part of the State Coun­cil, China’s cab­i­net.

Long said this trans­for­ma­tion has also gen­er­ated hand­some re­turns for for­eign com­pa­nies through both lo­cal sales and ex­ports from China.

Be­cause China is om­nipresent in the sup­ply chains of many con­sumer and in­dus­trial prod­ucts across the world, a num­ber of global com­pa­nies have in­creased in­vest­ment in China to sus­tain ro­bust growth so far this year.

For in­stance, Ger­man chem­i­cal gi­ant BASF SE and the US petro­chem­i­cal group ExxonMo­bil Corp have signed agree­ments this year with the Guang­dong provin­cial gov­ern­ment to build wholly for­eignowned plants, each en­tail­ing an in­vest­ment of $10 bil­lion.

Tesla Inc, the US tech­nol­ogy ma­jor, is ex­pected to start the con­struc­tion of a $2 bil­lion elec­tric ve­hi­cle plant in Shang­hai be­fore the year-end. The fac­tory will have a pro­jected an­nual ca­pac­ity of 500,000 e-ve­hi­cles.

For­eign di­rect in­vest­ment edged up al­most 3 per­cent year-on-year to 636.7 bil­lion yuan in the first nine months of this year. FDI in high-tech sec­tors, which ac­counted for 22.5 per­cent of the to­tal, climbed al­most 7 per­cent year-on-year, data from the Min­istry of Com­merce showed.

“Af­ter ben­e­fit­ing sig­nif­i­cantly from the first wave of glob­al­iza­tion, China is now start­ing a new in­flu­en­tial trend, by grow­ing its do­mes­tic mar­ket, and by im­prov­ing the qual­ity (of goods and ser­vices) and en­vi­ron­men­tal re­quire­ments, both on the in­dus­trial and con­sumer sides,” said De­nis De­poux, one of the top re­gional ex­ec­u­tives of Ger­man con­sult­ing firm Roland Berger.

To bet­ter com­pete with other es­tab­lished ri­vals from both do­mes­tic and global mar­kets, sports­wear man­u­fac­turer Nike Inc opened a mas­sive store in Shang­hai last month. Nike aims to at­tract dig­i­tal-savvy younger Chi­nese con­sumers with its dig­i­tal in­te­gra­tion, in­no­va­tions and per­son­al­ized ser­vices.

“As the gov­ern­ment has al­ready low­ered its value added tax on im­ports as well as taxes on ve­hi­cles and auto parts, medicines and con­sumer goods, the CIIE will help push more goods and ser­vices trade deals be­tween Chi­nese and global com­pa­nies,” said Sang Baichuan, a pro­fes­sor of in­ter­na­tional trade at the Univer­sity of In­ter­na­tional Busi­ness and Eco­nom­ics in Bei­jing.

ZHANG YUN / FOR CHINA DAILY

A shop­per picks im­ported prod­ucts at a su­per­mar­ket in Taiyuan, Shanxi prov­ince.

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