Speech by Chinese Vice President Xi Jinping at the Opening Session of the China-U.S. Economic and Trade Cooperation Forum

(Los Angeles, U.S.A., February 17, 2012)

It is a real pleasure to come to the beautiful city of Los Angeles and attend the opening session of the China-U.S. Economic and Trade Cooperation Forum on the occasion of the 40th anniversary of President Richard Nixon's visit to China and the issuance of the Shanghai Communiqué. Los Angeles is a major hub in China-U.S. economic and trade exchange. About 40 percent of China-U.S. trade is handled here through the Los Angeles Customs District every year. It is therefore a fitting venue for the China-U.S. Economic and Trade Cooperation Forum, which offers a good platform for closer exchanges and deeper cooperation between our business communities. I wish to express my sincere congratulations on the opening of the forum, and extend warm greetings and best wishes to all the friends who have played their part in promoting China-U.S. business ties.

Over the past 40 years, especially over the past 33 years since the establishment of diplomatic relations, China and the United States have moved from mutual estrangement to close exchange, with their interests increasingly intertwined. The two governments have put in place over 60 dialogue mechanisms at various levels and in different fields. Our people-to-people exchanges have been growing. More than 3 million mutual visits are made every year, with nearly 10,000 people traveling across the Pacific each day. The China-U.S. relationship has become one of the most important, dynamic and promising bilateral relationships in the world. As I look back over the years, I find the following three aspects most impressive in China-U.S. business relations.

First, business cooperation has become the biggest highlight in China-U.S. relations. The mutually beneficial business cooperation between China and the United States is expanding both in scope and scale and is moving toward a higher level. At the time when we established diplomatic ties, our two-way trade was less than $2.5 billion. Last year, it reached $446.6 billion, representing an increase of more than 180-fold. At the current growth rate, it is expected to exceed $500 billion this year. China and the United States have long been each other's second largest trading partners. For 10 years running, China has been one of the fastest growing export markets for the United States. It is the biggest market for American agricultural exports and an important market for American machinery and electronic products such as automobiles and aircraft. In 2011, the United States exported $23.3 billion worth of agricultural products to China. It means that on average, each American farm sold more than $10,000 worth of farm produce to China.

Two-way contracted investment between China and the United States is now approaching $170 billion. There are over 60,000 U.S.-invested projects in China and their total sales revenue reached $223.2 billion in 2010. A survey by the American Chamber of Commerce in China last year showed that in 2010, 85 percent of U.S.-invested companies in China saw their revenue grow and 41 percent of them had profitability higher than their global average. At the same time, Chinese companies are getting increasingly enthusiastic about investing in the United States. Over 1,600 companies have been established in the United States through direct Chinese investment, and they cover manufacturing, wholesale, retail, business services, finance, research and development, geological prospecting and so on. It is gratifying to see the strong momentum of such investment activities.

Second, mutual benefit has been the most salient feature of China-U.S. economic and trade cooperation. There is a view which suggests that China is the winner and the United States the loser in bilateral economic and trade relations. Such a view does not square with facts. China has indeed benefited a lot from its growing business ties with the United States over the past 40 years, especially the past 33 years since the establishment of diplomatic relations. So has the United States. Both China and the United States are winners. This is truly a win-win situation.

First of all, the large import of quality and inexpensive goods from China has helped the American people improve their real spending power and living standards and contributed to the efforts of the United States to maintain growth. According to the findings of the U.S.-China Business Council, economic cooperation and trade with China has served to propel economic growth and keep consumer prices relatively low in the United States. Business cooperation with China has, in effect, added an extra $1,000 to the annual disposable income of each American household.

In addition, the growing China-U.S. business ties have created lots of job opportunities in the United States. Available statistics show that between 2001 and 2010, over 3 million new jobs were created in the United States thanks to exports to China. Chinese companies in the United States have also contributed to job creation. For instance, the West Basin Container Terminal in Long Beach, Los Angeles, invested by China Shipping, has altogether offered nearly 10,000 job opportunities in the United States. China's Wanxiang Group has invested in roughly 30 projects in the United States, providing some 5,000 jobs locally. The opening of the Haier Industrial Park in South Carolina in 1999 by China's Haier Group has created over 1,000 jobs for the city of Camden, with at least one employee coming from every 10 Camden households. Let me give you another example. In 2009, a renowned U.S. multinational ran into serious difficulties. Yet its joint venture in China was the market leader, whose product sales represented the largest source of revenue for the parent company. The profits of its joint venture in China gave the company much needed cash flow and confidence. It eventually pulled itself together and returned to the stock market, thus saving tens of thousands of jobs for the company and its associated businesses in the United States.

Third, structural complementarities are the greatest advantage in China-U.S. economic and trade cooperation. China's large reserve of skilled labor and its potential as a late starter in the market make China a major manufacturing base in the world. The United States, on its part, boasts the most sophisticated high-end manufacturing industry and modern service industry, as well as the world's biggest consumer market. Our two economies are cut out for each other, making our cooperation all the more necessary and all the more beneficial to both sides. China views and approaches China-U.S. economic and trade cooperation as well as friction from a strategic and long-term perspective. We have worked hard to offer the necessary conditions for the smooth growth of our business ties and address problems that have occurred. The various bilateral dialogue and cooperation mechanisms have enabled us to conduct timely and in-depth exchange of views on overarching, strategic and long-term issues of shared interest. They have played an important role in helping us build consensus, resolve differences and advance cooperation, and contributed to promoting strong, sustainable and balanced growth of the world economy and strengthening global economic governance.

The agreement reached between President Hu Jintao and President Barack Obama in 2011 on building a China-U.S. cooperative partnership based on mutual respect and mutual benefit fully captures the features and requirements of China-U.S. relations under the new circumstances. We now stand at a new historical starting point. To promote sustained, sound and steady growth of mutually beneficial business ties is the shared responsibility of our two governments, and it represents the wish of the business communities in both countries. In this connection, I propose we take steps in the following four areas:

First, we need to seize market opportunities and promote balanced trade growth. In the 12th Five-Year Plan period from 2011 to 2015, the Chinese Government will speed up the shift in its economic growth model, accelerate economic restructuring and implement the strategy of expanding domestic demand. We will encourage more consumption, imports, outward investment and innovation. The U.S. government is implementing the National Export Initiative and vigorously attracting overseas investment. These mutually complementary macroeconomic policy goals offer new important opportunities for China and the United States to deepen economic cooperation and trade. The year 2012 is a crucial year for the implementation of the 12th Five-Year Plan. China's economy will make progress while maintaining stability and continue to achieve steady and robust growth. There will not be a "hard landing." By 2015, China's total retail sales of consumer goods are expected to reach 32 trillion yuan ($5 trillion), its domestic market will become one of the largest in the world, its total imports are expected to surpass $8 trillion, and its outbound investment will exceed $500 billion. This will create enormous business opportunities for countries around the world. We hope that the United States will seize these opportunities to increase the export of competitive civilian hi-tech products to China.

Some statistics I have read indicate that tight U.S. control on hi-tech exports has deprived many competitive U.S. companies of the opportunity to enter the Chinese market. Between 2001 and 2011, China's import of hi-tech products increased from $56 billion to $463 billion, up by 23.5 percent annually. Yet in the same period, the share of U.S. hi-tech products in China's total hi-tech imports dropped from 16.7 percent to 6.3 percent. If in 2011, the share of U.S. products in China's total hi-tech imports had been kept at the 2001 level, then the U.S. exports to China would have increased by as much as $50 billion. It is clear that relaxing export controls on China is highly beneficial to the United States, and that the most effective way to address China-U.S. trade imbalance is to expand U.S. exports to China, not to restrict China's exports to the United States.

Second, we need to foster a sound environment and raise the level of two-way investment. China joined the World Trade Organization (WTO) in 2001. Since then, China has fully implemented its WTO commitments. We have made tremendous efforts to revise laws and regulations, substantially lower the threshold for foreign investment, liberalize access to foreign trade operations and oppose protectionism in various forms. Chinese companies, like their American counterparts, have won more international customers through hard work, innovation and fair competition. We will continue to expand the opening up of China's economy, and encourage all companies in China, foreign-invested ones included, to engage in fair competition and pursue innovation in the Chinese market, so that they will not only get a bigger share of the market, but also contribute to technological progress and social development. Intellectual property rights (IPR) protection provides the incentive for innovation. China is taking steps to build a more open and transparent legal and policy environment. We are strengthening IPR protection through a mixture of judicial and administrative means, including the establishment of a vice-premier-level coordination mechanism for IPR protection, in order to provide a safer business environment for both domestic and foreign-invested enterprises. We hope that the United States will continue to offer a fair and convenient environment for Chinese enterprises investing in America, adopt an objective and sensible approach to investment by Chinese enterprises, and make sure that political factors do not interfere with economic cooperation.

We hope that the United States will keep its security review of foreign investment open, fair and transparent, speed up the negotiation process on the bilateral investment agreement, and make Chinese companies feel more confident about investing in the United States.

Third, we need to expand cooperation and foster new growth areas in China-U.S. business relations. It is the common strategic choice of both China and the United States to promote industrial upgrading and economic restructuring as the two countries endeavor to shape their respective new growth models. I hope that enterprises from the two sides will seize the opportune moment of industrial restructuring in both countries and step up cooperation in such emerging sectors as clean energy, information technology, electric vehicles, new materials, pharmaceuticals and medical equipment and remanufacturing. By doing so, we will add fresh impetus to China-U.S. business cooperation. We should encourage our enterprises to intensify cooperation in the construction and financing of high-speed rail, highways, ports, bridges, smart grids, sports and medical centers and livable communities, and strengthen exchanges in related technologies. I hope the Chinese and American business leaders present today will take a more active part in such cooperation. We encourage you to explore new ways and means of cooperation and translate opportunities into greater benefits.

Fourth, we need to work together to address challenges and strengthen cooperation in global governance. China stands ready to maintain and strengthen communication and coordination with the United States on global economic issues, such as fighting the international financial crisis, advancing the Doha Round negotiations and reforming the International Monetary Fund. We should play a responsible and constructive role as big countries and work together to tackle regional and global challenges, implement the positive outcomes of the Group of 20 Summit in Cannes, and contribute our share to the reform of the global governance system and steady and sustained growth of the world economy. The two countries should also step up communication and coordination on Asia-Pacific regional cooperation and build a pattern of cooperation between China and the United States in the Asia Pacific featuring positive interactions and win-win outcomes.

Thanks to reform and opening up, China has enjoyed fast development and made remarkable achievements over the past 30 years. Yet China remains the largest developing country in the world. We have set two major goals for the first half of this century, namely, to build a moderately prosperous society at a higher level to the benefit of the more than 1 billion Chinese people by 2020 and to build China into a modern socialist country that is strong, prosperous, democratic, culturally advanced and harmonious by 2050. To achieve the two goals requires an unwavering commitment to reform and opening up, a stable domestic environment and a peaceful surrounding and international environment. We sincerely hope that the United States and the entire international community will appreciate the Chinese people's aspiration to get rid of poverty and make the country prosperous and strong, have confidence in the Chinese people's sincerity and resolve to pursue peaceful development, respect the great value that the Chinese people place on the country's sovereignty, security, territorial integrity and social stability, and support China's peaceful development in various ways. A prosperous and stable China will not be a threat to any country. It will only be a positive force for world peace and development.

Let us join hands and work together to promote long-term, healthy and stable economic relations and trade. Together, we will create a better future for China-U.S. business cooperation.