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Speech by Consul General Zhang Ping at the Seminar on China-US Trade: Past, Current and Future

It gives me great pleasure to attend today’s seminar on China-US trade relations. This is an event jointly sponsored by the Los Angeles Area Chamber of Commerce and the Chinese Consulate General in LA to commemorate the 40th anniversary of establishment of diplomatic relations between China and the US and to promote sub national economic and trade cooperation between China and Southern California.

On behalf of the Chinese Consulate General, I wish to extend warm welcome and thanks to all the distinguished guests for your attendance and particularly to our distinguished speakers and panelists for kindly agreeing to come to share your views and insights with our audience. My thanks also go to LA Area Chamber of Commerce, the Los Angeles Regional Export Council and my consulate colleagues for your valuable assistance and hard work which makes this event possible.

Last weekend, we were saddened to learn the unfortunate news of passing of President George H.W. Bush, the 41st president of the United States. President George H.W. Bush was an old friend of the Chinese people. The Chinese people will remember his great contribution to the China-US relations. Before I proceed to the trade topic, I wish to pay tribute to him.

Ladies and gentlemen,

January 1st of next year marks the 40th anniversary of the establishment of diplomatic ties between China and the United States. Over the past 40 years, thanks to the joint efforts, China-US relations have achieved historic progress and become one of the most important bilateral relationships in the world.

As we look back at the journey that China-US relations have gone through, we have found economic and trade relationship is one of the areas that has most rapid and dynamic development. Yet it is also one of the areas that encountered many frictions and difficulties. Today, against the backdrop of the current trade frictions, the bilateral economic and trade ties have come to another critical point. It is necessary for us to review the past, in order to draw some useful experiences and lessons to help us to better meet the challenges of today and find the right path forward.

If we compare some of the statistics between the past and the present, it is an obvious fact that the development of the bilateral economic and trade ties over the past 40 years is enormous.

In 1979, there was only US$ 2.45 billion of trade in goods. In 2017, two-way trade in goods has grown to US$ 583.7 billion, a 233 fold increase from 1979. Today, the US has become China’s largest export market and sixth largest source of imports.

In 1979, there was literally no services trade nor direct investment between our two sides. In 2017, two-way trade in services rose to US$ 75 billion, an increase of 3.4 times compared with the figure in 2007. China is now the third largest market for US service export.

The two-way investment between China and the U.S. exceeded US$ 230 billion. By the end of 2017, there were approximately 68,000 US-funded enterprises in China with over US$ 83 billion in actualized investment. The stock of Chinese direct investment in the US amounted to approximately US$ 67 billion.

On the sub national level, China has become a major partner of trade and investment in many states. China is California's largest trading partner, the third largest export destination for goods, and the fourth largest export destination for service. In 2017, trade in goods with China accounted for 28.7% of California's total foreign trade, and exports of goods to China accounted for nearly 10% of California's total exports. Nearly one third of the trade between China and the U.S. went through the Los Angeles customs district. More than half of the cargo handled by the Port of Los Angeles and two-thirds of the cargo handled by the Port of Long Beach were related to China.

California is the top state in attracting Chinese investment. From 2000 to 2017, California attracted nearly US$ 30 billion of Chinese investment. Chinese companies, such as BYD, International Vitamin Group, Greenland and many others, are the successful examples of Chinese investment.

California ranks first among all the states for the number of Chinese students. In 2016/17 school year, over 60,000 Chinese students studied in Californian universities and colleges. California is also the most popular destination for Chinese tourists. In 2017, about 1.4 million Chinese tourists visited California, among which 1.1 million visited the Los Angeles area.

Over the last 40 years, China-US economic and trade cooperation brought tangible benefits to both our countries and peoples, which not only promoted China’s economic development, integration into the global economy and improvement of technology and management, but also provided the US companies with a wide range of business opportunities in Chinese market, which played a big part in driving US economic growth, creating jobs, increasing exports, lowering living costs and raising real purchasing power for US consumers.

In 2015, US exports to China and US-China two-way investment supported 2.6 million jobs in the US. Chinese investment covered 46 states of the US accounting for 98% of the congressional districts, generating more than 140,000 jobs, most of which are in manufacturing.

With the growth of Chinese economy, China has become one of the top five export markets of goods for 46 states, one of the top five export markets of services for all 50 states. In 2016, US firms in China realized US$ 606.8 billion of sales revenue and profits exceeded US$ 39 billion.

What we have achieved in our bilateral economic and trade relationship does not come easily. Over the course of its four decade long development, there were good times and bad times. There were times that both countries joined hands to sustain the world financial crisis. There were breathtaking moments on MFN and PNTR when the fate of China-US trade relationship hinged on a few vital votes in the Congress. There were protracted and tough negotiations on China’s WTO entry, which lasted for 15 years; so long that it made, in Premier Zhu Rongji ‘s words, the black hair turn into grey hair, not to mention that there were numerous disputes and arguments on specific issues such as textiles, beef, poultry meat, etc. However, most of the time, we managed to overcome the difficulties and find solutions acceptable to both sides.

The recent trade frictions as a result of US imposition of tariff measures on Chinese imports are somewhat unprecedented both in scale and intensity in the history of China-US trade relations. The good news is that the meeting between President Xi and President Trump on the side line of the G20 Summit in Argentina produced positive results and both sides agreed to halt the further escalation of friction to allow the working teams of both sides to work out current disputes. This again proves that trade war produces no winners and is in no body’s interest. Negotiation and consultation based on mutual respect and equality is the only way out.

As we look at the twists and turns, ups and downs that the bilateral economic and trade relations have gone through, there are important experiences and lessons that we can learn from the past.

We should take a long term strategic vision, realizing that we have many common interests not only in bilateral areas, but also on many global and regional fronts. 40 years ago, it was the common interest that made us come together. Today, our common interests are far greater than the differences. As China-US relationship assumes more and more global significance, any deterioration of the relationship would cause negative impact on world peace and economic wellbeing. In face of the complex and changing international situation, it is important that we proceed from the fundamental interest of our two peoples as well as the people of the world at large when handling bilateral issues to ensure that the bilateral relations always stay on the right track.

We should enhance strategic mutual trust and reduce the trust deficit by promoting better communication and mutual understanding. The current difficulty in bilateral relations has a lot to do with the misunderstanding and misperception of China’s strategic intention. It will be very dangerous if we base our policy on suspicion or misperception. China is a country with a proud history and civilization. Like any other countries, China has its sovereignty rights and legitimate interests that need to defend and we have the right to develop ourselves. China is committed to building a China-US relationship of non-conflict, non-confrontation, mutual respect and win-win cooperation. China and the US are partners for cooperation, not strategic rivals. China‘s development is an opportunity, not a threat. China’s development is aimed at providing a better life for its people, rather than challenging or replacing any nations. While competition may be inevitable, it should be conducted in a benign way, rather than confrontational manner.

We should take the right approach in handling our differences. China is the world’s biggest developing country and the United States is the biggest developed country. It is only natural that our two countries have differences and even frictions as our economic and trade ties grow closer. Under the current circumstances, we should take a constructive approach to manage differences rather than blame each other. We should take care of each other’s concerns and interests while seeking solutions through negotiations. Though we might not be able to settle all the disputes at one time, however, we can find temporary solutions to allow us to have more time to work out long term solutions to those tough issues.

We should work together to achieve win-win results for the benefits of both sides. China-US economic and trade relationship is mutually beneficial in nature. History proves that cooperation is the only right choice for China and the US, which will deliver win–win results whereas confrontation will end up with a loss for both sides. Our economic interests are so closely connected and intertwined. Zero sum or disengagement is neither possible nor the right option.

Ladies and gentlemen,

Looking ahead, though the journey in front for the China-US economic and trade relations may still be bumpy, we have the confidence that, with the further economic development and greater measures of reform and opening up in China, and with the joint efforts of both sides, the relationship has a great potential for development and will come up with a bright prospect.

California is always the active participant and supporter of China-US economic and trade cooperation. To further advance the existing economic and trade ties between China and California, especially Southern California, I think we should do the following:

First, make better use of the existing sub-national mechanisms to bring into full play their roles in promoting exchange and cooperation.

Currently we have a California and Chinese Provinces Joint Working Group on Trade and Investment Cooperation ( Joint Working Group ), established by Chinese Ministry of Commerce, the State of California and 7 Chinese provinces. For the city of LA, there is LA-Guangzhou-Auckland Tripartite Economic Alliance. These are great platforms for the sub national cooperation between California and Chinese provinces and cities. We need to ensure that these mechanisms continue to play their role as the promoter, facilitator and coordinator of the economic and trade cooperation between China and California.

Second, more interactions and engagements between the local government officials, business communities and groups of the two sides.

Face to face meeting and direct communication promotes better understanding and business opportunities. We welcome local elected officials, legislators as well as business leaders to visit China more often to engage with their Chinese counterparts so as to explore new ways and areas of practical cooperation. We encourage and welcome chambers of commerce, industry associations and the business groups to play a greater role in that regard.

Third, identify priority areas and stay focused to achieve concrete results.

Infrastructure, bio-pharmaceuticals, electronic information, agriculture, energy, manufacturing, tourism and environmental protection were identified by the Joint Working Group as key areas for cooperation between California and China. These are also the areas that have great potential for economic growth and job creation. It is important that we enhance coordination and consultation, work out long term implementation plan and bring in more resources to the cooperation projects.

I believe with the concerted efforts from both sides, we will be able to seize the opportunities, give full play to our respective advantages, and achieve more win-win outcomes out of the China-California economic and trade cooperation so that we can contribute our share to the development of China-US relations. On that note, I wish to thank you for your long term support and look forward to working with you for a better China-US relationship and greater cooperation between China and Southern California.

Thank you.

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