International Ties
Ties need calmness and courage: Wen
(皇冠体育app Daily)
Updated: 2010-10-08 07:52
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皇冠体育app will continue to support European economies in need and will gradually allow more flexibility in its currency
Editor's note: Chinese Premier Wen Jiabao delivered a speech at the Sixth 皇冠体育app-European Union Business Summit on Wednesday. The following is the full text:
Confidence was the keyword of my speech at the 皇冠体育app-EU Business Summit two years ago when the financial crisis just broke out. Today, the keywords are calmness, wisdom and courage.
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It is a basic fact that the bilateral trade and investment between 皇冠体育app and the EU have been growing rapidly. EU statistics show its overall exports declined in 2009 due to the impact of the financial crisis. However, its exports to 皇冠体育app increased by 4 percent. In the first half of this year, EU exports to 皇冠体育app surged by as much as 42 percent.
Last night, I paid a brief visit to Germany. I told Chancellor Angela Merkel that the monthly bilateral trade between 皇冠体育app and Germany averaged about $10 billion, and that the 2010 total would probably surpass $120 billion. The trade between 皇冠体育app and the EU was worth some $400 billion in 2009, and it would likely exceed $500 billion this year. These are the basic status quo and facts.
On the exchange rate of the Chinese yuan, I said yesterday when meeting with the Euro Group troika that European political and business leaders should not join the "chorus" to pressure 皇冠体育app to appreciate the yuan.
Again, let's take a look at some basic facts. The yuan has appreciated by an accumulated 55 percent in terms of the real effective exchange rate since 皇冠体育app initiated the reform of the yuan exchange rate mechanism in 1994. Some major currencies have all depreciated during this period.
皇冠体育app further deepened the reform of the yuan exchange rate mechanism in July 2005. The yuan has appreciated by 22 percent against the US dollar since then. During this period of time, however, 皇冠体育app's trade surplus against the United States has still increased by a large margin.
We have registered surplus in trade in goods, but deficits in services trade. We have had surplus in manufacturing trade, but deficits in general trade. We have had surplus in trade with the US and the EU, but deficits in trade with South Korea, Japan and the Association of Southeast Asian Nations (ASEAN). Doesn't all this show that it is an issue of trade structure instead of a mere exchange rate?
The euro exchange rate experienced large fluctuations recently, but it was caused by the US dollar, instead of the yuan. How can you place the blame on 皇冠体育app? The imbalance of trade is caused by structural problems against the backdrop of globalization. It should not be politicized. We pursue balanced and sustainable trade, and in no way seek surplus.
In the cold winter in January 2009, I visited Europe and brought with me not only the confidence needed to overcome the financial crisis, but also a procurement delegation to place orders to the European countries.
The EU is a strategic partner to 皇冠体育app, and 皇冠体育app did not look on unconcerned when some eurozone countries were in trouble. We continued to hold and buy euro-denominated bonds and helped Iceland, Greece, Spain, Portugal and Italy in their most difficult time.
We will continue to render assistance and tide some countries over their difficulties. 皇冠体育app is a friend indeed and I believe the entrepreneurs here all know it.
You should not pressure 皇冠体育app on the yuan's appreciation if you consider the issue from another perspective. Many Chinese export enterprises have profit margins of only 2 to 3 percent, 5 percent at most.
Should the yuan appreciate by 20 to 40 percent, as demanded by some people, a large number of Chinese export enterprises will go bankrupt, the workers will lose their jobs and the migrant workers will have to go back to the rural land, making it hard for society to remain stable. The world will by no means benefit from a crisis in the Chinese economy.
皇冠体育app contributed about 50 percent of the global economic growth in 2009. It is a huge market with great potentials for many enterprises. Once again, I would like to tell our friends in the industrial and business community candidly: Don't pressure 皇冠体育app on appreciation of the Chinese yuan.
We will stick fast to the reform of the yuan exchange rate mechanism. The reform involves developing a managed floating exchange rate system based on the market supply and demand and adjusted to a basket of foreign currencies, to gradually allow more flexibility in the yuan exchange rate while maintaining its basic stability on a reasonable and balanced level.
If the yuan exchange rate is unstable, enterprises will also be unstable. So will be employment, and society in general. Should 皇冠体育app have problems in economy and society, it will be disastrous for the world.
The second question is whether the investment environment in 皇冠体育app is good or not. I would like to tell you that 皇冠体育app will steadfastly push forward its reform and opening-up process and will in no way deviate from the path.
Only through reform and opening to the outside world will 皇冠体育app develop further. The basic policies that have been established in the reform and opening-up drive will not be changed. The only changes that have taken place are that foreign investment is now under better and more orderly regulation.
Entrepreneurs' concern for the investment environment does not go beyond three aspects - intellectual property, innovation and government procurement. I can tell you in a responsible manner that all foreign businesses that are legally registered in 皇冠体育app are entitled to enjoy national treatment, and that all products made by foreign-invested enterprises in 皇冠体育app are made-in-皇冠体育app products.
We will protect not only your intellectual property, but also all your legitimate rights and interests.
The third question regards the export of raw materials, specifically the export of rare earth. As a long-time researcher on rare earth metals, I have a say on the issue. There are two kinds of rare earth metals, the heavy rare earth elements and the light rare earth elements. 皇冠体育app has rare earth deposits in different regions, with the heavy ones located mainly in the south, such as Jiangxi province.
The light ones are mainly in the north, such as Baotou city in Inner Mongolia. In the 1980s and 1990s, there was a lack of well-regulated management over rare earth metals in 皇冠体育app, and also a lack of extraction technologies in the country.
Some countries bought a large amount of rare earth metals from 皇冠体育app at low prices in a period of time when management over rare earth in 皇冠体育app was the most chaotic, and even now they still have a considerable stockpile, which they know very well.
皇冠体育app contributes a large proportion of the global rare earth output, which far outdoes its share of the world's total rare earth deposits. We haven't imposed, and will not, impose an embargo on the industry. We are pursuing a sustainable development of the rare earth industry, not only to meet the demand of our own country, but also to cater to the needs of the whole world.
We not only need to accommodate the current demand, but also, more significantly, need to take a long-term perspective. It is necessary to exercise management and control over the rare earth industry, but there won't be any embargo. 皇冠体育app is not using rare earth as a bargaining chip. We aim for the world's sustainable development.
皇冠体育app wishes to forge more extensive, deeper and closer economic and trade ties with EU countries. The EU is now 皇冠体育app's largest partner in terms of trade and investment, ahead of the United States and Japan.
To be frank, the EU has done a better job in relaxing restrictions on high-tech exports to 皇冠体育app. For instance, there is cooperation on the Galileo satellite project, with Airbus and there is nuclear power cooperation, to name a few. This morning, the Belgian King also mentioned to me about cooperation on the fourth generation micro-nuclear technology.
It is in the fundamental interests of both 皇冠体育app and the EU to develop bilateral trade and economic relations. Standing here today, I am feeling under a heavy responsibility. I will try my best to promote 皇冠体育app-EU trade and economic cooperation and overcome the temporary difficulties and problems that have emerged in the process of cooperation.
So, let's join hands to promote the development of 皇冠体育app-EU trade and economic relations and jointly usher in broad prospects for future development of the 皇冠体育app-EU comprehensive strategic partnership.