Exclusive Interview with China's Commerce Minister Bo Xilai -- Part 2
Sunday, July 03, 2005DARREN GERSH, BUREAU CHIEF, WASHINGTON DC: I understand that currency is not your portfolio, but what do you think it will take to slow or bring down the US trade deficit with China?
COMMERCE MINISTER BO XILAI, PEOPLE'S REPUBLIC OF CHINA (THROUGH TRANSLATOR): The Chinese side has already taken note of the US position about its trade imbalance between our two countries. For China, we have not deliberately pursued a large trade surplus against any other country. Last year China's value of external trade was 1.15 trillion US dollars. However our surplus was nearly 20 billion US dollars
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In my opinion, a globally large trade surplus on the Chinese side is a kind of pressure on ourselves. Actually, we use a fairly large proportion of our trade surplus to buy a large amount of US securities in your market and actually the return rate is not very high.
Of course, I really want to know how we can buy more from the United States on the high-end product side. Due to the high-tech export controls we cannot buy those high-end products from your country. With regard to the low-end products, many of those low-end products actually are no longer being produced in the United States. So it really is quite difficult for me to know how we can buy more from your country. We can look into some numbers collected in recent years. We have been trying very hard to expand our imports from the US, and actually, this increase has been growing quite fast. The year 2002, the import from the US to China was $20 billion US dollars. The number in the year 2003 was $30 billion. And actually the number from last year was - the year 2004 - was already $44 billion US dollars. And meanwhile the last year US export growth rate to China was 31.9%. However, in the same period of time the average growth rate of your overall external trade to the rest of the world was nearly 12.9%. Therefore, in fact, we can prove that we have been working very actively to buy more from the U.S.
There is another very important detail. When we look into and evaluate our bilateral economic and commercial relations, we should not limit our focus only on trade in goods. We should also take into consideration the element of market occupation rate. And for China, the ability of the Chinese side to occupy the American market is merely on export trade -- for example, the export of textiles. However, for the US side, apart from export, you can also take a fairly large market share in China through investment. For example, through the means of investment, last year US companies have taken Chinese market share with a total value of $75 billion US dollars. And meanwhile, those American invested companies in China also made another export trade with a total value of over $70 billion US dollars. So you plus these two numbers together. The total number is already $150 billion US dollars. So you can see that is the true and genuine benefit that American companies can reap from the bilateral economic and trade relations with China.
GERSH: Let me ask you. As you know, Americans are very concerned about international property rights and copyright protection. We were walking around our hotel and saw copies of Revenge of the Sith on sale on the street. Many Americans say that China has done a great job in improving its legal system but has not done a good job on enforcement. Is that fair criticism?
BO: With regards to this IPR protection issue, actually I share the exact same feeling of the US population. Why we look into this very important issue, I myself hate very much the activity of piracy. And we believe even for the interest and benefits of our domestic Chinese industries we must improve our legislative and law enforcement efforts to better protect IPR's. Otherwise, if we were given 100 years time, we would not be able to develop ourselves and to make our people live a richer life. So you see, even from the benefits and interest of ourselves we must make the greatest efforts to have a better IPR protection.
The Chinese government has made a lot of great efforts to intensify law enforcement concerning IPR protection. We have already mobilized 300,000 to 400,000 Chinese people to take care of this law enforcement effort. And I would like to say these people are actually paid by the Chinese government, and last year we have seized and brought over 2000 people to courts due to the illegal activities and infringement. So while we look into the IPR protections, when we look into our battle against infringement and piracy, the highest Chinese leadership, including Premier Wen Jiabo and Vice Premier Wu Yi have, have attached the greatest importance to this issue.
However you must understand in order to have a better IPR protection, we must improve our education quality amongst the Chinese population. Compare in China at this moment we still have hundreds of millions of Chinese people whose educational level is merely at the middle school or even primary school level. So, for them, they even don't know what is IPR protection.
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So as a developing country, China has a very different situation here in this country from what you have in the United States, and also our countries are quite different in terms of educational quality. So in this regard, we still have a long way to go. But as a matter of fact, despite all these grave difficulties China and the Chinese government have already made tremendous progress in terms of IPR protection. We will not stop here. We will continue to move on.
GERSH: There are going to be many US workers and business people who are watching this program. Some of them are interested in trading with China; many of them may be worried about losing their jobs to trade with China. What would you say to those people?
BO: The first thing that I would like to tell them is that China actually reaps a very small proportion from the total benefit or profits that we earn from the exports of Chinese textiles to the US. The proportion we can take from that export is nearly 10%. For the rest, nearly 90%, it was actually taken by American importers, retailers, and the average consumers. Therefore, only when we can develop our bilateral trade on a mutually beneficial base we can make this trade cake larger and bigger and bigger. In the past several decades the value of our bilateral trade is increasing by dozens of folds. And actually, I believe that reflects the situation that our two countries enjoy a mutually complimentary and mutually beneficial trade relations, because our two countries have needs and demand on each other. So, as I said earlier, only on the basis of mutually beneficial situation we make these trade relations larger and larger.
And my second point is about employment or job opportunities. The Chinese textile industry provides valuable opportunities for those low income workers who are living in a difficult situation. And as a matter of fact, we are merely trading with the US at those low-end products. Meanwhile, we are open very widely our domestic service to the American companies. The WTO provides for totally 149 industries under the overall service sector. And within this 149, we have already opened 100 industries to foreign investors and business people. So this number is very close to the number for average developed countries and much larger than the number for average developing countries. Actually, even China's textile exports to the US itself has also already created a large number of jobs for American workers and basically these jobs are provided for and created in the retailing and circulation sector. According to our estimates, this number of job opportunities of around 400,000 to 500,000. And this number is absolutely not fewer than the number of job opportunities created by your own textile industry in the so-called golden age back 40 years ago.
And like other countries the US also needs to make its own domestic restructuring in order to create sufficient jobs for your workers. For some specific industries you can increase more job opportunities by expanding the development of your industries. However, for some other industries, even with some strong support from the government those industries cannot continue to develop or even survive. Therefore I believe restructuring of your industry is the fundamental way to provide adequate jobs to American workers. And even without the inflow of Chinese products, those job opportunities will be occupied or taken by other countries rather than by American workers.
I would like to make another quite important addition, which is also about jobs. Actually when we talk about this job opportunity or job issue, China and the US are actually having a kind of reciprocal trade off when we create jobs for each other. For example, the export of Chinese textiles to the US of course creates many jobs for the mass of Chinese textile workers. However, at the same time, we also open our service sector and import a large amount of, for example, soybeans from your country. And that absolutely has already created a lot of jobs for the workers in the service sector and agricultural sector. Let me make this scenario, if it is not China who has imported annually over then million tons of American soybeans, where can you export those things?
