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Speech by H.E. Ambassador Liu Xiaoming at the Aberdeen Standard Investments Breakfast: Have Confidence in China's Economy and a Better Future for China-UK Relations
London, 13 February 2020
2020/02/14

Sir Douglas,

Mr. Browne,

Ladies and Gentlemen:

Good morning!

It is a real delight to join you at the Aberdeen Standard Investments Breakfast.

Today is the 20th day of the first month of the Year of the Rat. As the Chinese people often say, "The festival is not over until the end of the first month of the new year." Therefore, it is not late yet to extend my Chinese New Year greetings to you. I wish you all present today a happy, healthy and prosperous Year of the Rat!

As suggested by Mr. Browne, I would like to share with you my views on China's economy and China-UK relations.

Let me begin with the prospects of China's economy.

There have been worries recently about the impact of the Covid-19 outbreak on China's economy. Some say the epidemic may drag down growth in China and even the world.

In my opinion, the economic impact of the epidemic should be seen from a comprehensive and reasonable perspective. The impact is short-term and temporary. It will not change the momentum of steady and long-term economic growth in China. I have full confidence in this, and here are the three main reasons for my confidence.

First, China's economy has a solid foundation.

In 2019, China's GDP stood at $14.4 trillion, increasing by 6.1%. This growth rate is much higher than the world average. It is in fact the highest in the trillion-dollar club. Over the years China has been contributing about 30% of world economic growth.

These are attributable to the solid foundation of China's economy:

  • China is the world's largest trader in goods, biggest holder of foreign exchange reserves and second largest destination for foreign investment.
  • China is the only country in the world that has all the industries under the industrial classifications issued by the UN.
  • China has the world's most extensive high-speed rail network, with the length of rails in operation reaching 35,000 kilometres. That's more than two thirds of the world's total high speed rails.

China won the battle against SARS in 2003 and dealt with the international financial crisis of 2008 successfully. We are experienced, capable and confident in dealing with similar crisis. And we will be able to steer our economy back onto an upward trajectory and achieve sustained growth.

Going forward, China's economy will keep the mid-to-high-speed growth rate. It will remain a key stabiliser and powerhouse for world economic growth.

Second, China's economy has room for growth.

As the largest developing country in the world, China has enormous potential for further development.

In 2019, China's per capita GDP passed the 10,000-dollar line for the first time in history, but this is still only one fourth of the UK and one sixth of the US.

China's urbanisation rate is 60.6%. Compared with Western industrialised countries where urbanization is 80%, there is a lot of room for growth.

China's enormous market, with more than 400 million middle-income consumers, is a unique strength. Retail sales of consumer goods in China have exceeded 40 trillion RMB yuan. Going forward, consumption will play an even bigger role in driving China's economic growth.

China has seen thriving development in digital economy, cyber economy and sharing economy. In 2019, on-line retail sales increased by 19.5% year-on-year.

China is deepening supply-side structural reform. It has set up the world's largest health care network and will take further steps, including increasing investment, to improve health care services. These will give further impetus to economic and social progress.

Third, China is opening up wider to the world.

The Foreign Investment Law and its implementing regulations took effect on January 1st this year. This law further broadens market access for foreign investment, increases imports of goods and services, enhances protection of IPR and increases openness in the financial sector.

This law will especially benefit joint venture firms in securities, futures, fund and life insurance sectors by bringing forward the deadline for lifting the foreign ownership caps from 2021 to 2020.

Last month, China and the United States reached the phase-one economic and trade agreement. This agreement is in line with market and business rules as well as WTO rules. It is beneficial to China, to the US, and to the whole world.

China is taking further steps to open up its market, explore new frontiers and improve business environment, including treating all locally registered businesses as equals.

With regard to the Covid-19 outbreak,

  • The Chinese Government has allocated special fund for epidemic prevention and control;
  • The People's Bank of China and other relevant institutions have rolled out measures to support the market;
  • And the Chinese business community has been playing an active part in fighting the outbreak.

China has the capability and confidence to minimise the economic impact of the epidemic. The World Bank, the IMF and well-respected economists in the world have all agreed that the impact is temporary, and they have full confidence in China's future. China's economy is highly resilient and enjoys enormous potential for growth in the mid-to-long term.

Ladies and Gentlemen:

Now let me turn to the second topic: How shall we define China-UK relations in the context of Brexit?

In 2019, China and the UK celebrated the 65th anniversary of diplomatic relationship at the chargé d'affaires level. Our relations have made steady progress and our cooperation across the board has maintained a sound momentum. In particular, our business cooperation has produced fruitful outcomes and created numerous highlights despite the continued slowdown of world economy.

First, new growth was achieved in bilateral trade and investment.

  • The tenth China-UK Economic and Financial Dialogue was held in London. It was a success, produced 69 outcomes and took China-UK business cooperation to a new level.
  • One of the outcomes was that British beef would be given access to Chinese market.
  • Thirty British companies attended the second China International Import Expo.
  • The 15th World Chinese Entrepreneurs Convention was held in the UK for the first time. It has drawn businesses from both our two countries and saw a number of cooperation agreements signed.
  • China-UK trade in goods totaled $86.3 billion in 2019, increasing by 7.3% year-on-year, and doubling the figure ten years ago when Mr. Browne was Minister of State for Foreign Affairs.
  • Direct investment from China to the UK exceeded $20 billion.

Second, new breakthroughs were achieved in China-UK financial cooperation.

  • The Shanghai-London Stock Connect was launched -- the first-ever link between the Chinese and a foreign capital markets.
  • Shanghai Pudong Development Bank, Agricultural Bank of China and China CITIC Bank opened branches in the UK.
  • ICBC issued pound-denominated bonds -- the first-ever by a Chinese bank.
  • Ant Financial purchased Worldfirst, a UK-based cross border payments group.
  • London became the world's largest offshore trading centre and the second largest offshore clearing centre of the Chinese currency, RMB. The total clearing volume stands at 43 trillion RMB yuan.
  • Heng An Standard Life set up the first-ever foreign owned pension insurance business in China.

Third, new driving forces were created for China-UK cooperation on the Belt and Road Initiative (BRI).

In April 2019, Philip Hammond, then Chancellor of the Exchequer, attended the second Belt and Road Forum for International Cooperation in China as the special representative of the Prime Minister. He praised BRI as "a project of truly epic ambition".

China and the UK signed an agreement on cooperation in third markets, which created new opportunities for China-UK cooperation on BRI. British companies and financial institutions engaged in active cooperation with China in third markets along the BRI routes, providing financing, expertise and services.

In 2020, China will achieve its first centenary goal, namely, to complete the building of a moderately prosperous society in all aspects, and eliminate absolute poverty. The UK will begin to leave the EU and write a new chapter of a "global Britain". The year 2020 also marks the fifth anniversary of the China-UK "Golden Era".

In this special year, it is my hope that friends from the British business community present today will work in the following three aspects to promote broader, higher and deeper business cooperation between our two countries.

First, I hope you will have more confidence in China's economy and share the new opportunities created by China's growth.

China is pursuing high-quality development. We will open up wider and at a higher level. Our economy is highly resilient. Our consumer market is 1.4 billion strong.

China will create more opportunities for the world and continue to be a powerhouse for world economic growth.

The UK is the cradle of the first industrial revolution and still a world leader now in science and technology.

As the fourth industrial revolution unfolds, China and the UK should leverage our respective strengths, enhance cooperation on science, technology and innovation, and jointly lead the new round of economic globalisation.

The Belt and Road Initiative is the most popular platform for cooperation in the world. It is a road of opportunities, a road for shared benefits, and a road to prosperity.

Sir Douglas has engaged deeply in China-UK cooperation on BRI. He has made important contribution. I hope more British friends from the business community will follow his example, seize the opportunities and take an active part in China-UK cooperation. I am sure our cooperation will deliver win-win results.

Second, I hope you will make concerted efforts to produce new outcomes of cooperation.

With highly matching development strategies and complementary strengths in the business sectors, China and the UK enjoy enormous potential for cooperation. Areas for deeper cooperation could include trade and investment, infrastructure, green finance and high technology. Areas such as artificial intelligence and green energy hold new potential for cooperation.

The UK has rich experience in the area of public health. Our two sides could enhance cooperation on medicine and health care so as to safeguard the health of our peoples.

Later this year, China will host COP15 to the Convention on Biological Diversity, and the UK will host COP26 to the United Nations Framework Convention on Climate Change. These two conferences create invaluable opportunities for closer China-UK cooperation on addressing climate change and enhancing environmental and wildlife protection.

Third, I hope you will remain resolved in building an open world economy.

Economic globalisation and integration are the irreversible trend of our times. Unilateralism and protectionism are in nobody's interest. In face of the opportunities and challenges in economic globalisation, the right choice is to maximize the opportunities and join hands to address the challenges.

China and the UK agree on supporting free trade and opposing protectionism. It is important that our two countries continue to safeguard the multilateral trade system with the WTO as its cornerstone. We should strive to ensure economic globalisation is more open, inclusive, balanced and win-win.

It is my hope that friends from the British business community will seize the new opportunities after Brexit and work with China to build an open world economy.

Ladies and Gentlemen:

I know you have been following the latest on Covid-19 closely. Since the outbreak, the Chinese Government has attached great importance to controlling the disease and adopted a series of strict measures. President Xi Jinping has made important instructions on many occasions and called three meetings of the top leadership to map out further plans of prevention and control.

Now the whole nation is mobilized to fight Covid-19. Nearly 20,000 medical professionals from all over the country have arrived in Wuhan and other cities and counties in Hubei Province. Two emergency hospitals have been built in ten days. The Chinese people are united in this "people's war" against an invisible enemy. On the whole, the epidemic is preventable, controllable and curable.

I am confident that, under the strong leadership of the Communist Party of China, and with the solidarity of the Chinese people and the broad support from the international community, we will win the battle against Covid-19!

Ladies and Gentlemen:

A Chinese saying goes, "Confidence is more precious than gold." There is a similar saying here in Britain, which goes, "Confidence can move mountains."

In this time of challenge, we must have confidence and strive forward with determination; we must seize the opportunities for development and overcome difficulties. If we can do this, we will embrace a brighter future.

It is my hope that the business community of China and the UK will pull in the same direction and join hands to write a new chapter of China-UK business cooperation and deliver more "golden fruits" for the China-UK "Golden Era".

Thank you!

Now I would like to take your questions.

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