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Ambassador Liu Xiaoming Attends CBI Webinar

On 20 May 2020, Ambassador Liu Xiaoming joined CBI Director-General Dame Carolyn Fairbairn and Vice President Lord Karan Bilimoria in a webinar chaired by former Director of BBC News James Harding and attended by more than 1,500 CBI members. The full transcript of the Q&A with Ambassador Liu is as follows:

James Harding: Ambassador Liu, will you start, if you would, by just giving us a sense of where you think the Chinese economy is now in the restart process?

Ambassador Liu: Yes, COVID-19 has a very bad impact on China's economy. You know there is 6.8% contraction of GDP in the first quarter. This is the first time since China started this record since 1992. And so that's a big impact. But I think the fundamentals of Chinese economy remain sound and unchanged. So we expect a rebound of the economy. According to IMF forecasts, China's economy will rebound by 9.1% next year. We have seen encouraging signs in April. 99.1% of the large scale businesses have restored their production, and 95.1% of their staff are back to work. And also the PMI was above the threshold in both March and April, reaching 50.8% in April. So we do have some encouraging signs.

James Harding: We're learning in the UK, that the nature of the recession is very uneven, that it has an impact on smaller businesses that is different from big ones. If you saw the unemployment numbers, the analysis of that is it affects younger people and it has a disproportionate effect on women. When you look at the 6.8% drop in the economy in China, can you give us a little understanding of how that is playing out in China, the extent to which region or the kinds of sectors and businesses that are particularly affected?

Ambassador Liu: The difference of this recession compared with the previous ones, including 2008 financial crisis, is that there's a serious blow to real economy, and also there is an impact on global supply chain. And also the small, medium sized businesses are badly affected. But in China, we always say, (you speak Mandarin, I still remember that, the Chinese word "crisis" is a combination of crisis and opportunities. So that means we always see opportunities in each crisis, and we can turn crisis into opportunities. COVID-19 has a negative impact on the real economy, but we also find opportunities, like stay-at-home economy, online economy, digital economy, and medical economy, fintech and others.

With regard to small and medium sized enterprises, the government has adopted very preferential and supportive policies, including more export rebates, loan credit, and what we call in China the Six Stabilizing Measures and the Six Protection Measures. The Six Stabilizing Measures are to stabilize employment, financial market, foreign trade, investment, FDI and expectation. The Six Protection Measures are about protecting the employment, basic livelihood, market entities, food and energy security, stable industrial supply chain and normal operation of grassroot communities. So there are more and more policies. These measures have already shown effect as we move forward.

James Harding: Ambassador, can you tell us a little bit practically about how China is managing the restart to shore up public confidence and particularly around public transport, the opening of schools, testing and protective equipment? These are the things that are dominating thinking here. I just wanted to get a sense in China specifically, how the government, and how businesses are handling that.

Ambassador Liu: Right now COVID-19 has been under control. We have achieved significant success in containing the virus. But we still have to be on alert. We achieved significant success, but we can't claim final victory yet. And right now we have confirmed cases of less than 100. And we haven't had any death case for the past 35 days, but there are still some sporadic cases reported inside China. Our main concern is imported cases. So there are still some very strict measures imposed in some areas. We have different layers of prevention and control in different regions. In some cities and provinces, there are lower restrictions and high percentage of production and economy has been resumed. But in some areas, there are still some restrictions. So we have to keep an eye on the virus.

On the other hand, we have to make every effort to restore production and to make sure the normal life will come back. And with regard to school, some schools are open, but there are very strict prevention and control measures there. You'll have to check the temperature. And you'll have to keep social distance. With regard to the factories, there are also a set of measures. People stagger office hours, have to wear face masks all the time and keep social distance, and also companies provide shuttles to transport their employees. So there are a lot of prevention and control measures still on the ground.

James Harding: How important are temperature check and testing do you think in that significant success you described?

Ambassador Liu: It's turned out to be very successful. Some people in the media, including the media you used to work for two years ago, the BBC, they challenged the figures, and asked us why China can have such lower death cases with such a big population. I explained to them that is because we have adopted the most comprehensive, most thorough, most vigorous measures to contain this virus. People have to wear face masks from early on. And the testing is really the answer to contain the virus. I just read a report that Wuhan, a city of 11 million people, started massive testing in the past few days. The goal is to have everyone tested in 10 days. So testing is still a very effective way to contain this virus because you also have many people who have no symptoms at all, and also there is a period that people do not know whether they got infected or not. So testing turned out to be a very effective tool to know earlier.

James Harding: I want to talk a little bit about the resumption of international trade and international business. I suppose one of the things that you're hearing increasingly is the worry that international business and trade are going to be blocked by non-tariff barriers, by very practical obstacles to doing business. Someone else say, look, we've got a lot of UK employees in senior roles based in China, but they're unable to enter the country presumably for the reason you mentioned, concerns about the import of the virus, but this is obviously very disruptive. What are you doing, Ambassador, to make sure that our trade relationship and business relationship resume?

Ambassador Liu: We have worked out with the British government on what we call Fast Track, Green Channel. We understand that there's a demand for British businesses to get their staff back to China. And we have adopted a very flexible and also in the meantime, specific measures to contain imported cases. With regard to the specifics, you need to have a test, you need to have what we call Green Code, which is your health certificate, to show that you have no symptom before you get on board an airplane. And then once you're in China, you have to take the temperature and if everything shows you are healthy, then there's a shorter period of quarantine, not 14 days which is applied to most travelers. This policy is for the business people of key sectors, such as logistics, technical business and financial services. We have worked out a category, a list of the people who are the key workers. So we try very hard to facilitate the flow of the personnel and to make sure that the business will not be affected, and try to limit the impact on the economy. We have already notified the British side that those people can apply for visas, a special category of visas, and we can facilitate it. And we also hope that British government will reciprocate our arrangement to Chinese businesses when they decide to come back.

James Harding: That's good to know Ambassador. There are practical problems, shipping, banking and finance issues. One person online says it is very difficult to export. China seems like a closed shop, not open. I don't know how much of that you're hearing. How worried you are that even though in principle the economy is reopening and restarting, in practice, it's very hard to resume some of the trade and business that operated just yet?

Ambassador Liu: When talking about specifics, I think it will take time. I will give you a broader picture about trade between China and the UK, with regard to the impact of COVID-19 on China-UK trade. In the period from January to April, trade between our two countries decreased by 19.3%. China is the third-largest export market for UK, yet UK's export to China between January and April decreased by 13.1% and China's export to UK decreased by 21.8%. April shows some encouraging signs. Though we still suffered a 13% decrease, the decline is slowing down. So I would say that, in the mid to long term, trade will resume, and business confidence is still there, as our two economies are very complimentary to each other.

With regard to investment, I can give you another example. The UK now is the largest destination for Chinese investment in Europe. So in the last five years, Chinese investment here in the UK is bigger than the previous 30 years combined. Give you one example to show Chinese businesses' confidence in the UK economy: Even in the height of the COVID-19, we saw Jingye, a Chinese steel company, coming here to purchase British Steel. This acquisition not only saved 3,200 jobs, it committed to investing 1.2 billion pounds in the next 10 years in order to transform and upgrade British Steel. So the confidence is still there.

The important thing is we have to remain committed to free trade, and we have to make sure that the UK is still a free, business-friendly country to Chinese businesses. So when we heard some politicians spreading this argument for "decoupling", and some even go so far as to preaching the Cold-War rhetoric against China, and that is very harmful. I had webinars with the Chinese business community, because they are very concerned. They do not know how pervasive, how massive, and how influential this rhetoric is. I had good conversations with British Secretaries and senior officials, and they told me these words did not represent the UK government position, and I believe that. And I do not believe this is a broad consensus of the business community here in the UK. I believe they still welcome foreign businesses including Chinese businesses. So I think it's very important that in time of difficulties, we need to stand together. We need to pull together, to fight the virus.

James Harding: I just want to understand when you speak to Chinese businesses and Chinese business people operating in the UK, are they saying that they are worried about hostility to China and Chinese businesses? Or are they saying that there is difficulty operating in a different global environment?

Ambassador Liu: Different businesses have different concerns. Some of course are concerned about supply and demand chains. Some of them are also concerned about the policies, when they heard there would be security review, new policies would be introduced. And everybody is watching how Huawei is handled. We are encouraged by the decision the British government made on Huawei. But there have always been noises, rhetoric and oppositions.

I'm going to have a conversation with the business minister of the UK government. I'll invite him to have a webinar with Chinese businesses. Chinese businesses have more confidence in hearing directly from British senior officials than indirectly from me, that Britain will remain committed to a free market and to free trade. That's very important. I think China and UK are now the flag bearers for free trade. I think when we look beyond this COVID-19, it's very important we have to keep economic globalization going. We have to keep free trade and trade liberalization going. China and UK have enormous common interest in keeping the world economy free and open. That's very important.

James Harding: One of the big questions that's unclear to people is whether the Chinese students who've been a big part of British university life in the last few years are coming back to the UK. Ambassador, what's your advice now to Chinese students studying or due to study in the UK?

Ambassador Liu: My advice to them is to stay put and stay safe. In the past few weeks I had a lot of online discussions, webinars like this with many Chinese students. They are very concerned about the COVID-19 situation here in UK. You know, the way you handle COVID-19 is quite different from the way how their relatives and family members are treated in China. As I told you, in China there are massive testings and timely treatments. But here, it is a different picture. You don't have the same testing scale as China. And also the way you treat the patients is different. You only take care of people with serious illness, but not with light symptoms. In China once you show the symptom, you will be given timely treatment, you'll be sent to the designated hospital, assigned best experts and doctors, and given a combination of Chinese medicine and Western medicine. So that's why the death cases are very low and cured cases are very high in China. It's about 94%.

We try very hard to tell the students, the country takes care of them. Here at the Embassy right here in this hall, I held an event to distribute what we call Health Packages, which included sanitary wipes, face masks, a COVID-19 guide and a lot of others. Some of the students have left but the majority still stay here. And I wrote letters to Vice Chancellors and Presidents of 154 universities, which hosted Chinese students. I asked them to take good care of Chinese students there. I also expressed our commitment to strengthening education cooperation and exchanges between our two countries.

Right now there are about 200,000 Chinese students studying here, the second largest number of Chinese students overseas, only after US worldwide and the largest in Europe. And till now, some Chinese students are still eager to come. They are applying to UK universities. They are making a lot of inquiries on when the school and universities will reopen, when this application process will restart. We tried to give them updates. I still feel confident.

James Harding: Thank you. It's really interesting to hear and specifically on the difference between the UK and China as you say it. Ambassador, I think there is real concern about what's happening in the world, particularly about US-China relationship. I just want to ask you two questions about this. First, how do you think this pandemic began? What was the source?

Ambassador Liu: I think it is still up to scientists to decide with regard to the source. Although China was the first to report the cases, we can't say that the virus originated from China. As the events unfolded, we heard a lot of reports that some cases were discovered much earlier than the first cases reported by China. You know, the first cases were reported on the 27th of December last year. Chinese doctors first found the cases of pneumonia with unknown cause, but they are not so sure about it. Four days later, on 31st of December, Chinese health authorities notified the WHO office in Beijing. Seven days later, on January 3rd, the National Health Commission in China officially notified the WHO. Eleven days later, on January 7th, we identified the pathogen and then we shared the genetic sequence with the WHO and other countries.

So, China has been transparent, responsible and swift in terms of reporting. And then, we adopted very strict measures to contain the virus. We also shared with the international community all our experience in terms of how to contain and prevent the virus. I think it is still up to scientists to decide the source.

James Harding: What would you try to do to ensure that the development and distribution of the vaccine is globally fair.

Ambassador Liu: I think our president made a solemn commitment two days ago at the opening of 73rd World Health Assembly, that China will make it available once the vaccine can be used. China has been very advanced now in terms of research on vaccines. We are in the second phase now. And we want to make it available to the world. We want to make it a public good for the world population, especially to make it available, accessible to the poorest and less developed countries, especially in Africa. Because we always believe that COVID-19 really brought the world together. We believe in the community of shared future for mankind. So that's very important.

You mentioned China-US relations. I just want to say briefly, that we have every reason to have a good relationship between China and the United States. It's a relationship between the largest economy and the second largest economy. And I think it bears great significance on the world. I always believe that China and US will gain from cooperation and lose from confrontation. We want to build stronger relationship based on mutual respect, cooperation and coordination, but you needed two to tango. So I just want to leave you with these words.

James Harding: Thank you Ambassador. With a thought of that on our minds we will conclude today. It's really important to have you, Ambassador. This really means a lot.

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CBI, founded in 1965, is the UK's most influential industry association and the largest business lobbying organization. It represents more than 190,000 British companies and nearly 7 million staff.

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