Speech by Consul General Liu Yongfeng at the Seminar of "China in focus"
（From Chinese Consulate General in Calgary）
Great Achievements with Bright Future
-- Review and Outlook of Chinese Economy
And Outbound Investment
April 10, 2012 Global Business Centre
Thank you,Rachel for the introduction.
Good morning everyone, and a sincere thank you to Calgary Economic Development for giving me this opportunity to talk about Chinese economy and outbound investments.
Many of you here today are successful entrepreneurs and business managers, and will likely find these subjects interesting.
In light of Calgary Economic Development's upcoming trade mission to China, I am delighted to provide you with some useful information to facilitate your decision to join the mission.
First of all, let me show you some highlights of the aggregate economy in China:
The above data implies a well positioned Chinese economy, with well-paced growth, stabilized prices, sustainable efficiency and improved standard of living.
As some ofyou may know, 2011 was the 10th anniversary of China's entry into the World Trade Organization and the first year of China's 12th Five-Year Plan. It was also a year full of economic uncertainties, with the major developed countries struggling against sovereign debt crisis, global economy slowing down and China's traditional export-oriented model of economic development being challenged. The Chinese government took effective measures, strategically accelerated the transformation of the pattern of economic development and successfully maintained its economic growth.
China is a large and responsible member of the global community of countries. In this role, China has contributed to world economic development. China's 10 years of WTO membership saw its annual imports grow by nearly 100 billion US dollars.
Now, let us take a look at China's quarterly GDP:
The above data shows slight declines in GDP growth in the four quarters in 2011 and in the first quarter of 2012. These results were largely attributed to the macro economic control of Chinese government , and of course the weak global economic recovery is also a driving factor of these declines.
This data also evidenced a good beginning for the 12th Five-Year Plan and, most importantly, indicated a "soft landing" for the Chinese economy.
For those of you, who have been following the Chinese economy closely, you will know that China has successfully implemented a number of Five-Year Plans in the past few decades.
The 12th Five-Year Plan beginning from last year showcases a blue print for the transformation of the Chinese economy towards an emphasis on the quality and efficiency of economic growth, on the improvement of people's standard of living, on sustainable growth without compromising energy efficiency and on environmental protection.
Moving forward, 2012 still looks challenging. Globally, we are facing a prolonged and weakening recovery, amid persistent international financial uncertainty, and unsolved sovereign debt crisis. The major developed countries are still struggling with high unemployment and lack of impetus for growth, while emerging markets are battling with the dual pressure from inflation and slower growth. Both the exchange rate of major currencies and the price of important commodities are experiencing sharp fluctuations. Also, protectionism in international trade and investment is mounting.
Domestically, there is downward pressure on economic growth, while consumer prices are still high. Some enterprises, especially small and micro businesses are encountering difficulties. Potential risks in the financial industry cannot be ignored either.
During the fifth session of China's 11th National People's Congress in Beijing last month, Premier Wen Jiabao delivered the Report on the Work of the Government and announced overall economic goalsfor 2012 as follows:
First, a realistic economic growth target has been set at 7.5% for 2012, after a comprehensive consideration of possible slower economic growth for a meaningful period and external market downturn in the short term. It is also consistant with the overall target of 7% for the 12th Five-Year Plan. This signals China's structural transformation towards the quality, efficiency, and sustainability of the economic development.
Secondly, a proactive fiscal policy and a prudent monetary policy will remain the core of the macro-economic control. In so doing, economic growth is expected to remain balanced and within inflation target. With that, China will strive to improve people's standard of living and support small-micro private businesses, guard against the potential risks in the financial sector and constrain the real estate market.
Thirdly, China will accelerate the transformation of economic pattern to an "organic growth" with a focus on the strengthening of the real economy and the reinforcement of a balanced, coordinated and sustainable growth.
We will restructure the economy by shifting the balance away from relatively cheap exports and more toward increased domestic consumption;
We will encourage indigenous innovation and technology, no longer merely "made in China" but "created in China"
We will also rebalance regional disparities by government support, such as favorable policies and encouraging collaboration between developing and developed regions.
Fourthly, China will strive to improve people's living standards overall.
We will do everything we can to address public concerns about jobs, welfare and public services.
We will give greater priority to job creation, education, medical services, social security, and public housing programs in overall budget allocations. Funding and planning will be designed to deliver equal access to public services for all.
The above noted four core goals are China's primary economic focuses in the near term. The implications of the above goals are huge for businesses in other countries who wish to cooperate with China. We will go over a few implications as below:
1) The expansion of China's domestic consumer spending will create the largest markets in the world.
- By the year of 2015, the scale of the domestic consumer demand probably reaches 5 trillion USD.
- It is expected that China's import will be over 8 trillion USD in aggregate in the next few years. Canada can definitely play a bigger role in this process.
- China is still in the industrialization and urbanization phase, which will sustain a high level of residential and infrastructure construction activities. Current urbanization in China just surpassed 50% last year. It is expected that an additional 300 million rural residents will migrate to urban centers in the next two decades.
- The correction of the regional imbalance which has been built up over years will become the new driver for China's economic development.
The eastern region has greater capacity for innovation and development, and the development potential of the central and western regions and the old industrial bases in northeast China is being constantly unleashed.
These emerging regions are playing catch-up, essentially expanding the investment and consumption scale.
2) China will strive to develop strategic emerging industries. Canada can play a role in the development of China's advanced technologies, advanced manufacturing, innovative materials, and biomedical industries with your advanced technologies and concept.
3) China will strive to develop the services sector. Canada has the strongest banking industry in the world. Our two countries just signed the Approved Destination Status agreement two years ago. We can cooperate in the services sector including banking, insurance and tourism.
4) China will strive to develop the "Green Economy". Canada is in a leading position in the development and utilization of efficient energy, environmental protection, and new energy technologies. Canada can fill the gap in China to assist in the development of these industries.
Now, more specifically, I'd like to introduce you to an overview of China's Outbound Investment.
China initiated a "Go-Global" strategy in the year of 1999. The strategy is intended to encourage and support the outbound investments by large Chinese corporations. Since then, China's outbound investments have has increased substantially:
First, the scale and growth of these outbound investments are impressive. By 2010, China ranked the fifth in terms of outbound direct investments, surpassing Japan and the United Kingdom. By the end of 2011, China has invested an aggregate of 322 billion USD and created one million jobs overseas.
Secondly, the destinations of these investments are diversified. By the end of 2011, investors from China have established 18,000 businesses in 178 countries and regions, including developed markets.
Thirdly, these investments cover almost all the economic sectors, including energy, electronic appliances, textile, advanced technologies, etc.
That being said, China's outbound investments are still in the initial stage. At the end of 2010, China's outbound investments accounted for a mere 1.6% in the world. There is a lot still to be achieved moving forward.
In his government work report last month, Premier Wen Jiabao reinforced the strategy of "Go-Global" and described the road map, including but not limited to:
- Strengthening the policy support,
- Simplifying the regulatory procedure,
- Encouraging orderly investments and cooperation in industries such as energy, material, agriculture, manufacturing, services and infrastructure, and
- Relaxing restrictions on outbound investments of Chinese residents.
Following the requirements of our government, China has established the strategic development objective of "Go-Global", that is, by the end of the 12th Five-Year Plan, the contribution of this strategy to the national economy will obviously increase, the scale and level of foreign investment cooperation will leap forward, and China's outbound investment may reach 100 billion US dollars. This will result in strengthening China as one of the largest international investors and enhance China's role in international cooperation.
Chinese companies will continue to look for mutually beneficial investments in Canada in the next few years.
Most importantly, Canadian Prime Minister Steven Harper visited China again in February this year. During this trip, our two nations successfully completed the substantive negotiations on the China-Canada Investment Promotion and Protection Agreement and announced the signing of the related memorandum. A solid foundation has been established for the bilateral investments and cooperation between the businesses of our two nations.
On the one hand, China will continue the "Opening up" policy and encourage domestic businesses to "Go-Global". In so doing, China hopes to achieve a higher level in outbound investment and cooperation. On the other hand, with its rich resources and well-established investment environment, Canada is definitely an ideal destination for Chinese businesses to execute their "Go-Global" strategy.
Currently the total Chinese investments in Canada have approached 20 USD billion, with over half located in Alberta. The Chinese three big national oil companies (Petro China, Sinopec, and CNOOC) have all made investments in Alberta, while the Bank of China recently opened its Calgary branch last year to service Chinese investments.
Unarguably Alberta and China have had a great start, with a lot of work on moving forward. We expect to see more Chinese investments in Alberta in the near future. Besides energy resources, Chinese businesses would love to invest and cooperate with Albertan companies in industries like agriculture, science and technologies, and in environmental protection.
That being said, Chinese businesses are facing a lot of challenges in Alberta due to the unfamiliarity of the local market, cultural differences, language barriers, ideological and legal diversity, and even political influence.
The Province of Alberta and the City of Calgary, especially Calgary Economic Development, have been very instrumental in supporting the bilateral business cooperation. We sincerely appreciate your assistance in this respect.
The Chinese Consulate General in Calgary will continue the cooperation with the Province, the City and the business community to strengthen the connection.
All of you here today are part of this connection. I am so delighted to see your participation in this bilateral cooperation. I believe, with your passion, and with your help, we will continue to witness the expansion and enhancement of Chinese investments in Canada and Alberta. Let us work together towards this mutual goal.
Thank you very much for your interest and your time.