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Speech by Consul General Luo Linquan at the World Affairs Council

(From Chinese Consulate General in San Francisco)

2017/09/08

Dear friends,

It is my great honor to speak again at the diplomat luncheon of the World Affairs Council, one of most influential international forums in California, 2 years after my first one here on August 19, 2015.

You see, I've been here through two administrations, but one thing most fortunate for me is that I have a group of friends who care about Sino-US relationship seated here. Thank you all very much.

Forty-six years ago, Dr. Henry Kissinger made his legendary visit to China. It marked the beginning of the visionary efforts of the leaders of China and the U.S. to break the ice between our two countries and start a new relationship. In the years afterwards, this relationship has withstood the test of the Cold War, survived the ups and downs and made historic progress.

Since President Trump took office, with the joint efforts of both sides, the China-US relationship has made important positive progress. Chinese President Xi Jinping and President Trump have had phone conversations for 6 times. They also have had 2 meetings, one in Mar-a-lago, Florida in April and another one on the sidelines of the Hamburg G20 summit in July. All of these have set the tone and direction for our relationship. We could expect another meeting between them this year, cause President Trump has accepted the invitation of President Xi to visit China this year.

Now, China and the United States have established 4 high-level dialogue mechanisms, namely, the Diplomatic and Security Dialogue, the Comprehensive Economic Dialogue, the Law-enforcement and Cyber Security Dialogue, and the Social and People-to-People Dialogue.

The first round of the Diplomatic and Security Dialogue held in June and the Comprehensive Economic Dialogue (CED) held in July were very successful. The first China-US diplomatic and security dialogue was co-chaired by Chinese State Councilor Yang Jiechi, U.S. Secretary of State Rex Tillerson and Secretary of Defense James Mattis. Both sides believed that the dialogue is constructive and fruitful. They agreed to continue to make full use of this platform, constantly enhance mutual trust, expand consensus, promote cooperation, handle and control disputes, so as to let this platform play a positive role in promoting China-US relations for greater development. At the CED, the two sides had an in-depth exchange of views on a broad spectrum of topics, including macro-economic policy, the 100-Day Action Plan and a one-year plan, global economy and governance, trade and investment, services, agricultural cooperation and high-tech trade.

Dear friends,

In recent years, bilateral economic and trade cooperation has been broadening so there's now an unprecedented depth of integration of the two countries' interests.

According to US statistics, U.S. goods and services trade with China totaled an estimated $648.2 billion in 2016. China is currently the United States' largest goods trading partner with $578.6 billion in total (two way) goods trade during 2016, 3rd largest goods export market and No.1 supplier of goods imports. China is also the second largest market for US agricultural exports, accounting for 15% of US agricultural exports. On average, each US farmer exports about $12,000 of agricultural products to China, including soybeans, beef, Californian wines, etc.

There is still huge potential for bilateral trade in the e-commerce age. Alibaba, a Chinese e-commerce giant, launched programs to link US businesses, mainly the small businesses with the company's 443 million customers in China. Currently, the site has 7,000 U.S. businesses, mostly large companies and big-name brands. Over the next five years, Alibaba wishes to increase that to 1 million, with the vast majority made up of small businesses. This is really a win-win situation.US businesses would have a broader market and Chinese consumers would have more choices.

China and the US enjoy a $170 billion two way investment. By the end of 2016, U.S. companies had invested nearly 80 billion U.S. dollars in 67,000 projects in China. On the other hand, Chinese companies' non-financial direct investment in the US reached roughly $50 billion, covering 46 states and 425 congressional constituencies, and creating over 140,000 jobs. For example, Chinese rail company CRRC, the world's largest supplier of rail transit equipment, has set up factories in Springfield, Massachusetts and Chicago, Illinois in recent years, creating hundreds of jobs for the local people.

In short, our economic relationship is mutually beneficial in nature. The two have their own competitive advantages when it comes to economics and trade; their relationship is highly complementary, with broad scope and a strong impetus for pragmatic cooperation. The two economies are very much interdependent, and the interdependence is still growing. So it is not a zero-sum game. Trade war is not an option. Currency war is not an option. Protectionism, seen on rise in America, will do no good to this mutual-beneficial relationship. Increasing bilateral trade would benefit both the US and China. We should make the pie bigger, then both sides would be able to take a bigger bite. Of course, there will be some competition between us. This is always the case. But such competition should make both of us better and stronger. It should not exclude cooperation. It should not aim at eliminating competitors, because without competitors, one loses its own competitiveness.

Here, I would like to bring your attention to a resolution passed by both Oregon State Senate and House of Representatives and signed by Governor Kate Brown on July 5, which I think high of. While non-binding itself, the resolution, aiming to advance economic and trade ties with China, makes Oregon the first US state that encourages continued collaboration with China for trade and economic development through an official resolution.

Dear friends,

There is a popular saying in the United States, "All politics is local." It also applies to Sino-US relations. The expanding and deepening US-China relationship is driven by many engines, sub-national exchanges is certainly an important one.

The 5 states in our consular area, namely California, Washington, Oregon, Nevada and Alaska, maintained close cooperation with China. Their export to and import from China came at the top of U.S. states. In 2016, the trade volume between China and the 5 states reached $201 billion, accounting for 35% of U.S. trade with China. Washington State has ranked No. 1 in terms of export to China since 2012. California also has a No.1, which I will talk later.

There are 7 pairs of trade and economic exchange mechanisms between Chinese provinces and U.S. states or cities, including the states of California, Texas, New York, Iowa, Michigan, Washington and the city of Chicago. Under these mechanisms, more than 50 investment programs were signed last year with contracts amount totaled $2.5 billion. There will be over 100 trade missions traveling across the Pacific this year. The mechanisms also promoted the mutual visits between the business communities of our two countries, giving boost to more future cooperation.

There are many other platforms and mechanisms that could promote the sub-national exchanges. The Social and People-to-People Dialogue, a high-level dialogue mechanism set up by our Presidents at Mar-a-Lago, will hold its first meeting in the US this year. How to promote the sub-national cooperation between our two countries would be an important topic for this meeting. The active participation of the local governments and people would certainly help to make the dialogue a success.

I want to talk a little bit more about California and China.

Among all the states, California ranked No. 1 in terms of total trade with China, accounting for 27% of U.S. trade with China by itself. California also had the largest import from China.

As you may know, 4 years after his previous trip to China, Governor Jerry Brown visited China again in June this year, which brought him to Sichuan, Jiangsu where he met his Chinese counterparts and signed agreements on cooperation on low-carbon technologies, environmental protection, clean energy development and climate action. In Beijing, besides meetings with China's Minister of Science and Technology and Minister of Commerce, Governor was received by Chinese President Xi. This arrangement was rare and it exactly reflected the importance China attached to the State of California, the forerunner in China-US sub-national cooperation.

Dear friends,

As a man in his 60's, I have witnessed the process that China grows from a poor and weak country to the world's second largest economy. It is a long journey full of Chinese people's hard work, and also a success that can't be achieved without the outside world. An old Chinese saying goes, when you reap fruits, you should remember the tree; when you drink water, you should remember its source.

China feels its responsibility and tries its best to help address challenges of our world today. From global economic recovery weighed down by lack of growth drivers to structural imbalances yet to be fundamentally addressed, from backlash against globalization to rising geopolitical risks, from rising extremist ideologies to enlarging digital divide, from wide spread poverty to job losses, we see so many.

China has advocated building an open global economy and highlighted the importance of promoting inclusive growth. At this year's G20 Summit, Chinese President Xi called on major economies to champion an open world economy and a multilateral trade regime, and Chinese Premier Li Keqiang made it clear at World Economic Forum's "Summer Davos" event that "promoting inclusive growth in our times calls for upholding economic globalization, which has greatly facilitated the flow of goods, capital and people, and provided bigger markets for producers and more choices for consumers than ever before".

China has been an active facilitator of inclusive growth. More inclusive growth in China has been an important reason why the Chinese economy has maintained steady growth in recent years despite the sluggish world economy. China's gross domestic product expanded 6.9 percent year on year in the first half of 2017 to about $5.62 trillion. The growth rate is well above the government's target of 6.5 percent for this year.

Another thing China offered to the world is the Belt and Road Initiative. Following the principles of extensive consultation, joint contribution and shared benefits, the Initiative provides a wide platform for inclusive development and offers new opportunities for all countries and businesses. In short, the Initiative aims to promote policy coordination, trade flows, financial accessibility, and people-to-people exchanges. The Initiative is warmly welcomed by the world. A total of 29 foreign heads of state, over 100 ministers and 1200 representatives and professionals from countries along Belt and Road area attended its first summit in May in Beijing. Now, 56 economic cooperation zones in 20 countries has been set up under the Initiative , which it claims have yielded $1.1 billion in tax revenues and have created 180,000 jobs in those nations.

As you may know, the 9th BRICS Summit was concluded successfully yesterday in Xiamen, China. As the representative emerging markets and developing countries, the BRICS countries owe their rapid development and rise to the environment of an open world economy. They have proposed to build an open world economy and discard all forms of protectionism on multiple occasions. BRICS is not a locked club and the influence of BRICS cooperation goes far beyond the borders of the five countries. I believe they would continue to inject "BRICS vitality" and make "BRICS contributions" to the pursuit of the robust, sustainable, balanced and inclusive growth of the world economy.

Dear friends,

"There are a thousand reasons to make the China-US relationship a success, and not a single reason to break it." That's what Chinese President Xi said at his first meeting with President Trump.

I look forward to your continued support to Sino-US relations and the dynamic cooperation between China and California.

Thank you!

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