Chong Quan Deputy China International Trade Representative
(June 18, 2011)

Distinguished guests,
Ladies and Gentlemen,

Good morning.

I am glad to attend 2011 Chinese Economists Society Annual China Conference, and would like to thank the University of International Business and Economics (UIBE), organizer of the Conference, for its warm invitation.

This year marks the tenth anniversary of China's entry into the WTO. The past decade has seen an extraordinary journey for China's open economy as well as the confrontation of new challenges and problems.

I. China’s open economy has realized leapfrogging development in the past ten years since China’s entry into the WTO

Since its accession to the WTO, China has actively adapted itself to the growing trend of global industrial division of labour, given full play to its comparative advantages and undertaken international industrial transfer, pursued export-driven economy, and vigorously developed foreign trade and promoted bilateral investment. As a result, China's open economy has scored rapid growth. China is on course to be the world’s No.2 economy with headlong growth and of unprecedented scale.

First, trade in goods has grown fast. From 2001 to 2010, China's export increased by 4.9 times, and import, 4.7 times, the fastest growing period since the PRC's establishment, especially the implementation of the reform and opening up policy. The annual contribution of export to domestic economic growth reached 20%. China's weight in world trade increased from 4.3% to about 10%, and has become the world's largest exporter and second largest importer. Trade structure has been optimized. Over the past decade, export of machinery products increased by almost 8 times. Hundreds of kinds of products including electronic products and textiles and garments have taken the lead in global market share, and technological products and products with high added value such as automobiles, ships, locomotives, planes and satellites have become new bight spots in export. Transformation and upgrading and gradient transfer of processing trade has achieved remarkable results. Key cities of Pearl River Delta, Yangtze River Delta, Bohai Economic Rim and central and western regions have developed into industrial belts with distinct characteristics and pillar industries.

Second, competitiveness of trade in services has been enhanced. From 2001 to 2010, China’s trade in services increased from US$71.9 billion to US$362.4 billion, an increase of four times. Its share in world trade in services reached 4.6% from 2.3%. China has become the third largest services importer and the fourth largest services exporter in the world. The export of emerging services trade sectors has been growing fast. As service structure improves, import and export of services are growing fast, including telecommunications, insurance, finance, fees for exclusive rights and franchise fees, computer and information service, consulting and advertising.

Third, China ranks first in terms of absorbing foreign investment among developing countries. From 2001 to 2010, China’s utilization of FDI increased from US$46.8 billion to US$105.7 billion, taking the lead for 19 successive years among developing countries. More and more transnational corporations have regarded China as an important region for their international investment strategy, with 480 out of the world’s Top 500 companies investing in China. By the end of 2010, R&D centers set up by foreign-invested enterprises in China exceeded 1,400, which is double of the figure by the end of 2001. At present, China has become the world’s second largest off-shore outsourcing market. The role of foreign investment in promoting domestic industrial upgrading and regional coordinated development is going from strength to strength.

Fourth, outward investment has scored headlong growth. From 2001 to 2010, China's outward direct investment reached US$59 billion from US$1 billion, ranking fifth in the world. The outward investment stock exceeded US$300 billion. More and more Chinese enterprises have shifted from greenfield investment alone to multi-modes of transnational merger and acquisition and overseas IPO, with investment fields expanded and cooperation level enhanced. Currently, the outward investment of Chinese enterprises has covered over 170 countries and regions across the world, with growing signs of market diversity. In 2010, the turnover of China’s foreign contracted projects reached US$92.2 billion, with 54 Chinese enterprises listed in the world’s top 225 international contractors. China’s position in engineering and construction has been further enhanced.

Fifth, multilateral, bilateral and regional trade and economic cooperation has deepened. Over the past ten years, China has been expanding trade and economic relations with developed and developing countries. Trade and economic cooperation is becoming the most dynamic part of bilateral relations. Currently, China has become the largest export market for Japan, Australia, Brazil and South Africa, the second largest export market for the EU and the third largest export market for the US. China has signed Free Trade Agreements with ASEAN, Pakistan, Chile, New Zealand, Singapore, Peru and Costa Rica respectively, Closer Economic Partnership Arrangements with Hong Kong and Macao, and Economic Cooperation Framework Agreement with Taiwan, which has promoted in-depth development of regional economic integration and trade and economic cooperation. China attaches great importance to South-South Cooperation, and has provided economic and technical assistance within its capacity to developing members. China plays an active part in building the WTO multilateral system, which demonstrates its image as a responsible big country while maintaining and enhancing the rights and interests of developing countries in the international economic governance system.

Developing by leaps and bounds, China’s open economy has effectively driven the continuous and fast growth of the national economy. Jumping from RMB 11 trillion in 2001 to RMB 40 trillion in 2010, China’s GDP grew an average annual rate of over 10% and leaped from sixth place to second in the world. China’s aggregate strength has been significantly enhanced.