Mr. Zhu Guangyao, vice minister of the Ministry of Finance
Xi Yanchun, vice director-general of the Press Bureau, State Council Information Office
Nov. 10, 2017
Zhu Guangyao, China's vice minister of finance, speaks at a press conference held by the State Council Information Office of China in Beijing, on Nov. 10, 2017. [Photo by Yuan Shaoda/China SCIO]
Ladies and gentlemen, good afternoon. Welcome to this press conference. Today, we are delighted to have with us Mr. Zhu Guangyao, vice minister of the Ministry of Finance.
He will introduce the economic outcomes achieved during the China-U.S. presidential meeting in Beijing, and answer some of your questions.
Now, I give the floor to Mr. Zhu.
President Xi Jinping and U.S. President Donald Trump held in-depth talks on Nov. 8 and 9 during the latter's first state visit to China. President Trump is the first head of state received by President Xi since the 19th National Congress of the Communist Party of China (CPC) last month. An important consensus was reached during the successful and historic presidential meeting, charting the course and drawing up a blueprint for the sound and sustained development of Sino-U.S. relations in the coming decades.
President Xi said during the meeting that China-U.S. economic ties were mutually beneficial and covered a wide range of fields including the macro-economy, trade, investment and international economic cooperation. Continued stable development of these ties will not only be of benefit to the two peoples, but also be a major contributor to global growth. China and the United States should face all economic issues in a forward-looking and constructive way and resolve problems by expanding economic cooperation. President Donald Trump expressed agreement with these views.
China and the United States have maintained close coordination on financial, currency and exchange rate policies, as well as structural reforms and global economic governance. The two countries will work together to promote robust, sustainable, balanced and inclusive growth of the global economy. As well, both sides will encourage their aviation regulators to sign the Implementation Procedures for Airworthiness under the Bilateral Aviation Safety Agreement.
As an effort to implement the plans on opening the country wider to the outside world set out during 19th CPC National Congress, China has made the following decisions: to ease the proportion limitations on single or multiple foreign direct or indirect investment converted into securities, funding management and futures corporate structural establishment to 51 percent pending removal of the limit in three years' time; to lift the proportion restrictions of no more than 20 percent and 25 percent on foreign single and joint shareholding respectively in Chinese banks and financial capital management companies, and impose equal proportion restrictions on bank equity for Chinese and foreign investors; to lessen the proportion limit to 51 percent on single or multiple foreign investment into life insurance companies in three years' time and to lift the limit entirely in five years; to make a moderate reduction in car import tariffs in a gradual manner, and to launch trials on lifting the proportion limits on foreign shareholdings in special-purpose and new energy vehicle companies in pilot free trade zones before June, 2018; to implement the same value-added tax (VAT) policy on imported and domestic dried distiller grains (DDGS) and remove VAT on imported DDGS.
China urges the United States to relax its export controls on high-tech products, fulfill its obligations under Article 15 of the Protocol on China's Accession to the World Trade Organization (WTO), give fair treatment to Chinese enterprises investing in the United States, facilitate China International Capital Corporation's independent application for offering financial services in the United States and take a prudent attitude towards trade remedial measures. Both sides will maintain communications on one-year and medium-to-long term economic cooperation plans.
The two countries signed business deals and bilateral investment agreements worth $250 billion during President Trump's visit to China. That's all I want to share with you on the economic outcomes achieved during the China-U.S. presidential meeting in Beijing.
Now, I am ready to take your questions.
Now let's open the floor to questions. Please identify your media outlet before asking your questions.
As we can see from the two-day meeting, there was a natural chemistry between the two leaders. But it seems that there is no fundamental change taking place in the economic structures of both sides. And President Trump said that the China-U.S. relationship is not sustainable and fair. And it is said that more stronger measures will be taken by the U.S. government in the future weeks. So, how do you see the economic relations between China and U.S.? And will there be more measures taken to change the trade structure?
At first, I quite agree with your opinions that both sides showcased a good interaction on the basis of mutual respect. The sound communication and coordination of both sides at the highest level ensured the healthy and sustainable development of China-U.S .relations. Since the Mar-a-Lago meeting, President Xi Jinping and President Trump have kept close communication. Looking back over the last months, the topics of discussion range from global issues to the specific China-U.S. economy, including various ways to communicate such as face-to-face encounters, exchanging telephone calls and sending letters. Since President Nixon's tour of China 45 years ago, the close communication between China and America is based on the mutual-respect, and laying a solid foundation for sustainable and healthy development of China-U.S. relations. And concerning your second question, about the future development of China-U.S. economic relations, I think this is directly linked to the sound communication between both sides. China-U.S. economic and trade relations are essentially mutually beneficial.
Just now I have noted that, during their talks in Beijing, President Xi particularly stressed to President Trump that seeking mutual benefits and reciprocity is the essence in the economic relations between China and the United States. President Xi also stressed that China-U.S. economic relations covers many areas like trade and investment as well as extensive cooperation in the field of the international economy. In this regard, President Trump expressed full consent. The important consensus reached by President Xi and President Trump aims at maintaining the sustainable and healthy development of China-U.S. economic relations and benefiting the Chinese and American peoples.
Certainly, the rapid development of China-U.S. economic relations doesn't just mean the annual over US$420 billion in total trade volume and over US$200 billion in bilateral direct investment. The figures are hardly a reflection of China-U.S. economic relations, in which the interests of both sides are closely intertwined and the two sides share in benefits. In other words, the two countries have become a community of close integration and shared benefits. On this premise, it is the aspiration of both sides to resolve the problems and contradictions arising from the rapid development of economic relations through consultations. It is a problem that President Trump wants to solve, and it is a problem that President Xi Jinping has already instructed relevant departments of the Chinese side to solve by enhancing policy coordination with the American side. All the approaches are to ensure the healthy and sustainable development of economic relations between China and the United states.
In preparation for President Trump's visit to China and the important meeting between President Xi Jinping and President Trump in Beijing, under the framework of a comprehensive economic dialogue between China and the United States, Chinese Vice Premier Wang Yang has maintained close policy communication and contacts with U.S. Secretary of Commerce Wilbur Ross and Secretary of the Treasury Steven T. Mnuchin. U.S. Secretary of Commerce Wilbur Ross visited China twice and made phone calls with Vice Premier Wang Yang many times. All the efforts made by both sides are to ensure that the meeting in Beijing between state leaders of China and the United States can achieve the desired results, which are not only substantive, strategic, and directional, but also specific and commercial.
As you can see, just now I have made a brief introduction of the common understanding of both sides on the nature of economic relations between the two countries, and the specific measures taken by the Chinese side to expand market access. The measures were hammered out in accordance with the principles defined in the 19th CPC National Congress and the strategic plans made by President Xi Jinping. In this regard, I think the approach will have a long-term, continuous impact. In terms of business cooperation, it doesn't just mean the over US$250-billion in contracts, either.
We believe that, with the joint efforts of both sides, the economic relations between China and the United States will realize a dynamic balance, mutual benefits and win-win situation, as president Xi Jinping stressed to President Trump during their talks in Beijing. Thank you.
There were lots of economic achievements made during the meeting between the two state leaders in Beijing, just as you have elaborated. My question is: What specific influences will these achievements have?
President Xi Jinping has reiterated that the economic relationship between China and the United States is the bedrock of global stability and a booster of world peace. Evolving from the past to the present, this bilateral economic relationship has become increasingly close and has remained unbroken. With the development of a community of shared interests, the two countries have fully recognized that they must cooperate with each other for the sake of the two peoples and for the peace and development of the world.
Cooperation is the only correct choice for the two countries. This is the conclusion made by President Xi. Facts have proven that cooperation is conducive to the interests of the two peoples as well as to the peace and development of the world.
The economic achievements reached between us, such as broadening mutual market access and signing enormous volumes of pragmatic business contracts, will lay comprehensive and strategic influences on China-U.S. economic relationship, and will boost further development of the relationship. They will also leave a lasting, positive and helpful influence in the future.
Just like the icebreaking trip made by the late U.S. President Richard Nixon 45 years ago, President Trump's state visit to China will be remembered in history for the fruitful achievements it has made and the profound influence it has left. Thank you.
Wall Street Journal:
Can you clarify what you said earlier on the restriction changes to the banking, securities and insurance sectors? Can you explain in more detail the timeline and also the roadmaps for that?
First, for securities and funds, China decided to relax the restrictions on shares owned by foreign individuals and groups in securities, fund management and futures companies from 49 percent to 51 percent, via both direct and portfolio investments. This is a significant change. In other words, foreign investors can hold over 50 percent of the total stake. Moreover, that restriction is no longer applicable after three years, which means that the 51 percent restriction will evolve into literally no restrictions at all for foreign investors. This will have a great impact on the reform of the securities and fund sectors.
Second, China will lift the restrictions on shares owned by foreign individuals (no more than 20 percent) and groups (no more than 25 percent) in China-funded banks and financial asset management companies and apply the same rule in the share of equity investment for both domestic and foreign investors.
Third, China will relax the restrictions on shares owned by foreign individuals and groups in insurance companies operating life insurance businesses to 51 percent in three years and lift the restriction in five years.
Therefore, the securities and funds, banking and insurance sectors, especially life insurance businesses, will definitely open up, and the impact is great. Moreover, there is a clear timeline for the opening up. Of course, after the announcement of the policy, related financial regulatory bodies will formulate specific implementation measures in accordance to Chinese laws and regulations. I think this will be very quick, because that is what President Xi Jinping has pointed out in his report to the 19th CPC National Congress on relaxing market access and expanding the opening up of the service sector.
We will work out the timeline and roadmap for the reform of the financial sector in accordance to the important instructions made by President Xi Jinping and the arrangements made by the CPC Central Committee and the State Council. This is a very good timing for us to announce China's reforms in the financial sector, especially the major reform measures with regard to market access of the financial sector. Thank you.
Phoenix Satellite TV:
How could the heads of state of China and the United States achieve so many economic and trade results in a course of two days? We're pretty surprised at the US$ 253.5 billion deals between the two countries, as well as China's announcement of a relaxation in market access requirements. What are the reasons behind all of those achievements? Thank you.
Thank you. Just as I said when answering the first question, the two heads of state have attached unprecedentedly high importance to China-U.S. economic cooperation. You are right that their meetings lasted only for a couple of days. However, I can tell you that the working groups of both sides were in close contact in preparation for the summit meeting ever since the two leaders met at the Mar-a-Lago resort. President Xi has been attaching much importance to China-U.S. economic relations. He has stressed we should strengthen China-U.S. economic relations and ensure its full and effective role as the anchor and promotion of bilateral relations. China's working group has followed President Xi's instruction in this respect. Under the framework of the China-U.S. Comprehensive Economic Dialogue, Vice Premier Wang Yang has called meetings, listened to reports, coordinated related departments to implement President Xi's important directions, promoted the implementation of the economic arrangement, including aspects such as market access, that were stressed by President Xi in his report to the 19th CPC National Congress.
The achievements are thanks to the special attention paid by the two heads of state, the efforts made by Vice Premier Wang Yang, Treasury Secretary Steven Mnuchin and Commerce Secretary Wilbur Ross, who led the Comprehensive Economic Dialogue, as well as the reinforced coordination efforts of the bilateral working groups. The achievements could not be possible without the unprecedented mutual trust between the two heads of state, their special attention to China-U.S. economic relations, the direct instructions on specific works made by Vice Premier Wang Yang, Treasury Secretary Steven Mnuchin and Commerce Secretary Wilbur Ross, as well as the unprecedentedly close policy exchanges between the working groups. The summit meeting was short, but the preparations were long. I think the positive impact from their meeting is historic and long-lasting. Thank you.
Nihon Keizai Shimbun:
What overseas financial institutions have long been expecting is the openness of China's financial market; however, there are always some constraints that have not been removed. Why does China decide to open the financial market this time? What contexts, if any, or reasons are there for doing so? Thank you.
The best answer to this question can be illustrated by President Xi's report delivered at the 19th CPC National Congress. According to the strategic plan, China will press ahead with opening up financial market access, fleshing out the related schedules and implementing blueprints for this. There is one more point that I would like to make it clear: despite the timing of China's announcement of wider financial market access during the meeting between the two heads of state of China and the United States, the openness is for all the countries in the world, which is the fulfillment of a commitment made in line with the principles of the WTO. As one of the important members of the WTO, China will unswervingly uphold the spirit of free trade and commit itself to the implementation of its principles. It will never close its door after opening up; on the contrary, the door can only swing open even wider. That is what President Xi has stressed time and time again. Thank you.
We have noticed that during U.S. President Donald Trump's visit to China, enterprises of both sides have showed great interest in the establishment of Belt and Road investment platforms. Could Mr. Zhu comment on this? Thank you.
Thank you. The issue you mentioned is very important. President Xi Jinping emphasized many times during his meeting with President Trump and later with the press, as well as at the U.S.-China Business Exchange, that China welcomes the participation of U.S. companies in its Belt and Road Initiative.
This was first proposed by President Xi in 2013, with the aim of facilitating policy coordination, facilities connectivity, unimpeded trade, financial integration and strengthened people-to-people ties, based on the principles of extensive consultation, joint contribution and shared benefits. The Initiative conforms to the trends of world development and meets the expectations of the people of all countries. Under the circumstances of economic globalization, we would like to work with other nations to promote economic cooperation and to build a community with a shared future for mankind.
Any interest shown by U.S. firms in China's Belt and Road Initiative is their own choice, with the purpose of searching for business opportunities and expanding market share. Of course, this is welcomed. We sincerely hope that U.S. market-oriented firms can meet their profit targets, and jointly push forward the growth of world economy with us.
In regard to any cooperation with a third party, American and Chinese enterprises should always follow the principles of market-oriented and independent decision-making in order to gain bigger profits.
In fact, the Belt and Road Initiative has received extensive recognition throughout the world. Meanwhile, it has been warmly welcomed and supported by many multilateral institutions, including the United Nations and the World Bank. We do believe that, in the process of building a community with a shared future for mankind, cooperation between Chinese and American companies will not only bring about benefits to the people of our two countries, but also make contributions to world peace and development.
You just mentioned about contracts and agreements with a value of more than US$250 billion; however, many critics in the U.S. say these agreements have more symbolic than actual meaning, because many of them have no binding force. They think of them as China's gifts to President Trump so that he can be accountable to his American constituents. I wonder how you would respond to that interpretation, and could you explain how long it will take exactly for these agreements to demonstrate their paper value of US$250 billion? Are all these agreements newly reached, or were they signed before and just officially announced this time?
Your question touches on the impact and the basis of commercial contracts. I think commercial contracts can only be reached when the supplier and the recipient both have the intention to fulfill their agreement; and, for intentional agreements, they can only be carried out after the two sides have undertaken sufficient and necessary study on their feasibility. Meanwhile, entrepreneurs of both sides involved were very smart and clever in this process. In terms of weighing up their interests, the two sides in the negotiations actually focused much on how to address their own interests and to meet the shared interests of both sides. Market rules and the dominance of companies are what China has been upholding throughout the contract negotiation, and so has the U.S. As a market economy, market rules must be upheld, and the dominance of companies is a fundamental principle. Without the real intention of the companies involved, it would be impossible to sign and implement big contracts like these.
Among the contracts signed yesterday, the biggest was a strategic cooperation framework agreement between China's National Energy Investment Group Ltd. and the State of West Virginia for a demonstration project with regard to complete industrial chain development of shale gas. It is an intentional agreement as our CNN friend has mentioned just now, but I can make it clear that, as we have heard from a Chinese company, namely the original Shenhua Group, they have made substantial preparations for the investment in West Virginia, including the input of funds. So, although the contract is a statement of intent, it carries high commercial feasibility considering the substantial preparations and prior-period input. A big contract like this really requires the efforts of both sides, which cover studying the market environment: how to create a more favorable environment for the companies. We think this project is indeed a very big one, with a value of more than US$80 billion, so it will take a long time to fully execute; however I value its impact more on the healthy development of China-U.S. economic relations, because President Xi has reiterated that China-U.S. economic relations are the anchor and driving engine for the overall China-U.S. relationship, and President Trump has also made clear that he is very keen on cooperation in big projects. I think the cooperation on such a large project is rare in the histories of China and the U.S. and even in the world history. We sincerely hope that it will become one of the greatest driving forces to ensure the healthy development of China-U.S. economic relations. Of course, the two sides should benefit from the cooperation in the first place. West Virginia wants to improve its employment and investment situation, and China also hopes to benefit from its involvement in the full industrial chain development of shale gas deposits in the U.S.
Meanwhile, I would like to emphasize that, in terms of policy appeals, sometimes it is China that makes the proposal, but eventually it comes down to the two sides reaching an agreement. The long-term contract of liquefied natural gas (LNG) is a good example. In the preliminary outcomes of the 100-day plan concerning the China-U.S. economic cooperation, China has a very clear policy appeal that the U.S. should allow LNG exports, and should allow China and U.S. companies to sign long-term contracts in this regard. Frankly speaking, China had been putting forward this request for a number of years; however, the U.S. did not lift restrictions on LNG exports to China for a variety of reasons, domestic legislation in particular. The preliminary outcome of the 100-day plan had realized LNG exports to China, and the U.S. had begun studying the signing of long-term supply contracts. Now, months later, the appeals of the U.S. have become stronger, hoping to sign a more fixed, long-term and big supply contract, so we can see that the changing process in the appeals of both sides is also a process whereby the economic interests of China and the U.S are closely linked and integrated. I hope very much that the CNN reporter will report this to the U.S. audience. Thank you.
China National Radio:
During your briefing just now, you mentioned that in the meeting between parties of China and the United States, there was a bilateral airworthiness agreement signed, which was applauded by both sides. May I ask what the significance of this achievement is? Thank you.
Thank you. This is also a matter of mutual benefit and win-win for both sides as I just mentioned. Truthfully speaking, this is an important appeal made by China in the 100-day plan for China-U.S. economic cooperation.
However, signing this agreement actually reflects the interests of both China and the United States. Indeed, our large aircraft is on trial. We need cooperation with other countries, especially the United States. At the same time, as the second largest aircraft market in the world, China has great capacity. But, we actually operate half the number of aircrafts compared to the United States. In other words, we are the second largest aircraft market, yet we only have half the number of the United States, so the American Boeing has vast business potential in China.
Because of this, the U.S. enterprises strongly support signing the airworthiness agreement between China and the United States. It is the governments of the two countries that answer the demands of the enterprises of the two countries, so before this state visit of President Trump to China, both sides were able to sign this airworthiness agreement. The agreement, I think, will produce mutual benefits and win-win results for both countries and will have a long-term, effective and positive impact on the future economic relations between China and the United States, especially on the cooperation between both aviation industries. Thank you.
You just mentioned market access in the financial sector. I would like to ask whether there are any other sectors besides the financial sector, where China is going to relax controls over market access. Trump and other American companies have also been paying attention to market access as well as technology transfer and intellectual property theft. Have China and the United States been discussing these issues? If so, what is China's response?
As for the issue of market access, just now I have specifically reported on this to you all. The principle China has followed is the substantial relaxation of control over market access and further opening up of the service industry, which was put forward by President Xi in his report to the 19th CPC National Congress. It is very clear - not just for the financial industry. The issues surrounding the financial industry were a consensus reached by both sides during Trump's visit to China. I think, just as President Xi stressed in his report to the 19th CPC National Congress, China will drastically relax control over market access and further open the service sector to the outside world. All relevant departments of the Chinese government are making the necessary timetables and roadmaps. China will become more and more open. The closer the integration of China's economy and the world economy, the bigger the contributions that will be made by China's economic development to the development of the world economy. At the same time, China also benefits from the development of the world economy. Therefore, the close integration between China and the United States are the basis for our close cooperation. Thank you.
Xinhua News Agency:
In your introduction, you mentioned that China will continue to open up in more sectors, including the finance and automobile sectors. My question is, what is the biggest benefit China would gain from the meeting between President Xi and President Trump. And what are the mutual benefits?
The meeting between the two presidents is based on mutual respect. The two sides had sincere and frank talks on issues of concern. That means all issues of common concern of both parties were laid on the table. The two sides were both clear that our common goal is to maintain the sound development of Sino-U.S. economic ties, and the bilateral relationship as a whole.
Both presidents have stressed that Sino-U.S. cooperation has a significant impact on the wellbeing of the two peoples as well as on the peace and development of the whole world. Both sides have their aspirations for economic policies. Such aspirations reflect their confidence in each other's markets. American corporations want to be more involved in the Chinese market, eyeing up the opportunity to open more factories and ventures in China. Meanwhile, Chinese entrepreneurs want to invest more in the U.S., and carry out cooperation with U.S. counterparts in the U.S. or in third-party countries. This all results from their mutual confidence in each other's markets and development paths. Based on this confidence, the meeting has lifted the closely related bilateral ties, especially the economic ties, to a higher level.
President Xi pointed out in his report to the 19th CPC National Congress that China will work toward a new form of international relations featuring mutual respect, fairness, justice, and win-win cooperation. The Chinese side will unswervingly follow this principle in conducting negotiations with the U.S. I'm sure this will definitely bring benefits to both Chinese and U.S. peoples and, furthermore, make contributions to the peace and development of the world.
Why has the international community paid such close attention to this meeting and the results it has yielded? Because China and the U.S. are the two biggest economies in the world. As the biggest developing country and the biggest developed country, China and U.S. have their respective responsibilities. President Xi stressed that we have 1,000 reasons to maintain a good relationship between China and the U.S., and not one reason to spoil it, with which, I think, President Trump may have also agreed.
Yesterday, at the state dinner hosted by President Xi, President Trump played a video of his granddaughter Arabella singing Chinese songs and reciting Chinese poems, which was applauded by all the attendees. In her tender voice, Arabella started by greeting "Grandpa Xi and Grandma Peng" in authentic Chinese. Her performance at once brought closer the affection between the Chinese and American peoples. I think the video revealed that President Trump and his family highly value Chinese culture and his belief in the future of bilateral ties, and more importantly, his effort in pushing forward China-U.S. relations.
In his toast at the dinner, President Trump said that the two countries will make efforts to achieve a more just, secure, and peaceful world and a future based on the dreams of our children. I can tell you all that the meeting between the two presidents is of historic significance. From Arabella's video, the performances by the Chinese children at the state dinner, and the interaction between the two presidents and the Chinese children, we can see that the two leaders care much about the future generations of the two countries, and about the world peace and development. I think that is the biggest achievement of the meeting. Thank you.
Because time is limited, the briefing will end now. If you have other questions, you may contact the news office of the Finance Ministry. Thanks again to Mr. Zhu and all present.