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NO.13 (July 1, 2004)

Premier Wen Jiabao Talks to European Press

Premier Wen Jiabao Addresses the China-EU Investment and Trade Symposium


Premier Wen Jiabao Talks to European Press

        On the eve of his 10-day visit to Europe, Chinese Premier Wen Jiabao gave interviews to Dieter Stolte, publisher of the German newspaper Die Welt, Dario Divico, Vice-President of the Italian newspaper Corriere Della Sera, Editor-in-Chief Geert Linnebank of Reuters and Assistant Editor Miriam Donohoe of the Irish Times on April 27 and 28.

        Excerpts of the interviews follow:

        Die Welt: You are the first leader of a foreign country to visit Brussels after the recent expansion of the European Union. Is this a coincidence?

        Wen: China regards the development of Sino-European relations as an important part of its diplomatic strategy. China and the European Union decided to develop a comprehensive and strategic partnership at the sixth China-EU summit, held last year. The comprehensiveness of the China-EU partnership means that it is a multi-tier and all-round relationship covering a wide range of areas. It includes not only political and cultural relations, but also economic and technological relations. It is not only bilateral but also multilateral, and it includes both official and people-to-people exchanges. The strategic nature of the relationship means that the relations are long-term and stable, and transcend the differences in social systems and ideologies. The China-EU relationship must be based on mutual trust and mutual benefit, and be aimed at a win-win outcome.

        Corriere Della Sera: Italian people admire and are interested in China for its great achievements in economic development. How will China and Europe intensify economic cooperation in future in your opinion?

        Wen: The development of China-EU economic relations retains a good momentum, with the bilateral trade value reaching US$125 billion last year, which is close to that between China and the United States and that between China and Japan. At the sixth China-EU summit, the two sides jointly defined a goal--to reach a bilateral trade value of US$200 billion by 2013. Judging from the current situation, the goal will probably be realized ahead of schedule. There is huge potential for economic and technological cooperation between the two sides. People from many European countries have come to China for investment and technology transfer. Some of them have built factories in China. They have brought capital and advanced technology as well as management expertise to our country. After years of efforts by the two sides, a complete cooperative mechanism has been set up. So long as we make full use of this mechanism, we will be able to solve any problems that crop up in the course of economic cooperation. Therefore, I'm full of confidence about the prospects for China-European economic and trade relations.

        Die Welt: Could you expound on your aim for visiting Germany?

        Wen: My visit to Germany aims to define the objective for the development of China-German relations, establish a cooperative mechanism, intensify consultation on major international issues, and advance trade, economic and technological exchanges. China and Germany are each other's main trading partners, with their trade volume reaching US$41.8 billion, accounting for one third of the total China-European trade. By 2010, the two countries' trade is expected to double. In addition, I hope that the two countries can conduct close cooperation in high-technology, cooperation among medium and small-sized enterprises and personnel training. Besides, we want to create channels for settling trade disputes between the two countries.

        Corriere Della Sera: In cooperation with Chinese enterprises, some Italian entrepreneurs of small and medium-sized enterprises worry that their Chinese counterparts might produce fake and shoddy products. What measures will the Chinese Government take to solve this problem?

        Wen: I hope to eliminate the worry of Italian entrepreneurs through your newspaper. The Chinese Government attaches great importance to the protection of intellectual property rights. We are taking the following four measures:

        --Establishing a leader-responsibility mechanism led by a vice premier;

        --Meting out severe punishment in cases of making or selling pirated discs, and other activities infringing upon intellectual property rights;

        --Constantly launching special campaigns to crack down on the infringement of intellectual property rights; and

        --Strengthening people's awareness of the importance of protecting intellectual property rights.

        With our unremitting efforts, I'm sure China will make greater progress in this regard.

        Corriere Della Sera: Our newspaper will certainly carry your comments on the protection of intellectual property rights. I have another question--How is China progressing two years after it joined the WTO?

        Wen: Since its WTO entry, China has sincerely fulfilled its obligations as a member of the WTO. Within two years, China has reduced its tariffs from 15 percent to 10.4 percent, and abolished or revised 3,000 clauses of related laws and regulations. Also, it has abolished some non-tariff barriers, and will cancel the quotas for imported automobiles in 2005. It is not easy for China, a developing country with a population of 1.3 billion, to do this.

        Irish Times: What experiences can China learn from the development of Ireland?

        Wen: One of the most important experiences of Irish development is that it attaches importance to educational, scientific and technological progress. A country with a small area has cultivated a considerable number of talented people and Nobel Prize winners, and enjoys a large share of the world computer software market. I have learned that there are more than 20,000 Chinese students studying in Ireland. This figure, though not big, shows a big ratio in the total of foreign students studying in Ireland. Many people who have been to Ireland have told me that the country is worth visiting.

        Currently, there are about 60,000 Chinese residing in Ireland. Some of them have Irish nationality, and others retain their Chinese citizenship. I urge them to observe Irish laws and join the local people's efforts to build Ireland. We encourage Chinese students studying abroad to come back, and they are free to return or not. I hope they will help the construction of the motherland in some form, no matter whether they come back or not.

        Reuters: China's economy is developing at a breath-taking speed. Many analysts and observers say that China's economy is overheated. What do you think about this? And what measures will China take to curb its over-heated economy?

        Wen: China's economy is in a good situation as a whole, with fast growth, growing profits for industrial enterprises, rebounding agricultural production, expanding foreign trade, surging revenue, and the rise of both urban and rural residents' incomes. But there are indeed some prominent contra-dictions and problems in our economic performance, such as the excessive growth of investment in fixed assets and extremely large scope of construction, increasingly strained supplies of coal, electricity, oil and transportation, growing inflationary pressure and price hikes for the means of production. We are taking the following measures to address these problems:

        * Tightening the supply of money and loans;

        * Controlling the requisition of farmland;

        * Intensifying the management of newly planned projects and projects under construction, and meting out severe punishment to those who illegally use farmland to build projects; and

        * Launching a campaign to save resources throughout the nation.

        China plans to raise the rate of reserve requirement for banks. In the meantime, it will issue new regulations on tightening land requisition, and raise the investment for certain industries. The government's resolute and decisive macro-economic control measures will help handle the problems in different ways.

        We believe that all these measures will work effectively after a period of time, and that the economy will maintain stable, relatively fast growth without major ups and downs. The prominent problems in China's economy are the structure and institution ones. Hence, China will unswervingly push forward systematic reform, including the reform of the investment and financial systems. In spite of the difficulties in carrying out macro-economic control, we are confident about the prospects.

        Reuters: We know that China's capital market, particularly its financial market, needs reform. China has made great efforts in this regard. What further measures should the Chinese Government take to make China's capital market more competitive?

        Wen: Banking reform is the crucial task of the reform in the entire financial sector. Determined to conduct banking reform, the government has defined the reform goal of establishing a modern banking system through adopting the equity and enterprise systems. Reform will be conducted first at the Bank of China and China Construction Bank. To support the reform, the Central Government has earmarked US$45 billion from its foreign exchange reserve to replenish the two banks' capital. But whether the reform is successful or not lies in the management system and operational mechanism. Our basic task is to introduce modern management methods, which include a unified, scientific and international standard accounting system and an information system. The difficulty for the reform is the shortage of management experience and talented people. Based on the experiences of the two banks, other state-owned commercial banks and the policy-nature banks will push forward reform.

        In addition, we will develop the stock market to create a direct financial channel. The government will provide a fair, just and legal environment for the development of the stock market. Both banking reform and the development of the capital market call for enterprise restructuring. We should push forward the restructuring to increase the quality and benefits of enterprises in the process of development.

        Corriere Della Sera: China has included the euro into its foreign exchange reserve. Europe is please with this, regarding it as supportive of the euro circulation. Will China expand the ratio of the euro in its foreign exchange reserve?

        Wen: The euro began circulation on January 1, 2002, as a step toward European integration, which China fully supports. Over the past two years, the euro has remained stable, with its value continuously appreciating. This indicates a recovery and development of the European economy, and also added to China's confidence in the euro.

        Reuters: Some people say that the exchange rate of China's Renminbi is too rigid, and, to some extent, has aggravated its economic overheating. Which do you prefer personally m gradually enlarging the Renminbi's fluctuation or making a swift "soft landing"?

        Wen: There is no problem of a too-rigid Renminbi exchange rate. China began the reform of the Renminbi exchange rate in 1994, with a view to dovetailing it with international practice. In the following years, the Renminbi exchange rate fluctuated in a single, management-based form in light of market supply and demand. From 1994 to 1997, the Renminbi rose 38 percent against the US dollar. In the wake of the Asian financial crisis, which occurred in 1997, China, holding a responsible attitude, made efforts to keep the Renminbi stable. Since then, the exchange rate of the Renminbi has fluctuated narrowly. We are determined to keep the basic stability of the Renminbi exchange rate based on a rational and balanced level. In the meantime, we are studying ways to establish a Renminbi exchange rate mechanism that suits the changes of the market. We will not give up this effort, but we must be prudent in choosing a time and method for such a work. In this process, two factors must be taken into consideration. One is the correct implementation of a macro-economic control policy and the other is the improvement of the banking system. Without these two factors, the reform will lead to adverse results and be likely to affect the stability of the world economy. The monetary exchange rate is a complicated problem on which even experts hold different opinions. We will pool our opinions widely, and study the problem seriously.

        Corriere Della Sera: China has written the protection of human rights and private property into its Constitution. European people are interested in this issue. Could you expound on it?

        Wen: In the course of revising the Constitution, the National People's Congress stressed respect for and protection of human rights. China has made long-term and unremitting efforts for the protection of human rights. First, it has persisted in reform and development, which provide a guarantee for its 1.3 billion people's right to subsistence and development. Second, In addition to the economic restructuring, China is also reforming its political system, which includes optimizing the socialist legal system and developing socialist democracy, particularly democracy at grassroots units, such as democratic election of leading cadres, people's participation in decision making, and democratic management and supervision. Third, we have set the goal of building China into a socialist country ruled by law and governing the country by law. China has joined the International Covenant on Economic, Social and Cultural Rights, and submitted its first report last year. China is also preparing for the adoption of the International Convention on Civil and Political Rights. We hope the countries with different social systems can launch dialogues, instead of confrontation.

        China has also written the protection of private property into its Constitution with two aims. One is to protect the right to assets by China's nationals, and the other is to promote the reform of property rights, thus bringing all positive factors into play and beefing up the development of the productive forces.

        Die Welt: Please allow me to raise a question about the Tiananmen event in 1989. Could you reach an understanding with those who left China for this reason?

        Wen: The late 1980s witnessed drastic changes in Eastern Europe and the disintegration of the former Soviet Union, as well as China's political event. At that critical time, the Chinese Government, depending on the force of the people, adopted resolute measures to stabilize the overall situation of development and reform, thus safeguarding the achievements of socialist undertakings and unswervingly pushing forward reform and opening up. The Communist Party of China has made a definite conclusion on the political event. China's huge achievements made over the past 15 years have fully demonstrated that stability is critically important.

        Reuters: You will visit Britain. I think that country is interested in the issue of Hong Kong. China has precluded the possibility of direct elections in Hong Kong in 2007 and 2008. My question is whether you will allow or predict that a direct election will be held in 2012. Without direct election, how will the Hong Kong people recover their confidence in the authorities there?

        Wen: Since Hong Kong returned China seven years ago, the Central Government has been consistent in its policy of "one country, two systems," "Hong Kong people governing Hong Kong" and the implementation of the Basic Law. Hong Kong's capitalist system has not changed, and its laws and way of life have basically remained unchanged. The Hong Kong people have been enjoying much more democratic rights and various freedoms since Hong Kong's return to China than in any other periods in history. Constitutional development in Hong Kong should follow the principles of the Basic Law and be in accordance with the actual conditions in Hong Kong, and be realized in a gradual and orderly way. Such a practice is conducive to the sound development of politics in Hong Kong, to safeguarding the interests of various sectors and strata in Hong Kong, and to the long-term prosperity and stability of Hong Kong.

        As a matter of fact, in the seven years since Hong Kong's return to China, Hong Kong's democracy has been continuously expanding. For instance, the number of directly elected members of the Legislative Council has increased from 20 in the first council to 24 in the second, and will rise to 30 in the third.

        The constitutional development in Hong Kong should suit its political and economic conditions. The objective stipulated in the Basic Law has not changed -- to ultimately realize election by universal suffrage of the chief executive and the Legislative Council of the Hong Kong Special Administrative Region. But it needs to follow an orderly process.

        The decision made by the Standing Committee of the National People's Congress on Hong Kong's electoral methods was based on democratic consultation, and the committee had repeatedly listened to the opinions of various sectors. It is normal to have different opinions in Hong Kong, a pluralistic society. But I always tell Hong Kong compatriots that the long-term and fundamental interests of the Hong Kong people, and the prosperity and stability of Hong Kong must be emphasized. The Central Government is firm in carrying out the policy of "one country, two systems," "Hong Kong people governing Hong Kong" and the implementation of the Basic Law. We believe that the Hong Kong people are capable of governing Hong Kong well, and Hong Kong can certainly maintain long-term prosperity and stability.

        Irish Times: Do you think China will draw the lesson of Britain and Ireland in dealing with the problem of Northern Ireland as China addresses the problem of Taiwan?

        Wen: Taiwan is part of Chinese territory, and the Taiwan issue is in fact one left over from China's civil war. There is only one China in the world, and both the mainland and Taiwan belong to China, and China's sovereignty and territorial integrity are inseparable.

        China's policy on Taiwan is to adhere to "peaceful reunification," and "one country, two systems," and China will exert its utmost efforts to realize peaceful reunification of the motherland, and at the same time it will never tolerate Taiwan's separation from it.

        But from historical and present-day viewpoints, the Taiwan issue is different from the problem of Northern Ireland.

        Reuters: You had talks recently with U.S. Vice President Dick Cheney and the leader of the Democratic People's Republic of Korea (DPRK) Kim Jong II. Did Dick Cheney advise you to believe that DPRK has nuclear weapons, as claimed by Pakistani scientists? What message has China passed to Kim Jong Ii and what message has Kim Jong Ii given to China?

        Wen: China holds the unswerving stance that the Korean Peninsula should be nuclear-free and the Korean nuclear issue should be solved through dialogue and consultation to maintain peace and stability on the peninsula. Hence we have kept promoting the six-party talks to serve this goal. China explained its stance to the United States and the DPRK, respectively, during both Dick Cheney's and Kim Jong II's visits to China. Both the United States and the DPRK expressed their willingness to participate in the six-party talks continuously in a bid to solve the Korean nuclear issue in a peaceful way, and they agreed to reach the final goal of a nuclear-free Korean Peninsula.

        The U.S. and the DPRK also expressed their hope of settling their own concerns, agreeing to take coordinated steps. The six-party talks have had a good start, especially in defining the goals and mechanism of such talks. I cannot confirm the claim by some Pakistani scientists that the DPRK has nuclear weapons.

        Die Welt: German Chancellor Gerhard Schroeder promised to sell a German nuclear-material processing plant to China during his visit here in December last year, which aroused debate among the coalition government of the German Social Democratic Party and the German Green Party. Some people worry that China would make nuclear weapons with Germany's technology. Could China preclude this possibility?

        Wen: I can answer this question quite seriously. First, cooperation in nuclear technology between the two countries is for peaceful purposes. Second, the cooperation is based on the principles of equality and mutual benefit. Third, China respects Germany's wishes on this issue.

        Die Welt: China shared the EU's stance on opposition to the Iraq war. Now the Iraq war is over, but the region is not yet peaceful. Does China, as a standing member of the UN Security Council, have any suggestion for promoting stability in the region?

        Wen: China is deeply concerned about the current situation in Iraq, and feels sincerely sympathetic to the Iraqi people. China and Europe have the same or a similar stance on the issue of Iraq's reconstruction. The United Nations should play a dominant role in the process, and every country should take part in it. China is willing to join and play its due role in Iraq's reconstruction process. At the same time, deeply worried about the increasing tension between the Palestinians and Israel, China hopes such disputes will be resolved through political negotiations and that the two sides can return to the path of "land for peace." In this regard, the relevant UN resolutions must be fully implemented.


Premier Wen Jiabao Addresses the China-EU Investment and Trade Symposium

        On May 6, 2004, when visiting the EU headquarters in Brussels, Chinese Premier Wen Jiabao attended the China-EU Investment and Trade Symposium and delivered a speech titled Vigorously Developing Comprehensive Strategic Partnership between China and the European Union.

        Speaking at the symposium, the premier praised the Sino-EU relationship, which was established 29 years ago, saying that it has withstood the test of time and the evolving international situation, and has embarked on a course of mature, sound and steady development. Striving for a comprehensive strategic partnership is a shared view of both sides.

        By "comprehensive," Wen said, it means that cooperation should be all-dimensional, wide-ranging and multi-layered cooperation in fields such as economy, science and technology, politics and culture, and between government and non-government.

        By "strategic," it means that cooperation should be long-term and stable, cover a wide range of areas and transcend the differences in ideology and social system and is not subjected to the impacts of individual events that occur from time to time, the premier explained.

        By "partnership," it means that the cooperation should be on an equal footing, mutually beneficial and win-win. The cooperation should be based on mutual respect and mutual trust, and the two sides should make joint efforts to expand common interests and seek common ground on major issues while shelving differences on minor ones, the premier added.

        Premier Wen noted that to develop such a new type of relationship between China and the EU will not only serve the mutual interests of the two sides, but also contribute to peace, stability and development in our respective regions and the world at large.

        The premier pointed out that developing the comprehensive strategic partnership between China and the EU has its nature of objectives and it thus enjoys a solid foundation.

        First, the international situation has undergone stupendous and profound changes. Peace and development has become the theme of the times, which offers a favorable international environment for the substantial expansion of China-EU relations.

        Second, both China and the European Union follow courses of development suited to their own characteristics and circumstances. The two sides have no conflict of fundamental interests, and rather see their common interests growing steadily.

        Third, China and the European Union are highly complementary economically.

        Fourth, both China and the European Union boast ancient histories and brilliant civilizations.

        Fifth, the two sides have already accumulated sufficient experience in properly handling disputes and ironing out their differences. Opting for dialogue and resisting confrontation not only reflect the existing maturity of the relationship but also ensure its further sound development in the days ahead.

        China has all along viewed and cultivated Sino-EU relations from a strategic vision, Premier Wen stressed. Since the early 1990s, Chinese leaders, such as Jiang Zemin and Hu Jintao, have visited EU member states on many occasions in an effort to promote the bilateral relations, he added.

        "We are glad to see that the EU admitted 10 new countries on May 1, increasing the number of its members to 25. The EU enlargement will make a key impact on European configuration and even the entire pattern of international relations," Wen noted. He added that China has always supported European integration and looks forward to a more important role of the European Union in European and international affairs.

        We stress that an enlarged European Union will contribute to greater prosperity and stability in Europe and generate new opportunities for deeper ties between China and the European Union, the premier said.

        The premier called on both sides to tap their trade potential, step up cooperation in the hi-tech area, promote cooperation among small- and medium-sized businesses, remove outdated barriers and obstacles and build and improve the consultation and dialogue mechanism.

        Premier Wen proposed five-point proposals for expanding China-EU economic ties. They are as follows:

        First, making a bigger "cake." Both sides should work hard in tapping their trade potential, expanding the trade scale and increasing the trade volume.

        Second, enhancing cooperation in the hi-tech realm. The two sides should make vigorous efforts to push for research and development (R&D) cooperation in the hi-tech area, with a view to developing internationally competitive products and opening up new markets. At the same time, the two sides should continue to expand the traditional purchase of product, import of technologies and investment cooperation.

        Third, energetically promoting cooperation of small- and medium-sized enterprises. The two sides should help small- and medium-sized businesses become a vital player in the Sino-EU economic partnership by putting in place a necessary cooperation platform, providing information, financing and other needed services, and giving full play to the role of intermediary agencies.

        Fourth, eliminating barriers. China will continue to faithfully honor its commitments of the World Trade Organization (WTO), enhance the efforts to protect intellectual property right and increase the fairness and transparency in economic and trade policies, laws and regulations. Premier Wen urged the European Union to ease its restrictions on hi-tech exports to China and lift its import bans that are inconsistent with WTO rules.

        Fifth, establishing consultation and dialogue mechanism. The existing mechanisms, the Joint Committee on Economic and Trade Cooperation included, should be given full play, with a view to properly addressing the problems, differences and other concerns of the two sides through friendly consultations, said the premier.

        Premier Wen noted that prior to the adoption of major measures that may bear on the interests of the other side, greater attention should be paid to keeping the partner informed and consulted so as to avoid complicating the problems. In addressing economic and trade issues at the multilateral level, consultation and coordination should be strengthened, the premier concluded.

        Premier Wen said that China has experienced 25 years of reform and opening up, and five years of WTO entry. The country's socialist market economic system has been basically established, and its individual, private, non-public and other forms of economies have been developing rapidly, constituting a considerable proportion of the national economy. More than 90 percent of product prices are decided through market, and related policies, laws and regulations conform to the WTO rules. Nearly 3,000 laws and regulations as well as economic and trade policies have been made public and implemented.

        With the transformation of the government functions and deepening of the structural reform, enterprises have become independent economic entities. Foreign-funded enterprises not only enjoy national treatment, but also enjoy preferential policies in taxation.

        With the constant expansion of coverage rate in social security, the rights and interests of employees in the field of old-age pensions, industrial injuries, medical treatment and unemployment have been protected. Premier Wen hopes that the European Union will pay attention to the above facts and try to admit China's complete market economy status, which will help promote new development and economic and trade cooperation between China and the European Union.

        Premier Wen said that China's economy has entered a rising stage in the new round of growth cycle. It is expected that in 2020, China's GDP will reach more than US$4,000 billion, with the annual import of about USS1,000 billion. The rapid development in China's eastern coastal areas, the great development in western regions, the invigoration of old industrial bases in northeast, the host of 2008 Olympic Games and 2010 Shanghai World Expo will all provide huge business opportunities for EU industrial and commercial circles.

        Finally, Premier Wen pointed out that China's development needs Europe and vice versa. The relationship between China and Europe is at the new starting point and Sino-European economic and trade cooperation is promising.



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