* JANUARY 16, 2011, 11:26 A.M. ET
The Wall Street Journal submitted a series of questions for Chinese President Hu Jintao ahead of his visit to the U.S. from Jan. 18 to 21. The Washington Post also submitted questions. China’s Foreign Ministry supplied responses from Mr. Hu to seven questions, as follows:
1. How do you view the current state of China-U.S. relationship? What do you see as the most promising areas of mutually beneficial cooperation between China and the United States? What do you see as the major challenges to the long-term, sound and steady development of China-U.S. relationship?
A: Since the beginning of the 21st century, thanks to the concerted efforts of both sides, China-U.S. relationship has on the whole enjoyed steady growth. Since President Obama took office, we have maintained close contact through exchange of visits, meetings, telephone conversations and letters. We agreed to build a positive, cooperative and comprehensive China-U.S. relationship for the 21st century and together, we instituted the China-U.S. Strategic and Economic Dialogues mechanism. Over the past two years, China and the United States have carried out practical cooperation in a wide range of areas including economy and trade, energy, the environment, counterterrorism, law enforcement and culture. The two countries have maintained close contact and coordination in dealing with major international and regional hotspot issues and addressing global challenges, such as climate change and the international financial crisis. The strategic significance and global impact of China-U.S. relations have been on the rise.
China and the United States have major influence in international affairs and shoulder important responsibilities in upholding world peace and promoting common development. Under the new circumstances, the common interests of our two countries have been growing and areas of cooperation expanding. There is great potential for our mutually beneficial cooperation both in advancing Asia-Pacific regional cooperation and in improving global economic governance and promoting sustainable growth of the world economy; both in expanding cooperation in economy and trade and in strengthening cooperation in new areas like new energy sources, clean energy, infrastructure development and aviation and space; and both in fighting terrorism and preventing the proliferation of weapons of mass destruction and in meeting challenges like natural disasters, food security and major communicable diseases.
We both stand to gain from a sound China-U.S. relationship, and lose from confrontation. We should act in the fundamental interests of our two peoples and uphold the overall interests of world peace and development. We should rise up to challenges, remove disturbances, work for shared goals and promote continuous growth of our relations. I wish to stress the following four points. First, we should increase dialogue and contact and enhance strategic mutual trust. Second, we should abandon the zero-sum Cold War mentality, view each other’s development in an objective and sensible way, respect each other’s choice of development path, and pursue common development through win-win cooperation. Third, we should respect each other’s sovereignty, territorial integrity and development interests and properly address each other’s major concerns. And fourth, we should make constant efforts to expand our converging interests so that China and the United States will be partners for cooperation in broader areas.
There is no denying that there are some differences and sensitive issues between us. Both sides should keep to the right direction in the development of our relations, increase exchanges, enhance mutual trust, seek common ground while reserving differences, properly manage differences and sensitive issues and jointly promote the long-term, sound and steady development of China-U.S. relations.
2. Despite the continuous growth of foreign investment in China, some American companies have complained about China’s business climate. What steps is China taking to ensure a level playing field for U.S. and other foreign companies in China?
A: The use of foreign investment is an important part of China’s basic state policy of opening-up. Over the past decade since its accession to the WTO, China has fully honored its commitments by abolishing all domestic laws and regulations incompatible with WTO rules and giving foreign companies national treatment. All foreign companies registered in China are Chinese enterprises. Their innovation, production and business operations in China enjoy the same treatment as Chinese enterprises. The package plan and the related policy measures that the Chinese government introduced to counter the international financial crisis have also provided good opportunities for the growth of all enterprises in China, foreign companies included.
China will stay firmly committed to the basic state policy of opening-up. We will actively and effectively use foreign investment, improve its structure, diversify its form, and open up more channels and sectors so as to facilitate investment. China will continue to improve laws and regulations concerning foreign investment, strengthen IPR protection, promptly address the legitimate concerns of foreign companies and facilitate the growth of enterprises of all kinds in China by offering them a stable and transparent legal and policy environment, a consistent and open market environment as well as a standardized and efficient administrative environment.
3. What lessons do you think can be drawn from the 2008 international financial crisis? What effective measures did China adopt to counter the impact of the crisis?
A: This international financial crisis has reflected the absence of regulation in financial innovation. Its root cause lies in the serious defects of the existing financial system. They are mainly as follows: First, the international financial system has not kept up with the latest development of economic and financial globalization and was incapable of tackling the risks and challenges brought about by massive financial activities. Second, international financial institutions failed to fully reflect the changing status of developing countries in the world economy and finance. The global representativeness and enforcement capabilities of these institutions need to be further strengthened. Third, the international financial system was in serious shortage of resources and means to tackle the international financial crisis and its rescue capabilities need to be built up.
However, thanks to the concerted efforts of the international community and G-20 members, progress has been made in the reform of the international financial system over the past two years since the outbreak of the financial crisis. China hopes that the international community will work together to further advance the reform of the international financial system and move toward the establishment of a fair, just, inclusive and well-managed international financial order. To achieve the long-term and sound growth of the world economy, we must not only address specific issues such as managing properly the relationship between the financial sector and the real economy, between financial innovation and financial supervision and regulation, and between consumption and saving, but also, and more importantly, review those fundamental problems in the world economy on a macro level. The most prominent problem in the world’s economic imbalance today is the serious development imbalance between the North and the South. The international community should make concerted efforts to build a new and more equal and balanced global partnership for development and encourage developed and developing countries to have more mutual understanding and closer coordination, so as to promote the strong, sustainable and balanced development of the world economy.
The international financial crisis has inflicted on China unprecedented difficulties and challenges. To address its impact and maintain the steady and relatively fast growth of the economy, China quickly adjusted its macroeconomic policies, resolutely adopted the proactive fiscal policy and moderately easy monetary policy, put in place a package plan to boost domestic demand and stimulate economic growth, significantly increased government investment, implemented industrial readjustment and reinvigoration plans on a large scale, energetically promoted scientific innovation and technological upgrading, raised social welfare benefits by a substantial margin and introduced a more active employment policy. As a result, our economy in 2009 and 2010 maintained steady and relatively fast growth and contributed to the economic recovery of the region and the world. Looking ahead, China will take scientific development as the main theme and focus on transforming the economic development pattern at a faster pace. We will implement a proactive fiscal policy and a prudent monetary policy, speed up economic restructuring, vigorously strengthen indigenous innovation, make good progress in energy conservation and pollution reduction, continue to deepen reform and opening-up, work hard to ensure and improve people’s livelihood, build on the achievements in addressing the international financial crisis, maintain steady and relatively fast economic growth, and promote social stability and harmony. China will pursue the win-win strategy of opening-up and stands ready to work with the United States and the international community as a whole to intensify practical cooperation, properly handle various risks and challenges, and make greater contribution to the overall recovery of the world economy.
4. What do you think will be the U.S. dollar’s future role in the world? How do you see the issue of making the RMB an international currency? Some think that RMB appreciation may curb China’s inflation, what’s your view on that?
A: The current international currency system is the product of the past. As a major reserve currency, the U.S. dollar is used in considerable amount of global trade in commodities as well as in most of the investment and financial transactions. The monetary policy of the United States has a major impact on global liquidity and capital flows and therefore, the liquidity of the U.S. dollar should be kept at a reasonable and stable level.
It takes a long time for a country’s currency to be widely accepted in the world. China has made important contribution to the world economy in terms of total economic output and trade, and the RMB has played a role in the world economic development. But making the RMB an international currency will be a fairly long process. The ongoing pilot programs for RMB settlement of cross-border trade and investment transactions are a concrete step that China has taken to respond to the international financial crisis, with the purpose of promoting trade and investment facilitation. They fit in well with market demand as evidenced by the rapidly expanding scale of these transactions.
China has adopted a package plan to curb inflation, including interest rate adjustment. We have adopted a managed floating exchange rate regime based on market supply and demand with reference to a basket of currencies. Changes in exchange rate are a result of multiple factors, including the balance of international payment and market supply and demand. In this sense, inflation can hardly be the main factor in determining the exchange rate policy.
5. How do you comment on China’s achievements in economic and social development in the Eleventh Five-Year Plan period? Is there a risk that inflation in China could get out of control? Is China’s political reform keeping up with the steps of its economic reform?
A: The Eleventh Five-Year Plan period was a truly eventful one in the course of China’s development. Facing the complex changes at home and abroad and the major risks and challenges, we adhered to the Scientific Outlook on Development, strengthened and improved macro-regulation, gave full play to the basic role of market in resources allocation, took proactive steps to curb the unstable and unhealthy factors in the economic operation, and maintained steady and relatively fast growth of the national economy and social stability and harmony.
In the past five years, China’s GDP is expected to have grown at an average annual rate of 11% and per capita GDP is expected to have reached US$4,000. Agricultural development accelerated and grain output increased on a continuous basis. Important progress was made in economic restructuring. Development of different regions became more balanced. Urbanization and development of the new countryside was steadily advanced. Good progress was achieved in energy conservation and pollution reduction. And foreign trade enjoyed stable and relatively fast growth. While developing the economy, we continued to put people’s interests first and paid more attention to developing social programs and improving people’s livelihood. Per capita incomes of urban and rural residents are estimated to have risen at an average annual rate of over 9.3% and around 8% respectively in the past five years. Population below poverty line in the rural areas was noticeably reduced. Education, social security, health care and other social programs developed more rapidly. In short, remarkable achievements have been made in China’s socialist economic, political, cultural and social development and in the building of a conservation culture. At the same time, we are keenly aware that China is still the largest developing country in the world and we need to make long and hard efforts if we are to build a moderately prosperous society in all respects and basically achieve modernization.
The rise of the overall price level has a very strong structural feature, yet it is on the whole moderate and controllable. There is a basic balance between total supply and total demand, and the material basis is strong enough to maintain market supply and stabilize the overall price level. We have the confidence, conditions and ability to stabilize the overall price level.
We have always maintained that people’s democracy is the life of socialism. Without democracy, there can be no socialist modernization. To develop socialist democracy is a goal we have always been committed to. China’s reform is a comprehensive one, covering economic restructuring, political restructuring, cultural restructuring and social restructuring. In the past 30-plus years since reform and opening-up, notable progress has been made in China’s political restructuring. The fact that China has enjoyed sustained, rapid economic growth and social stability and harmony proves that China’s political system fits China’s national conditions and meets the requirement of overall economic and social development.
Political restructuring must deepen in the course of economic and social development and meet people’s growing enthusiasm for participating in political affairs. The political restructuring we pursue in China is aimed at advancing the self-improvement and development of the socialist political system. We will continue to expand people’s democracy and build a socialist country under the rule of law in keeping with China’s national conditions. We will ensure that all work of the state is based on the law and that the lawful rights and interests of the people are safeguarded. We will define the institutions, standards and procedures for socialist democracy, expand people’s orderly participation in political affairs at each level and in every field, mobilize and organize the people as extensively as possible to manage state and social affairs as well as economic and cultural programs in accordance with the law, and strive for continued progress in building socialist political civilization.
6. China stated it is committed to peaceful development. But in the past year, China has become more assertive. Do you think this will affect China’s relations with the United States and neighbors in Asia?
A: To follow the path of peaceful development is a solemn commitment of the Chinese government and people to the international community. It is a policy that we will always adhere to. Specifically, it means that we will achieve national development by our hard and creative work, by reforming and improving our institutions, and by maintaining friendship and mutually beneficial cooperation with other countries.
China has been committed to the independent foreign policy of peace and has developed friendship and cooperation with all countries on the basis of the Five Principles of Peaceful Coexistence. We stand for equality and mutual respect between countries. Like other countries in the world, China must uphold its own sovereignty, territorial integrity and development interests. At the same time, we are willing to properly handle differences and disagreements in state-to-state relations in accordance with the basic norms governing international relations and the principle of mutual understanding, mutual accommodation, dialogue and consultation.
Over the years, relations between China and other Asia-Pacific countries, including the United States and our Asian neighbors, have grown steadily, and together we have contributed to development in the Asia-Pacific region. Mutual trust between China and other countries in this region has deepened in our common response to tough challenges, and our cooperation has continuously expanded in our pursuit of mutual benefit and win-win outcomes. At present, relations between China and other Asia-Pacific countries face unprecedented opportunities. China is ready to work with other countries to seize opportunities, meet challenges and promote peace and development in the region and beyond.
7. What is China’s view on the tension on the Korean peninsula? Does China believe that reunification of the Korean peninsula will bring more stability than maintaining the status quo? How do you view North Korea’s goal of building nuclear weapons?
A: There was high tension on the Korean peninsula a few weeks ago. China maintained close contact and coordination with other parties and made relentless efforts to help ease the tension and maintain peace and stability on the peninsula. We urged the North and the South to be calm and exercise restraint, refrain from any action which might escalate tension and undermine peace and stability on the peninsula, and enter into dialogue and contact as quickly as possible to seek an appropriate solution. We also called on relevant parties to work to ease tension and contribute to peace and stability on the peninsula. Thanks to joint efforts by China and other parties, there have been signs of relaxation. We hope that the relevant parties will seize the opportunity to engage in active interactions, resume the process of dialogue and consultation as soon as possible, and ensure that the situation on the peninsula will move forward in a positive direction.
As a close neighbor and friend of both the DPRK and the ROK, China hopes that the North and the South will improve relations and achieve reconciliation and cooperation through dialogue and consultation and eventually realize independent and peaceful reunification, and we support their efforts in this regard. This is in the fundamental interests of both the North and the South and conducive to peace and stability on the peninsula.
China pays a great deal of attention to the Korean nuclear issue. We stand for achieving denuclearization of the peninsula in a peaceful way through dialogue and consultation to maintain peace and stability of the peninsula and Northeast Asia. For this purpose, China actively advocates and promotes the Six-Party Talks process. We hope that proceeding from the overall interests of the denuclearization of the peninsula and regional peace and stability, the parties concerned will take active measures and create conditions for the resumption of the Six-Party Talks. I am convinced that as long as the parties respect each other, engage in consultation on an equal footing, and implement the September 19 Joint Statement in a comprehensive and balanced way through the Six-Party Talks, they will arrive at an appropriate solution to the Korean nuclear issue and contribute to lasting peace and stability on the peninsula and in Northeast Asia.