Keynote Speech by Ambassador Liu Xiaoming at the Sino-European Entrepreneurs Summit: Join Hands to Meet the Challenges, Create New Opportunities and Build a Shared Future

Chairman Long Yongtu,

Minister Graham Stuart,

Lord Edward Garnier,

Entrepreneurs,

Ladies and Gentlemen:

Good morning!

It is a real delight to join you for the third time at the Sino-European Entrepreneurs Summit and give my first speech a day after coming back from China.

Since its inception in 2008, the Sino-European Entrepreneurs Summit has focused on topics that are always highly pertinent and timely. It has become an effective platform for political, business and academic leaders from China and Europe to explore ways to work together and achieve development. Over the years, the Summit has contributed new ideas and new thoughts on how to deepen China-Europe and China-UK relations. I would like to express my appreciation for this.

The theme of this year's Summit is "A New Era for China-Europe Business Cooperation". Let me share with you my views on the challenges and opportunities in the new era from three perspectives: global environment, China-Europe cooperation and China-UK cooperation.

First, how do we see the challenges in the global business environment in the new era?

The world is undergoing profound changes unseen in a century. The new round of scientific and technological revolution and industrial transformation is leading the forces reshaping the international landscape and determining the future of mankind.

However, at the same time, unilateralism and protectionism are on the rise. Economic globalisation encounters headwind. And the international economic order and multilateral trade system experience severe setback.

A big Western power, adopting bullying trade policies and protectionist measures, is the major force behind this gloomy picture. This has not only affected its business relations with China. Their impact on the global business environment could be extremely negative and worrisome.

First, they risk disrupting the global industrial chain and supply chain.

Economic globalisation is not an empty concept. It is real and concrete. The global industrial chain and supply chain have locked the multi-national corporations in an interdependent network. They are the exact embodiment of economic globalisation.

But this big Western power raises tariffs at the expense of the industrial chain and undermines the stability and security of the supply chain, forcing many corporations to readjust their global layout and resulting in lower efficiency in global resources allocation.

Second, they undermine the authority of the multilateral trade system.

This big Western power is using tariff weapon against other countries according to its domestic law and at the excuse of safeguarding "national security".

This goes against the most fundamental and central WTO rules on most-favoured-nation treatment and tariff bindings.
This undermines the authority of the WTO and its dispute settlement system.
And this puts the multilateral trade system and the international trade order in jeopardy.
Third, they thwart the momentum of world economic recovery.

At a time when the world economy has not fully recovered from the international financial crisis, this big Western power's move to trigger "trade wars" will dampen market confidence, hamper economic recovery, hold back the growth of enterprises and affect people all over the world.

As a result, WTO has downgraded the growth forecast for global trade from 3.7% to 2.6%. And the "World Trade Outlook Indicator" for the second quarter of this year hit the lowest level since March 2010.

China always believes that there is no winner in a trade war. Dialogue and consultation are the right way forward.

For the severe setbacks in China-US trade talks the US should bear full responsibility, because it has gone against consensus and broken promises during the talks. By contrast, China went into the negotiations in good faith and in the spirit of mutual respect, equality and mutual benefit. We had tried to find a solution through consultations. We hope to maintain the stability and development of the world economy.

China's position and attitude in the trade talks is consistent and clear: China is always open for talks, but we would fight to the end should a "trade war" break out.

Now let me turn to China-Europe business cooperation: how do we advance this cooperation in the new era?

China and Europe share broad consensus on major issues such as improving global economic governance, upholding multilateralism and advocating free trade. Our cooperation has a solid foundation.

In 2018, bilateral trade between China and Europe stood at 604.7 billion euros (681.8 billion dollars), increasing by 5.5% year-on-year. Real investment from Europe in China reached 10.42 billion dollars, up by 25.7% year-on-year.

When President Xi Jinping visited France last March, he attended the closing ceremony of the China-France Global Governance Forum together with French President Macron, German Chancellor Merkel and President of the European Commission Juncker. They reached an important consensus on upholding multilateralism, improving global governance and enhancing international dialogue and cooperation.

In my opinion, to translate this consensus into real growth, China and Europe should work together in the following three aspects:

First, China and Europe should enhance mutual trust.

The ever-deepening economic globalisation has resulted in the international division of labour and created a global market, where countries rely on each other for economic growth, and market fluctuations are felt across the world.

Against this background, it is important that China and Europe respect and trust each other, treat each other as equals, stay open and inclusive, and engage in win-win cooperation.

We should work together to uphold the basic norms governing international relations. We should improve the global governance system, safeguard the rule-based multilateral trade system, and ensure the sustained and sound growth of the world economy.

Last month, China submitted to the WTO the Document of China's Suggestions on WTO Reforms, in which China's position is explained in detail.

China stands ready to work with Europe to advance WTO reforms so that WTO could play a bigger role in global economic governance.

Second, China and Europe should work together on rules setting, and take the lead in innovation-driven industrial upgrading.

The EU has been China's largest trading partner and China is EU's second largest trading partner. Our two sides have also been important partners in technology transfer and investment.

There are huge potential and broad prospects for our cooperation in areas such as nuclear power, aviation, artificial intelligence, digital technology, green economy, 5G and financial services.

To tap such potential, our two sides should enhance communication and cooperation. We can work together to build a peaceful, safe, democratic, transparent, inclusive and universally-beneficial system of rules that govern international cooperation. This would facilitate industrial transformation and upgrading. It would also help deliver the benefit of scientific and technological innovation to more people.

Third, China and Europe should enhance open cooperation and share development opportunities.

Openness, connectivity and common development are the trend of our times. China has followed this trend by easing or removing the foreign ownership cap in sectors such as banking, insurance, securities, telecommunications, medical care, education, transport and energy.

As a result, BMW, BASF, AXA, Allianz and many other European companies have expanded their investment in China. Moreover, despite the steep drop in global FDI last year, the amount flowing into China totaled 135 billion dollars, up by 3%. This speaks volumes about international confidence in the Chinese economy.

As China implements the Foreign Investment Law, it will take further measures to deepen reform, open its door wider to the world and make business environment even better. Later this year, we will host the second China International Import Expo. This will create more opportunities for more wide-ranging cooperation between foreign companies and their Chinese partners.

Now I would like to turn to China-UK cooperation: how do we see the prospects of this cooperation under the new situation?

This year marks the 70th anniversary of the founding of the People's Republic of China. It is also the 65th anniversary of the establishment of China-UK diplomatic relationship at the level of chargé d'affaires.

At this new historical starting point, China-UK relationship is faced with a new situation and new opportunities. Tapping these opportunities requires China and the UK to make the following efforts as we go forward:

First, we should stay confident in the steady and sustained development of the China-UK "Golden Era".

President Xi Jinping's successful state visit to the UK in 2015 ushered in the China-UK "Golden Era". Since then, the cooperation between our two countries has made steady progress and delivered fruitful results across the board.

In 2018, China-UK trade in goods exceeded 80 billion dollars for the first time; FDI from China to the UK increased by 14% year-on-year.

Last April, Chancellor Hammond attended the second Belt and Road Forum for International Cooperation in Beijing. This gave a further boost to China-UK cooperation on the Belt and Road Initiative.

Next week, our two countries will hold the tenth Economic and Financial Dialogue. This will be an important opportunity to explore deeper and more substantial cooperation on financial services, trade and agriculture.

Second, we should make decisions independently in order to foster an open, transparent and fair business environment.

As big countries of global influence, China and the UK have broad consensus on promoting open cooperation.

Early this year, BT became the first overseas telecom operator to secure nationwide license in China. At the same time, the future of a Chinese telecom company in the UK is watched closely. Last month during my annual consultations back in China, I had the opportunity to meet with the top management team of Huawei. From the meetings I could see the importance Huawei attaches to the UK market and how deeply they believe that cooperation with the UK enjoys a promising future.

It is important that the British Government resist interruptions and pressure, and make the right decision independently based on its national interests and the interests of China-UK cooperation.

I hope that Chinese companies including Huawei will continue to find themselves in an open, transparent and fair business environment here in the UK.

Third, we should keep the long-term interests and big picture in mind so as to create favourable conditions for China-UK relations after Brexit.

Despite the uncertainties of Brexit, China believes that both the UK and the EU have the wisdom and capability to deal with this issue in a proper manner.

China remains unchanged in developing both China-EU and China-UK relations. We hope to see a prosperous and stable EU as well as a prosperous and stable UK.

China stands ready to work with both the UK and the EU to explore new opportunities for cooperation on goods, services and investment after the UK leaves the EU. I am sure we could achieve win-win results for all.

Ladies and Gentlemen:

More than two hundred years ago, Adam Smith emphasised the importance of openness and free competition. He said, "In general, if any branch of trade, or any division of labour, be advantageous to the public, the freer and more general the competition, it will always be the more so."

President Xi Jinping said, "We are convinced that a more open China will further integrate itself into the world and deliver greater progress and prosperity for both China and the world at large."

Facts have proven that full market competition is conducive to sound economic growth, while arbitrary protectionism only harms the interests of all countries.

I sincerely hope that entrepreneurs from China, the UK and Europe could join hands to meet the challenges in the spirit of innovation and entrepreneurship. I hope you would stay confident in our cooperation and take concrete actions to translate opportunities into mutually-beneficial results.

Together, we could create a prosperous future for China-UK relations and together, we could build a new era for China-Europe cooperation!

In conclusion, I wish the tenth Sino-European Entrepreneurs Summit a great success!

Thank you!