How does US$130 billion make sense?

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Last updated at: (Beijing Time) Wednesday, January 07, 2004

How does US$130 billion make sense?

China had a trade deficit of US$13.4b which was US$8.82b more than that of the year 2002. Japan has been China's largest trade partner for strait 11 years. The bilateral trade volume between China and Japan was estimated to hit a new high at US$130b for 2003.

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The Sino-Japan economic and trade cooperation has deepened with the development of their bilateral relations. The two countries are important trade partners to each other. Statistics from the Chinese customs showed that for the first eleven months of 2003 from January to November, the Sino-Japan trade volume, up to USD 119.9b, had even exceeded that of the whole year for 2002, an increase of 30.6 percent over the same period of the previous year and accounting for 15.8 percent of China's total foreign trade.

China's exports to Japan posted at USD 53.25b, up 22.1 percent while China's imports from Japan was USD66.65b, a rise of 38.3 percent. China had a trade deficit of USD13.4b which was USD8.82b more than that of the previous year. Japan has been China's largest trade partner for strait 11 years. The bilateral trade volume between China and Japan was estimated to hit a new high at USD130b for 2003.

Japanese businesses launched a new surge of investment in China with a contract value of USD55.76b and USD40.24b in place, covering 27730 projects. Japan has grown to be an important source of foreign capital and technology for China. Japan is also China's biggest ODA (official development aids) country which extends over half of loans China receives from foreign governments. Japan's ODA to China, as well as its trade with and investment in China, contributes a lot to the economic growth of both China and Japan. China has a very high opinion about this.

That some Chinese enterprises with some strength has made their presence in the Japanese market is quite encouraging. The Sino-Japan bilateral relationship in which the two sides has close cooperation and are integrated and complementary to each other brings generous benefits to both sides and makes great contributions to the economic progress for Asia and the world at large.

However, there are bumps that cannot be dodged on the generally flat and long way of Sino-Japan trade and economic ties. To name just a few, trade frictions were triggered by Japan's restrictions or investigations on exports of Chinese farm produces such as poultry, spinach, and eels and other Chinese products such as towels. Unbalanced bilateral trade, slashed Japan's ODA to China year-on-year and some Chinese enterprises blacklisted on the export control catalogues by Japan all disturb the trade between the two sides. These issues need to be faced and solved with positive measures by China and Japan.

China insists that we view and evaluate the Sino-Japan trade and economic cooperation fairly and objectively and we don't agree with some claims on the Japanese side for the past years that Sino-Japan trade and economic cooperation made Japan's industries empty or China was exporting its deflation. China appreciates Japanese Prime Minister Koizumi's position on his opposition to the fare of "Chinese threat".

Problems and frictions are normal in trade ties with a volume up to hundreds of billions dollars for a year. It is definitely not wise to make a fuss with one or two problems or for the media to give excessive and irresponsible distorted reports on the problems. This hyper will mislead the bilateral trade and economic cooperation, immediately affect the economic benefits of the participants in the cooperation framework, and even course damages on the feelings between the two countries.

We hold that friendly consultations with far-sightedness is the right way to smooth away the problems, instead of any unfair or unscientific discriminative moves and any artificially created trade barriers. Both sides will be affected if the frictions get stronger. Governments from the two countries are stepping up communications and consultations between them. Good results have been made from the talks between Sino-Japan economic partners and between the supervisory departments from the two sides.

Settling down and erasing trade barriers and easing trade frictions through dialogues and consultations will help to sustain the fast growth of Sino-Japan trade, which is in the interests of both China and Japan, as well as countries and their entrepreneurs willing to build a long-term rational trade and economic cooperative relations with China.

Since 2003, China has made great efforts on fulfilling its WTO commitment by further opening its home market. The import growing faster than the export evidently shows the promising market potential of China. China's opening-up and reform and its WTO membership have offered opportunities and a big center stage for a more extensive Sino-Japan trade and economic cooperation and further development of multi-lateral cooperation. The Sino-Japan trade and economic partnership will mainly take the following way to expand in the future.

First of all, there is ample space for cooperation on service industry. The opening of and relaxation of market access to China's service trade give more opportunities to Japan's service businesses with advantages over their Chinese counterparts. China's service trade is developing slowly compared with the fast pace of its goods trade.

With the international industrial restructuring and China regarded as the "world's plant", China's commodities export presents high-speed rise. But the sectors closely correlated with this goods flow lag behind, involving distribution, logistics, cargo agency, warehousing service, transportation, insurance, consultancy, and legal services. This situation pushes goods trade cost higher, impedes operation improvement, and retards the expansion of goods trade.

China's cooperation on the service sector with Japan will not only bring advanced operation ideas and systems to China, but also coordinate the pace of development of goods and service trade between the two countries through competitions and cooperation.

The second point is to exploit new growth point for more extensive economic cooperation. While developing its west regions, China has adopted the strategy of rejuvenating the old industrial cradle in the northeast and energizing the Bohai Sea economic ring. This will be new driving force for China's sustainable economic growth and add more possibilities to Sino-Japan economic coordination.

The Japanese business circle and enterprises are encouraged to take this chance and participate in the construction and cooperation. China will host a forum in the northeast China of cooperation on invigorating the used-to-be industrial base in this region and a workshop in Tianjin on China-Japan-South Korea cooperation on Bohai Sea Ring development which is also an occasion for international components fair for the three countries. Active cooperation and participation from the business circle in Japan and South Korea are expected.

The third point is to make more efforts on the coordination of regional economic cooperation between the China and Japan. Japan, South Korea, and ASEAN are all important trade partners to China. China always actively participates into and pushes forward the ASEAN +3 (China, Japan and South Korea) cooperation process. China shares common interests with Japan in regional cooperation. The two countries should keep frequent contact and coordination on multi-lateral cooperation.

The construction of China-ASEAN free trade zone goes smoothly. Japan has reached common understanding with ASEAN on a closer trade and economic partnership. South Korea and ASEAN are considering a free trade zone between them. And ASEAN has set the building of an "economic union" as its next step. All of these will pave a way for a free trade zone in the east Asia. Discussions and research on the free trade zone around China, Japan and South Korea and the cooperation on the free trade zone in east Asia should be conducted. This cooperation is of historical significance and needs to be pushed forward from a strategic perspective.

An article from People's Daily on Jan.5, 2004 and translated by PD Online Lijia

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