(Reuters) - Chinese President Xi Jinping arrives in Britain on Monday for a state visit at the invitation of Queen Elizabeth II, the first state visit to the United Kingdom by a Chinese leader since 2005.
In advance of the trip, President Xi conducted a written interview with Reuters, providing written answers to questions posed in writing by Reuters.
The answers, given in English, were prepared by Chinese officials but reviewed and approved by Xi, according to foreign ministry officials.
The questions and answers follow in full. For a story on Xi’s comments, click on.
Q: Britain says it wants to be China’s best partner in the West, and that its economy is wide open to Chinese investment. At the same time, many in Britain fear China’s intentions and think the British government is too eager to please China. What are China’s aims in fostering a stronger relationship with Britain, and how do you intend to ensure that it is mutually beneficial?
A: I visited London, Oxford, Glasgow and Edinburgh in 1994. I was deeply impressed by the visit, particularly Britain’s long history, unique culture, friendly people and its beautiful environment.
During my upcoming state visit to the UK at the invitation of Her Majesty Queen Elizabeth II, I look forward to having discussions with British leaders and engaging the British public on our bilateral ties. I hope this will chart the course for the future growth of China-UK relations, inject new impetus in practical cooperation between our two countries in all fields and enable us to jointly usher in a “golden time” for China-UK comprehensive strategic partnership.
Public opinion surveys conducted in Britain show that views of China are largely favorable among the British people. Our two peoples appreciate each other’s time-honored and unique cultures. This is an important foundation and favorable condition for growing bilateral ties. It is true that some people have some misgivings about China-UK cooperation. What I want to stress is that in today’s world, no country can afford to pursue development with its door closed. One should open the door, warmly welcome friends and be hospitable to them. This is recognized international practice. The UK has stated that it will be the Western country that is most open to China. This is a visionary and strategic choice that fully meets Britain’s own long-term interest. China looks forward to engaging with the UK in a wider range, at a higher level and in greater depth.
In recent years, while global growth has slowed down, China-UK investment and business cooperation has kept growing. The UK has become the EU’s second largest investor in China as well as China’s second largest trading partner and investment destination in the EU. China has been the UK’s second largest non-EU trading partner. In 2014, China-UK trade volume for the first time exceeded US$80 billion, and China’s import from the UK has doubled in five years. Two-way investment between China and the UK has grown rapidly. China’s investment in the UK has risen at an annual rate of 71.7% over the past three years. Last year, the UK investment in China increased by 87.6% year-on-year, the fastest among major EU countries.
The British government has introduced ambitious plans on upgrading infrastructure, building the Northern Powerhouse in the north of England and implementing the strategy of UK Industry 2050. These plans and the “Road and Belt Initiative” and the initiatives of “Made in China 2025” and “Internet Plus” undertaken by China complement each other in many ways. China is ready to partner with the UK in the spirit of inclusiveness, opening up and seeking win-win progress through cooperation to upgrade and expand cooperation to deliver more benefits to our two peoples.
This year marks the beginning of the second decade of the China-UK comprehensive strategic partnership and the 40th anniversary of China-EU diplomatic ties. Both China-UK relationship and China-EU relationship face important opportunities to build on past success for new progress. Since the UK is an important member of the EU, China-UK relationship and China-EU relationship reinforce each other. During my visit to the EU Headquarters last year, EU leaders and I agreed to build China-EU partnership of peace, growth, reform and civilization. I believe new progress in China-UK relationship will inject new momentum into the growth of China-EU relationship across the board and make new contribution to the building of China-EU partnership as a whole.
Q: London is one of the world’s financial centers, and is keen to play an important role in China’s financial development, whether by serving as an offshore trading hub for the renminbi or by possibly one day having a trading link between the London and Shanghai stock exchanges. What role do you envision London playing in the modernization and globalization of the Chinese currency and stock markets?
A: The reform and opening up of China’s financial sector has made remarkable progress since China embarked on the path of reform and opening up 37 years ago. This has been especially obvious in the past several years. China will continue to adopt multiple measures to advance the reform and opening up of its financial sector so that its financial market can better adapt to financial modernization and globalization.
As one of the global financial centers, London is an important pump station in the world economic lifeline, so to speak. Strengthened financial cooperation with London is definitely a win-win choice for both countries. China-UK financial cooperation started early. It has enjoyed rapid growth, has tremendous potential and leads China-UK cooperation in various areas. We have accomplished much in recent years. Our two countries signed the bilateral currency swap agreement. China set up an RMB clearing bank in London. The UK became the first country outside Asia to obtain the RQFII (Renminbi Qualified Foreign Institutional Investor) initial investment quota, the first Western country to issue RMB-denominated sovereign bond and the first major developed country to include RMB into its foreign exchange reserves. This is a highlight in our bilateral cooperation.
Back in 2012, London officially launched the plan of Centre of RMB Business. London has since then become one of the most dynamic and most important RMB trading centers and offshore RMB markets. In 2014, RMB trading in London grew by 143% year-on-year and its RMB deposits reached 20 billion yuan, a year-on-year increase of 37%.
When conditions are in place, China is ready to consider strengthening the connectivity of the financial markets of the two countries. London can leverage its unique strengths in the financial field to get actively involved in the modernization and globalization of China’s financial market.
Q: Two Chinese companies are expected to take a stake in the Hinkley Point nuclear power plant in southwest England. This is in line with plans announced by your government earlier this year to help Chinese firms in areas such as high-speed rail and nuclear power to expand overseas, including support such as subsidies and government-backed financing. What role do you hope to see Chinese companies playing in the global markets for such technology over the next decade? Do you think that opposition could derail China’s participation in such projects overseas? Will such opposition lead to fresh trade frictions? Is such state-subsidized, state-directed expansion of Chinese industry abroad fair to other market players and in line with China’s professed desire for a more market-driven economy?
A: China is intensifying its reform and opening-up drive, which means both opening up its economy further to attract foreign investment and encourage Chinese firms to make overseas investment. This is natural when a country reaches a particular stage of development and when a company grows bigger, and this is what all big companies in the world are doing.
Having benefited from the world economy, Chinese companies should contribute their share to world economic development. China has grown into a global manufacturing power, with particular strengths at the middle rung of the global industrial chain. Many Chinese industrial sectors and equipment making capacity, including the building of high-speed railway and nuclear power stations as well as automobiles making, are advanced and competitive internationally, and meet the demand and absorbing capacity of many countries. China is ready to pursue cooperation of various forms with the UK and other countries in international production capacity and equipment manufacturing to synergize our respective strengths and promote each other’s development. The Hinkley Point is the product of tripartite cooperation among China, the UK and France. I hope that the companies of the three countries will fully leverage their respective strengths to ensure the successful launch of this project and deliver benefits to the British people.
It is normal for a company to encounter various problems when making investment, whether domestically or overseas. When doing business, one should focus on business. Problems that occur in business operations should not be politicized, and Chinese companies should not be viewed with bias. Competition is necessary for a business to grow, and no one will give away a market to its rivals. We hope that such competition is benign and market-based. There should be no swing doors or glass doors which are placed as non-economic or non-market-based barriers. Unlike established multinational companies, Chinese companies still lack experience in making investment overseas. They need to better adapt to local laws and regulations, technological standards, marketing, human resources management rules, local cultures, etc. Chinese companies will learn a lot and emerge successful in fierce international competition.
The Chinese government supports Chinese companies in going global. But we believe that this process should be market-oriented, with companies being the main driver. The role of the Chinese government is to secure and create a favorable political environment and a fair legal framework for Chinese companies. This is what all governments are doing, and I think the Western countries are doing better than us. Even under market conditions, countries support the growth of their companies in various ways, and such measures should not be all labeled as government subsidy. China’s system is different from that of Western countries. Due to historical reasons, Chinese companies perform many social functions, which are hard to measure with a simple arithmetic formula.
In the coming decade, China’s overseas investment will continue to grow and is forecast to reach US$1.25 trillion. This will provide more opportunities for China-UK cooperation. The Chinese and British companies may also engage in tripartite cooperation in developing countries to integrate the upper stream, middle stream and lower stream of the global value chain and share development opportunities.
Q: Britain was the first European country to sign up for membership of the new Asian Infrastructure Investment Bank (AIIB). China has promised that the new bank will be transparent and have high governance standards. However, China still struggles with its own transparency and governance issues, and is also facing a protracted battle against corruption. How will China ensure that the AIIB really will be transparent and have world-class governance?
A: China’s initiative to establish the Asian Infrastructure Investment Bank aims to promote infrastructure development and connectivity in Asia and boost regional cooperation.
The AIIB is an international financial institution whose rules of operation are decided by its members through consultation, not by China alone. We agree that the AIIB should fully draw on the experience and practices of other multilateral development banks, observe high international standards in terms of governance structure, operation guidelines, and human resources management, and ensure its professional and efficient operation as well as transparency and integrity. During the negotiation over the AIIB agreement, 57 prospective founding members acted on the principle of openness, inclusion, professionalism and transparency, and concluded a high-quality agreement text. A total of 53 prospective founding members have signed the agreement.
I know that this agreement has drawn on the practices of existing multilateral development banks in many ways. It has also made some breakthroughs and explored new ways of operation. For example, in terms of governance structure, AIIB has, with reference to the common practice of multilateral development banks, set up a three-tiered structure, consisting of a board of governors, a board of directors and a management team. It has also put in place an oversight mechanism in line with the principle of transparency, openness, independence and accountability. It is specified in the agreement that the management team will be selected through an open, transparent and merit-based process. This is a new principle not included in the constitution of existing major multilateral development banks. Another example is that the AIIB places no restriction on the procurement of goods and services from any country, and again this is not the case in the other regional multilateral development banks.
The AIIB prospective founding members are working on the specific operation guidelines in accordance with the agreement. The relationship between the AIIB and existing multilateral development banks is a cooperative and complementary one. The AIIB will engage in cooperation with them in terms of sharing expertise, capacity building and joint financing.
China commends and welcomes the UK joining into the AIIB. We are ready to work with the UK and all other prospective founding members to build the AIIB into a professional and efficient infrastructure financing platform to contribute to the development of Asia and beyond.
Q: China is playing an increasingly active role as a member of the international community, whether by helping bring peace to South Sudan or evacuating foreigners, including Britons, from the civil war in Yemen. As China’s economy and influence in the world continue to grow, it will increasingly have to protect its legitimate interests around the globe. How do you see China’s role in global affairs changing in the coming decade? Will it play a greater role in mediating conflicts? Will China one day replace the United States as the world’s policeman? Will China one day have to build military bases around the world to protect its interests?
A: China was, is and will continue to be a force for world peace, common development and international cooperation. With the increase of its overall strength, China will be able to play a more active role in international and regional affairs.
At the summits commemorating the 70th anniversary of the UN this September, I announced on behalf of the Chinese government a series of initiatives, which include:
China has been stepping up efforts for world peace and development not because it wants to become a “world cop”, even less to take anyone’s place. We are always of the view that a country’s affairs should be decided by its own people, and the world’s affairs should be managed through consultation among the peoples of all countries. China upholds the purposes and principles of the UN Charter. It pursues common, comprehensive, cooperative and sustainable security. China follows the principle of non-interference in other country’s internal affairs and believes that international and regional hot spots should be resolved by peaceful means. China has declared many times that it pursues a defense policy defensive in nature and will never seek hegemony, engage in expansion or impose its own will on others.
Q: China, the world’s biggest greenhouse gas emitter, has pledged to bring its emissions to a peak by “around 2030” and has also said it would cut carbon intensity – the amount emitted per unit of economic output – by 60 to 65 percent below the 2005 level. As a developing country, China has stuck firmly to the principle that industrialized nations should bear most of the burden when it comes to cutting carbon emissions. Is China prepared to change any of its negotiating positions or offer further compromises in order to make sure that a new global climate change deal is secured in Paris later this year?
A: Climate change is a global challenge at which no country can stand on their own. Developed and developing countries have different historical responsibilities for climate change, and different development needs and capabilities. Just like in a car race: it would be neither reasonable nor fair to apply the same speed requirements to cars which have run far ahead and those which have only just left the starting point. Developed countries should do more and lead the way in addressing climate change. This is in keeping with the important principles laid down in the UNFCCC (United Nations Framework Convention on Climate Change), such as “common but differentiated responsibilities”, equity and respective capabilities. This is also the hope of all developing countries.
Having said that, the principle of “common but differentiated responsibilities” does not exempt developing countries from contributing their share to global response to climate change. It is only that such contribution should be in line with their capabilities and needs. China is now the world’s biggest country in energy conservation and utilization of new and renewable energy. In 2014, China’s per unit GDP energy consumption and CO2 emission were cut by 29.9% and 33.8% respectively from the 2005 level. China’s submission to the UN of its nationally intended contributions is aimed at facilitating global climate governance, and also for the sake of China’s own development. It represents China’s very best effort to help achieve the goals set in the UNFCCC. China has announced the setting up of an RMB20 billion South-South cooperation fund on climate change to help other developing countries.
The Paris Conference coming up at the end of this year is a significant milestone in the multilateral process on climate change, as it will set up post-2020 international regimes to tackle this challenge. Progress in negotiations requires flexibility of all parties, yet the basic principles of the UNFCCC need to be observed. Parties should demonstrate sincerity as much as they can, build up consensus and work toward the same goal. China is ready to play a constructive role and work for the timely conclusion of a comprehensive, balanced and strong agreement at the Paris conference.
Q: China is being increasingly assertive in pushing its territorial claims in the South China Sea, which has worried many of its neighbors, and Britain, too. China also says it will not pursue hegemony and will unswervingly stick to the path of peaceful development. Do you understand why so many of China’s neighbors doubt these claims? How do you respond to accusations that China’s activities in the South China Sea could be worsening the security situation in the region? What is China’s ultimate aim with its current activities in the South China Sea?
A: To follow the path of peaceful development serves China’s fundamental interests, and is also what regional countries and peoples expect from us. It is a strategic choice made by China that has not changed and will not change. For many years, China’s active efforts for win-win cooperation with its neighbors have brought real benefits to countries and peoples in the region. Under the new circumstances, China will strive to deliver more benefits of its development to neighboring countries and peoples. China will continue to pursue friendship and partnership with its neighbors, build a harmonious, secure and prosperous neighborhood and follow through on its policy of amity, sincerity, mutual-benefit and inclusiveness towards its neighbors.
The islands and reefs in the South China Sea are Chinese territory since ancient times. They are left to us by our ancestors. The Chinese people will not allow anyone to infringe on China’s sovereignty and related rights and interests in the South China Sea. The actions China has taken in the South China Sea are legitimate reactions to safeguard its territorial sovereignty. Expansionism refers to laying claims to land outside one’s own territory. China has never done anything like that, so such doubts or accusations are unwarranted.
With the joint efforts of all parties, the situation in the South China Sea has on the whole been stable. The South China Sea provides important waterways for China’s international commercial exchanges. China needs peace, security and stability in the South China Sea more than any other country. China would not want any turbulence there, still less would it be the party to stir up chaos. It is working hard to take forward consultations on a code of conduct in the South China Sea within the framework of fully and effectively implementing the Declaration on the Conduct of Parties in the South China Sea. China will continue to work with its neighbors in the South China Sea to manage disputes through institutionalized dialogue, peacefully resolve disputes through negotiation and consultation, actively explore win-win results through cooperation and joint development, and safeguard the freedom of navigation and overflight enjoyed by countries in accordance with international law. We will together endeavor to make the South China Sea a sea of peace, friendship and cooperation. And the efforts of countries in the region to maintain peace and stability there deserve more respect.
Q: China has asked for international help from countries including Britain to return corruption suspects who have fled overseas. Some of these countries have complained that China is reluctant to hand over the evidence needed for them to be able to process deportation orders in court, and that China has illegally sent agents to try and induce these people to return. How will China improve its cooperation with foreign countries to get these suspects back?
A: China’s judicial departments would readily provide solid evidence on specific cases in international anti-corruption cooperation. China is a country with rule of law. It acts according to law and on the basis of facts both in fighting corruption within the country and carrying out international anti-corruption cooperation.
In any country, corruption is most detested by the people. International cooperation in this area is aimed at bringing criminal suspects who have committed acts of corruption and absconded overseas back to China to face justice. China and the UK have maintained sound cooperation in jointly fighting corruption and concluded the treaty for mutual legal assistance in criminal matters, which has laid the legal foundation for jointly fighting corruption.
In today’s world, no country or place should provide shelter or even safe haven for corrupt elements and their proceeds of crime. What baffles the Chinese people the most is that some corrupt elements for whose crimes there are solid evidence should be able to stay at large in some countries and escape the punishment of the law by citing all kinds of excuses. Due to differences in legal systems between countries, some technical legal matters need to be worked through in international cooperation against corruption. This requires various parties to explore solutions together. In particular, anti-corruption and law enforcement agencies need to strengthen cooperation in investigation and information sharing on individual cases. I am convinced that as long as we have the political will to fight corruption, international cooperation in this field will surely yield more results.
Q: Your government has set a target of growing the economy by around 7 percent this year. However, the economic situation appears to have deteriorated in the last several months, and many investors and economists now see this target as highly unlikely to be reached, creating great concern in global financial and commodity markets. Do you expect to meet this target? What further measures do you stand ready to take in order to keep growth from slowing too much? Will that include more fiscal spending, and if so, will those moves derail your government’s stated aim of forging ahead with reforms aimed at giving the market more of a role in allocating capital and bringing the economy to rely more on consumption?
A: The Chinese economy grew by 7% in the first half of this year, which is consistent with the growth target of the whole year and is the fastest growth rate among major economies around the world. It is normal that an economy may grow at different speeds in different periods. It would be against the law of economics to aim for ever higher growth without any slowing down. The 7% growth in the first half of this year was achieved on the basis of an economy of over US$10 trillion. The increment is already equivalent to the annual GDP of a medium-sized country and still exceeds what was generated by double-digit growth several years ago.
As an economy closely linked to international markets, China cannot stay immune to the lackluster performance of the global economy. We do have concerns about the Chinese economy, and we are working hard to address them. We also worry about the sluggish world economy, which affects all countries, especially developing ones.
Historian Dr. Arnold Toynbee believes that “challenge and response” is an important factor underpinning the development of human civilization. China’s economic development is adjusting to the new normal and experiencing growing pains of shifting from old drivers of growth to new ones. Yet the fundamentals of a steadily growing economy have remained unchanged. The new type of industrialization, IT application, urbanization and agricultural modernization that is in full swing has generated strong domestic demand and great potential for future growth. It has also made the economy more resilient and adaptable. All this, coupled with deepening structural reforms, means that China will have very promising economic prospects.
We are making coordinated efforts to promote steady growth, continued reform, structural adjustments, and higher living standards, and forestall economic risks. We will enhance macro regulation in creative ways to improve the quality and efficiency of economic development and address the lack of balance, coordination and sustainability in the economy. We will put more emphasis on innovation and consumption-driven growth. The policy on utilizing foreign investment remains unchanged. We will improve the rule of law in the commercial field, protect intellectual property rights, and promote fair competition. We will continue to promote the development of the Silk Road Economic Belt and the 21st Century Maritime Silk Road and carry out international cooperation on production capacity. Both the Chinese economy and the world economy stand to benefit in this process.
In the face of changes in the domestic and international financial markets, we have taken a number of steps including lowering the required reserve ratio and interest rates and improving the RMB exchange rate regime. These measures have helped to largely defuse risks and restore stability in the markets. Going forward, we will deepen market-oriented financial reforms according to law to cultivate an open and transparent capital market that enjoys long-term, stable and sound development. We will improve risk management, stabilize market expectations and make it easier for private capital to operate in the financial sector to better support the real economy.
Q: You have said that you hope one day China will be able to host the World Cup, and that one day China could win it. You care about the sport enough that you announced big reform plans for Chinese football earlier this year. Britain is the birthplace of modern football. Is there anything China can learn from Britain in raising the level of Chinese football, and making the Chinese football industry as successful as Britain’s? What is your biggest hope for Chinese football?
A: Football is the most popular sport in the world and there are over 100 million football fans in China alone. My greatest expectation on Chinese football is for the Chinese team to be one of the best in the world and for football to play an important role in making people stronger in body and mind. We will find a new way forward for the sport to flourish in China that is both consistent with the general pattern of football development and fits well with Chinese conditions. We will pursue the goals of strengthening football training for the youth, reforming the professional football system, enhancing international cooperation and boosting the football industry.
The UK has a long and proud history of football and a wealth of experience in this sport. The Premier League is one of the most influential and successful professional football leagues in the world. China and the UK have had good cooperation on football in recent years. In 2012, a cooperation program was launched to promote football in schools and the UK started to train Chinese football coaches at the grassroots level. In 2013, the Premier League and the Chinese Super League signed a letter of intent on cooperation, and David Beckham was named “ambassador for the youth football program in China and the Chinese Super League”. Last month, the two countries signed an MOU to produce future stars in football. In the next five years, football training will be introduced to 20,000 Chinese schools, which means huge potential of cooperation between China and the UK in the training of players, coaches and referees.
I am confident that Chinese football will do better and make its own contribution to world football.
Editing by Jason Subler