Full text of Reuters' Q&A with Chinese President Xi Jinping
Updated: 2015-10-19 09:10
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 favourable 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 labelled 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.