GCC Business ＆ Commerce: Briefly, what are the prospects of economic cooperation between GCC and China?

Ambassador Yang: GCC is a key trading partner of China. In recent years, economic and trade relations between the two sides have witnessed rapid development with all round cooperation in areas of trade, energy, project contracting and investment. In 2007, bilateral trade volume accounted for 3.1% of the total foreign trade volume of China and 40% of the trade volume between China and West Asian and African countries as a whole. GCC countries are the major importing sources of China in terms of petroleum and natural gas, which accounted for 29% of the Chinese total imports of petroleum. Now GCC Countries rank as the 9th biggest exporting market of China with broad recognition from gulf consumers toward Chinese products.

Both China and GCC countries have been experiencing the best period of economic development currently. The two sides enjoy numerous opportunities now in bilateral economic and trade cooperation with huge potential and strong complementarity, especially in the sectors of energy and infrastructure construction. The economic development of China could provide ample opportunities for investments from GCC countries.

GCC Business ＆ Commerce: The GCC and China signed a framework agreement on economic, trade, investment, and technological cooperation in Beijing in July 2004. The two sides have made an excellent start. Negotiations were focused on goods, services, investments and other areas. Briefly, what have been accomplished since the framework agreement was signed?

Ambassador Yang: In July 2004, China and GCC signed the cooperative agreement in the areas of economic, trade, technology and investment, which ushered a new stage for comprehensive cooperation between the two sides. Since then, bilateral trade volume had increased from 16.9 billon US dollars in 2003 to 58 billon US dollars in 2007 with an annual increasing rate of 61% in average. Both sides had exerted arduous but effective efforts for the promotion of bilateral trade development.

First of all, cultivating sound environment for bilateral economic and trade cooperation through intensified high level exchanges of visits. In recent years, Chinese President Hu Jintao and Vice President Xi Jinping have visited GCC countries like Saudi Arabia and Qatar. King Abdullah of Saudi Arabia and Vice president Mohammad of the United Arab Emirates have also paid visits to China. Meanwhile, exchanges between the two sides have flourished than ever before in various forms including exhibitions, promotions and symposiums sponsored by governments, enterprises and civil societies. Secondly, strengthening governmental exchanges at working level. Two dialogue conferences about energy have been convened with wide coverage on topics including energy policy, cooperative willingness, and supply and demand. Technical exchanges in the areas of products inspection and quarantine have been conducted in order to provide convenience for bilateral trade. Thirdly, launching China-GCC Free Trade Zone negotiations. Since 2004, 4 rounds of negotiations and 6 working group meetings about the FTA have taken place with ongoing negotiations in the areas of service and other items and initial accomplishments in goods negotiation. It is the firm belief of both China and GCC countries to accomplish the negotiation successfully, in which process both sides have been showcasing utmost sincerity. Fourthly, accelerating the pace of mutual investments. It has been witnessing outstanding progress of mutual investments between China and GCC, particularly the investments in energy sector, coping with the development of bilateral trade.

GCC Business ＆ Commerce: The GCC has established their Common Market, which took effect this year. What are the prospects of the envisioned Free Trade Agreement (FTA) between GCC and China now that the GCC Common Market is established?

Ambassador Yang: At the beginning of this year, the 6 GCC countries stepped into a new era of economic development by launching the Gulf Common Market. It is a vital phase for the economic integration of Gulf countries with national treatment for all citizens living in the 6 GCC countries. It ensures equal opportunities for every citizen and guarantees investments, market developing, production and sales for every company on the basis of equality. It will promote the economic development, enhance the negotiating position and sharpen the competitiveness of GCC countries as a whole.

It has been strengthened of the urgency and anxiety of establishing the China-GCC Free Trade Zone since GCC Common Market was put into function. The signing proceedings are also expected to be speeded up for the sake of unified negotiating standard, internally coordinated operation, concentrated and quick policy-making. Bilateral trade is expected to be upgraded consistently getting along with the improvement of GCC Common Market at the meantime.

GCC Business ＆ Commerce: The setting up of FTA requires the activation of trade and improved market access conditions for GCC exports to China. Has China developed methods of trade systems, like e-commerce, that will enhance bilateral trade with GCC?

Ambassador Yang: The system of the Chinese market economy has been improved greatly with recognition of the full market economy status from 77 countries. Meanwhile, the trading system has also experienced rapid development with E-commerce and E-administration in particular. It has been widely used in the areas of custom, export-import and foreign trade management. It has created more trading opportunities, reduced the trading cost and promoted trading efficiency for enterprises both domestic and foreign. Therefore, the Chinese government now is exerting utmost efforts to promote the development of E-commerce and E-administration.

GCC Business ＆ Commerce: What is the current volume of bilateral trade between GCC and China?

Ambassador Yang: In 2007, the trade volume between China and GCC countries totaled as 58 billion US dollars, with imports of 30.3 billion and exports of 27.7 billion US dollars. It has witnessed a 71.6% increase from 33.8 billion US dollars (imports of 20 billion and exports of 13.8 billion US dollars) in 2005.

GCC Business ＆ Commerce: There has been serious concerns regarding the quality of Chinese export products to the Gulf region. Certainly this is being addressed. What are the latest developments to curb this problem?

Ambassador Yang: Generally speaking, the Chinese products exporting to gulf markets are quality-reliable as a whole. Therefore, bilateral trade has witnessed a steady increase from year to year. However, there are problems of some Chinese products indeed. We welcome objective and just report but oppose fabricating rumors or draw lopsided conclusion to Chinese products without serious consideration.

First of all, we need to analyze the issue comprehensively with a scientific perspective. The problems of a small minority can not reflect the whole situation. Taking toothpaste as an example, its exporting volume only accounted for less than 1/10,000 of the total Chinese exports, among which only 1/300,000 inspected as unqualified. According to the statistics of the Japanese relevant authorities, the qualified rate of the Chinese exporting food reached 99.42%.

Secondly, we need to view the issue with an ever-developing perspective. China is still a developing country. Gap in technology still remains compared with developed countries. It is difficult to eradicate this problem completely for the sake of that a small minority of enterprises severely lack the sense of social responsibility. But we have made consistent endeavors to combat fake and inferior commodities. The quality of our products as a whole has been improving steadily.

Thirdly, some producers could only make benefits by sacrificing quality of their commodities due to very low quotation offered by some importers. A small minority of illegal importers even order fake and inferior commodities intentionally, which exert very negative influence toward Chinese products.

The Chinese government attaches vital importance to products quality with strict management measures stipulated by the Foreign Trade Law. Punishment measures will be taken to those enterprises violating the Law while criminal liabilities will be claimed against those severely violating ones. Recently, the Ministry of Commerce has tightened the punitive measures against those enterprises violating the Law. First of all, the ministry stepped up the process of establishing the credit system of foreign trade. Secondly, it has set up the “black list” of enterprises related to illegal operations. Thirdly, it has strengthened the information sharing and data exchanging system with other relevant authorities including custom, foreign currency management, quality inspection and taxation. Fourthly, it has set up a column called “Foreign Trade Order” with timely bulletin of relevant laws, stipulations and topical acts.

GCC Business ＆ Commerce: What is the current amount of China’s foreign direct investments (FDI) to GCC, and what is your projection of China’s FDI to the region?

Ambassador Yang: Since 1990s, the Chinese government has been undertaking the strategy of “going out”. Nowadays, the Chinese “opening up” policy has witnessed a long stride development of foreign trade scale and a fundamental shift from mainly relying on “bringing in” to equally depending on both “bringing in” and “going out”. For the aspect of “bringing in”, the total attracted foreign capital has increased to 74.7 billion US dollars in 2007 from 52.7 billion US dollars in 2002, which has ranked as the first in developing countries for 15 consecutive years. For the aspect of “going out”, the overseas investments of the Chinese enterprises totaled 18.76 billion US dollars in 2007, 7 times larger compared with 2.5 billion US dollars in 2002, which ranked first in developing countries and climbed to the 13th from the 26th in the whole world. In the first quarter of this year, the Chinese total overseas investments reached 19.34 billion US dollars, with the increasing rate of 353% on a year-on-year basis.

The Chinese investments to gulf countries have still been at an initial stage due to historical reasons. According to the statistics released by the Chinese Ministry of Commerce, the total Chinese direct investments to gulf countries by the end of 2006 amounted to 0.4664 billion US dollars. But in the same period, the Chinese direct investment to Middle East totaled 2.04941 billion US dollars with Iraq, Sudan and Saudi Arabia as the main destination.

GCC Business ＆ Commerce: One of the difficulties cited by GCC businessmen in their quest to expand trade and other ventures in China is the lack of economic data and information. How do you address this issue?

Ambassador Yang: China has embarked on a road of “opening up” since the late 1970s. Meanwhile, we have endeavored to formulate and release economic statistics in a more standardized and transparent way. Regarding the problem mentioned above, it could be attributed to the lack of access to China’s economic data. Actually, China has set up disseminating agencies both at central level and grass-roots to release relevant economic and trade information via internet. At central level, China has National Bureau of Statistics responsible for releasing authorized and professional economic data while the Chinese Ministry of Commerce also has its statistical sections in various economic fields. The above mentioned authorities have already opened English websites with timely and updated economic data for global investors. At grass-roots level, specific agencies have established in all cities to answer foreign investors’ enquires timely. Local governments have been actively developing foreign economic service websites with all kinds of information available in English. Generally speaking, foreign investors now could have easy access to China’s overall and regional economic data via internet anytime and anywhere. If investors intend to establish joint venture in China, they could contact the commercial sections of relevant Chinese embassies.

The Chinese embassies in gulf countries are prepared to have more English information available on links to relevant Chinese Municipal Departments responsible for foreign economic cooperation and offer more convenience for investors from this region. Furthermore, the commercial sections of the Chinese embassies in the gulf will provide services consistently according to gulf investors’ special needs.

GCC Business ＆ Commerce: Chinese companies, particularly those engaged in oil and construction operations, are increasing in number. These are encouraging developments. Your comments please?

Ambassador Yang: At present, there are 55 Chinese enterprises having their branches in Saudi Arabia, most of which are engaged in projects construction (3 enterprises engaged in upstream oil and gas prospecting, another 10 engaged in petrochemicals production). The number of Chinese enterprises in Saudi Arabia increased to 24 by the end of 2004 getting along with the sound development of bilateral relations and the second construction climax in the gulf region. Especially after the exchange of visits conducted by the two heads of state in 2006, the Chinese enterprises in Saudi Arabia experienced a period of rapid growth. The Chinese enterprises and their Saudi counterparts are preparing to conduct much closer cooperation in various sectors in the foreseeable future. Most of the Chinese staffs have been back to China on time after completing their contracts. However, the Chinese enterprises in Saudi Arabia do have their difficulties and challenges, among which the depreciation of the dollar and inflation remain most severely. The good news is that the Saudi government has attached great importance to those problems. King Abdullah issued an order to compensate enterprises suffering heavy losses from price hike of building materials. This policy has played a positive role in easing enterprises’ pressure and accelerating the pace of construction.

GCC Business ＆ Commerce: How do you look at the future GCC-China economic cooperation?

Ambassador Yang: The cooperation between China and GCC is based on mutual benefit and common development with broad consensus from both government and civil society of the two sides. The economic cooperation between China and GCC enjoys a high degree of complementarity, great vitality and numerous opportunities. I’m quite confident about the future economic cooperation between the two sides and it will enter into a new stage through endeavor from both sides.