Chinese government is committed to opening-up and does not make technology transfer a precondition for market access

Editor's Note: Minister of Commerce Chen Deming talks about China's trade and investment policies and the cooperation at sub-national levels between China and the United States in an interview with Bloomberg News. The following is the transcript:

Q: The investment environment in China has always been a topic of interest to foreign governments and companies. We've heard some companies complain about the forced transfer of technologies from foreign investors to their joint ventures in China. Is that the case?

A: Shortly after it joined the World Trade Organization, China conducted a comprehensive review of its laws and regulations governing foreign trade and economic relations. It revised those that did not conform to WTO rules and its accession commitments, and canceled stipulations for forced technology transfer. Taking this opportunity, I want to reiterate that the Chinese government is committed to the policy of reform and opening-up and welcomes and encourages, as always, foreign investment. Technology transfer and technological cooperation should be independently decided by businesses and will not be used by the Chinese government as a precondition for market access.

Q: Why has China been strengthening its commercial and investment ties with US states and big cities? Is that because US states are now more open to Chinese investment?

A: A stronger cooperative relationship between China and the United States is in the fundamental interests of both the Chinese and American people, and is also the consensus and shared will of people in all walks of life in both countries.

Thirty-eight and 176 sister relations have been forged between the two sides at provincial and city levels respectively. Exchanges and cooperation across the two countries in trade, investment, energy, the environment and cultural fields are being broadened at sub-national levels.

As the financial crisis is spreading and worsening, all countries are faced with the task of promoting economic growth and creating more jobs. China and the US are seeing greater interest, at both the provincial and city levels, in strengthening trade and commercial ties. Both Chinese provinces and cities and US states share this desire for cooperation. For 29 out of the 50 US states, China has been one of their top three export markets. Forty-five states increased their exports to China between 2007 and 2010, among which 10 states, including Vermont, Oregon and Montana increased their exports to China by over 100 percent. More than 30 investment and trade promotion offices have been opened in China by US states. Last year, the Ministry of Commerce of China set up a "US Pavilion" at the China Import and Export Fair, the biggest and most well-known trade fair in China, which hosted the governments and companies of some US states. They were invited to set up booths and display their products. The invitation was warmly echoed by the US side.

Closer communication and cooperation at sub-national levels serve as a solid foundation for a stronger friendly relationship between China and the US, as well as being a powerful driving force for bilateral trade and economic relations. We are hopeful that the comprehensive cooperation at sub-national levels between China and the US will enable the bilateral trade and economic cooperation to generate more benefits for both peoples.

Q: When visiting some trading companies in Guangzhou, Premier Wen Jiabao said export and import policies will maintain overall stability, should there be any change, it will be more of a support than restraint. Given lackluster demand from the US and Europe, what measures will be taken by the Chinese government to maintain a stable growth in exports?

A: China's foreign trade growth has slowed in the second half of 2011. The export figure in January does not make us optimistic and is expected to show negative growth year-on-year due to Chinese New Year and other factors. Chinese trading companies, particularly small and micro businesses, have come under growing pressure. Foreign trade, an integral part of the Chinese economy, is essential to people's lives and jobs. Premier Wen Jiabao has said on various occasions that the government will adopt measures to help businesses overcome difficulties in order to maintain stable growth in foreign trade.

First, we will keep the overall stability of our export and import policies. For example, we will keep the export rebate policy basically stable and speed up its implementation. We will maintain the overall stability of the renminbi exchange rate and relevant policies for the processing trade. Should there be any fine-tuning, it will be supportive rather than discouraging. Second, we will take concrete measures to ease the tax burden on trading companies and give more financial support. For example, we will speed up the pilot program for replacing the business tax with value-added tax for small and micro businesses and improve the structural tax reduction policy. We will introduce a credit-worthiness assessment and reward system for small businesses and encourage qualified commercial banks to give more credit to small and micro businesses. We will support small and micro businesses raising funds through the stock market and will give more support to export insurance. Third, we will intensify trade promotion. We will step up efforts to build business platforms such as e-commerce, professional markets, demonstration centers at home and abroad, and marketing networks etc. We will vigorously carry out trade and investment promotion events, such as the Canton Fair, China International Fair for Investment and Trade in Xiamen, Expo Central China, and China-Eurasia Expo.

While taking measures to stabilize exports, the Chinese government will continue to energetically expand imports and further balance foreign trade. For example, we will do more to remove unreasonable restrictions against imports, promote import facilitation and formulate financial policies to encourage and support imports.