MFA: IP royalities paid by China to foreign right holders registered an annual growth of 17% in 2017

Q: The US has issued several reports to accuse China of violating the WTO rules and cited these violations as reasons to launch unilateral trade measures against China. What is your comment?

A: 17 years have passed since the day that China was accepted to the WTO. During this whole time, China has been fulfilling its WTO obligations and keeping to its promises, even when it means enormous efforts and costs. Since 2002, China's contribution to global economic growth has approached 30 percent on average, and the international community is well aware of these important contributions China has made to the world economy.

If China does not mean to abide by the WTO rules, then why did China choose to join the WTO in the first place? The Chinese government made that decision at that time out of a strong conviction that economic globalization corresponds with the call of the times and a high degree of trade liberalization and openness leads to mutual benefit and win-win results. Such conviction remains the same and has been guiding our actions all along the past 17 years. China had considerably lowered the duties on imported automobiles. From 2001 to 2017, imports of passenger cars with certain engine displacement registered an annual growth rate of 26.4%, with the auto trade deficit surging from US$ 870 million to US$34.35 billion. After its accession, China launched major efforts to review and revise relevant laws and regulations, involving 2,300 laws, regulations and departmental rules at central government level, and 190,000 policies and regulations at sub-central government levels.

If China does not mean to abide by the WTO rules, then why has China been faithfully fulfilling its WTO accession commitments? China just published a white paper titled "China and the World Trade Organization" which illustrates with facts and figures that China has comprehensively fulfilled its commitments to the WTO with regard to lowering tariffs on goods, opening up to trade in services, eliminating import quotas and other non-tariff measures. The average tariff level was reduced from 15.3 percent in 2001 to 9.8 percent. Foreign trade by private companies and foreign-invested enterprises (FIEs) accounted for 83.7 percent of the country's total trade volume, up from 57.5 percent in 2001. China has step by step lowered the threshold for foreign investment to enter the services sectors. Since 2001, intellectual property royalties paid by China to foreign right holders have registered an annual growth of 17 percent, and invention patent applications China received in 2017 ranked the first in the world for the seventh consecutive year.

If China does not mean to abide by the WTO rules, then why has China been a staunch supporter of the core values and basic principles of the WTO? China believes that only when the international rules are obeyed in the spirit of contract can the authority and effectiveness of the multilateral trading regime be upheld. As an advocator for an open world economy, China has been participating in trade negotiations and other WTO works in a constructive way, including promoting trade liberalization and facilitation via joining the Trade Facilitation Agreement, and vigorously supporting the integration of developing members into the multilateral trading system. During the 22nd APEC Economic Leaders' Meeting in Beijing, the G20 Hangzhou Summit, and the BRICS Xiamen Summit, all hosted by China, we secured statements on supporting the multilateral trading system and opposing trade protectionism in the outcome documents of these summits. China has never imposed unilateral measures on others, nor have we acted against the basics of the WTO, namely free and open trade, non-discrimination, tariff constraints and special and differential treatment, and we have not the slightest intention of doing these things in the future. In face of major matters of principle, China will always prioritize principle, credibility and responsibility.

China's efforts to comply with the WTO rules and honor its commitments have won wide recognition from the international community. China underwent its seventh Trade Policy Review (TPR) by the WTO several days ago. During the review, China's measures to pursue independent opening-up and comprehensively deepen reforms as well as China's support and contribution to the multilateral trading system were spoken highly of by most participants. WTO Director-General Roberto Azevedo said that China's role in the WTO has increased a lot which is very impressive and deserves a thumbs-up. In fact, the US side has so far issued 16 reports on China's WTO compliance. Barring from this year's report, none of the previous 15 ones mentioned that "China was wrong".

Now let us take a look at the US. The US elevates its interests above the global interests, and its rules above the global rules. In the WTO, no country sides with the US unilateral acts.

President of the European Council Donald Tusk, who just wrapped up the 20th China-EU Summit here in Beijing, said in June that the rules-based international system is under threat, and to everyone's surprise, the threat comes from no one but the US who built up this system. Many prominent international economists including President Adam Posen of the US Peterson Institute for International Economics also publicly said that today's US government constitutes the biggest threat to the current world economic order.

In China, we say that knowing others is intelligence, but knowing yourself is true wisdom. China will continue to be a role model in observing the WTO rules. We hope that the US could also respect and comply with the WTO rules and maintain the WTO-centered multilateral trading system.

Q: The 20th China-EU Summit was held in Beijing yesterday. How do you comment on this meeting?

A: The 20th China-EU Summit was successfully held in Beijing yesterday. President Xi Jinping met with President of the European Council Donald Tusk and President of the European Commission Jean-Claude Juncker. Premier Li Keqiang co-chaired the meeting along with President Tusk and President Juncker. The two sides issued the Joint Statement of the 20th China-EU Summit, including the Leaders' Statement on Climate Change and Clean Energy.

The two sides agreed that in the current complex international landscape, China and the EU, as two major stabilizing forces globally and major economies in the world, need to step up strategic communication and coordination to jointly uphold multilateralism and rules-based free trade system, safeguard an open world economy, boost trade and investment liberalization and facilitation, improve global economy and promote world peace, stability and development.

President Tusk and President Juncker said that the China-EU comprehensive strategic partner cooperation is of great importance. The EU appreciates China's support for the European integration process and is willing to expand cooperation with China in various fields. Both the EU and China are committed to multilateralism and maintain that the rules-based international order should be preserved. The EU and China share the responsibility in resisting protectionism and unilateralism, respecting universally accepted international rules, drawing lessons from the past, handling state-to-state relations on the basis of mutual respect and improving the multilateral trading system through multilateral negotiations.

Most notably, the two sides exchanged market access offers after the meeting, which brings the Investment Agreement negotiations into a new phase. This showcases that in face of resurging unilateralism and protectionism, China and the EU are rooting for multilateralism and free trade, not only by holding common grounds but also by jointly taking concrete actions. This will also make the Chinese and EU business communities feel more confident in conducting cooperation.

As we mark the 40th anniversary of reform and opening-up this year, China has announced and is implementing a series of new measures to advance a new round of opening-up. The Chinese people and the whole world can count on us to deliver even better results when it comes to comprehensively deepening reform and expanding opening-up. We believe this will provide wider space and brighter prospects for cooperation between China and other countries including the EU.

We stand ready to work with the EU to earnestly implement the consensus of the summit and advance the China-EU Comprehensive Strategic Partnership on the basis of mutual respect, fairness and justice and win-win cooperation so that the world could enjoy greater stability and more positive energy.

Q: You said that China would continue to abide by the WTO rules. Article 23 of the Dispute Settlement Understanding says that the country must not retaliate and it must go through the dispute settlement process. Does that mean that China is not following the WTO rules?

A: We have explained adequately with facts and figures why China has been faithfully honoring its accession commitments and the WTO rules.

You want to know why China took countermeasures in response to the US unilateral imposition of tariffs. The Vice Minister Wang Shouwen of the Commerce Ministry already made clear China's position in Geneva the other day. The US measures under Section 301 are typical of unilateralism in violation of the WTO rules of the most-favored-nation treatment and tariff constrains. The US is fully aware that its Section 301 contravenes the WTO ruling, yet it still chose to disdain and trample on the multilateral rules. Out of the position to safeguard the multilateral trading system, China immediately referred the US measures to the WTO dispute settlement mechanism. However, going through the normal procedures of the WTO dispute settlement means that China would have to wait two years for any outcome on the US Section 301 measures that are already deemed illegal. The Chinese side is forced to make necessary response to the US blackmail and extortion, and our response is backed up by solid facts and sufficient domestic laws and international rules. You may have noticed that quite a few WTO members, like Canada and Mexico, have taken corresponding countermeasures in response to the US unilateral acts under Section 232.

Q: Yesterday, Russian President Vladimir Putin and US President Donald Trump met in Helsinki, Finland. How do you comment on the results of the meeting? How will this meeting influence the relationship between China and Russia and between China and the US?

A: We have noted relevant reports. China welcomes the meeting between the leaders of Russia and the US in Helsinki. As permanent members of the United Nations Security Council and major countries commanding global influence, Russia and the US shoulder important responsibilities for global peace and security. China welcomes the improvement of Russia-US relations. We hope that the two sides will step up communication and expand cooperation. This is conducive to the cause of world peace and development and the joint efforts of the international community to address common challenges.

We are fully confident in the China-Russia comprehensive strategic partnership of coordination, and the China-Russia relations will not be affected by any external factor. Our stance on the development of the China-US relations is also consistent and clear-cut.

Q: You said that China has taken relevant countermeasures in accordance with laws. Can you be specific what those laws are?

A: What you just asked is quite technical, so I need to refer you to officials of the Ministry of Commerce who have been very professionally handling relevant issues. You may also need to ask the US officials on what legal basis did they carry out the Section 301 investigation and impose additional tariffs.

Q: The Australian media reported that countering China's "pernicious meddling" in the Pacific island countries is on the agenda of the annual Australia-US Ministerial Consultations (AUSMIN) on July 23 and 24. What is your comment?

A: I have seen relevant reports. We are following the upcoming AUSMIN. We hope the relevant consultations will really serve to promote regional peace and stability.

As to the so-called China's "pernicious meddling" in the Pacific island countries (PIC), I don't know whether this is a set item on the agenda of the AUSMIN, or just a speculation of the media. But you may still remember the malicious hyping-up targeting the relations between China and PIC by some media not long ago, which was refuted and cleared up by several leaders and mainstream media of those countries. They said that the main difference between China and certain countries is that China listens to what the people of PIC have to say, and China offers the most wanted help on the basis of fully respecting the will of the PIC governments and people and taking into full account their development needs.

A recent case may be of interest to you. The Chinese naval medical ship Ark Peace visited Papua New Guinea days ago, offering free medical diagnoses and treatments to local residents. The medical ship was met with warm response from the locals and has so far received more than 4,000 people seeking medical treatment. Papua New Guinea's Prime Minister Peter O'Neill boarded the Ark Peace and highly commended the vessel's second mission to his country and its role in enhancing bilateral friendship and strategic partnership.

Besides Papua New Guinea, the Ark Peace will set sails to other Pacific island countries including Vanuatu, Fiji and Tonga to provide humanitarian medical services. I believe this is only one of the many touching stories testifying to China's commitment to developing friendly relations with Pacific island countries and enhancing the well-being of the local people. China will continue to develop friendly cooperative ties with these island countries on the basis of the Five Principles of Peaceful Co-existence and make greater contribution to supporting their socio-economic development and upholding regional peace and stability.

(Source: Ministry of Foreign Affairs website)