Chinese President Xi Jinping conducted a written interview with Reuters on Sunday, in advance of his state visit to Britain. Following is the full text: [Special coverage]
1. You will soon pay a state visit to the UK. It is learned that both the royal family and the government of the UK attach great importance to your visit and are making meticulous preparations for it. You visited the UK in the 1990s and what was your impression then? What do you expect from your coming visit to the UK after more than 20 years? What will be its impact on China-UK relations and China-EU relations? Some Britons fear China's intentions and believe that the British government is too eager to please China. How do you ensure that China-UK relationship 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 80 billion U.S. dollars, 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 percent over the past three years. Last year, the UK investment in China increased by 87.6 percent 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.
2. 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 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 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 Center 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 percent year-on-year and its RMB deposits reached 20 billion yuan, a year-on-year increase of 37 percent.
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.(more)
3. Chinese companies are expected to take a stake in the 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. What role do you hope to see Chinese companies playing in the global markets 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 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 1.25 trillion U.S. dollars. 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.
4. 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. 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.
5. 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 economic strength and world influence continue to grow, it needs to make more efforts to protect its rights and interests across the world. 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 and protect its interests by establishing military bases around the world?
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 the Chinese government a series of initiatives, which include:
The establishment of an assistance fund for South-South cooperation with an initial pledge of 2 billion U.S. dollars;
A ten-year, 1-billion-U.S. dollar China-UN peace and development fund;
China joining the newly-established UN Peacekeeping Capability Readiness System and setting up a permanent peacekeeping police squad and a peacekeeping standby force of 8,000 troops;
The provision of 100 million U.S. dollars in military aid to the African Union in the coming five years to support the building of African Standby Force and the African Capacity for Immediate Response to Crisis.
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 defence policy defensive in nature and will never seek hegemony, engage in expansion or impose its own will on others.
