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Ambassador Gui Congyou Gives Exclusive Interview with SVD on China-Sweden Economic and Trade Cooperation

On 16 November 2018, Ambassador Gui Congyou gave an exclusive interview with SVD journalist Mikael Törnwall on China-Sweden economic and trade relations. Following is the full text of the interview:

Gui Congyou: I heard you were recently in China to cover news stories. How did you feel about China?

Mikael Törnwall: China is a huge country. It is very impressive. As my focus is economy and trade, there are lots of stories to cover in China.

Q: Mr. Ambassador, first of all could you give an overall comment on China-Sweden economic and trade relations?

Gui Congyou: China-Sweden economic and trade relationship is characterized by a long history, good foundation, fruitful outcomes and bright prospects. It goes back over 300 years. Especially the Swedish merchant vessel Göteborg traveled to China more than 270 years ago, carrying silk, tea and porcelain back to Sweden, marking the start of China-Sweden cooperation along the Maritime Silk Road. On 9 May 1950, Sweden became the first Western country to establish diplomatic ties with China, opening a new chapter of friendly cooperation between the two countries. Sweden was also the first Western country to sign inter-governmental agreements on economic, trade, scientific and technological cooperation with China. All these have laid a good foundation for the continued development of China-Sweden economic and trade relations.

More significantly, in the past 40 years since China adopted reform and opening-up, China has opened its door for cooperation with all other countries in the world, including Sweden. As a result, China-Sweden economic and trade relations have seen strong and rapid growth. Our bilateral trade, which stood at only USD 5 million at the early days of diplomatic relations, exceeded USD one billion in 1994. As China’s economy continued fast growth, trade between China and Sweden also surged, reaching USD 15 billion last year and registering a record yearly growth rate of nearly 20%. Last year, Sweden stood on the surplus side in its trade with China for the first time in 25 years, with a surplus of USD 900 million. From January to September this year, bilateral trade reached USD 12.6 billion, up nearly 18%, and Sweden already achieved a surplus of USD 900 million, the amount of last year put together. It is expected that both the bilateral trade and Sweden’s surplus will hit a new high this year. These numbers fully demonstrate the sound momentum and bright prospects of China-Sweden cooperation.   

China’s economy continues to maintain medium-high growth rate, and Sweden also enjoys steady growth. Both China and Sweden are committed to open development. China will open up wider to the world, especially by expanding importation from other countries. The first China International Import Expo, which was held recently in Shanghai, represents another major initiative of China to open its door and market to the world.

Q: We know that recently the Chinese Government adopted a number of new policies and measures to reduce restrictions on foreign investment in China. But there are still many investors, including those from Sweden, that believe the conditions for Chinese investment abroad are not reciprocal to conditions for foreign investment in China. For example, foreign investors have to partner with local companies to make investment in China, and for some industries there are still equity limits for foreign investment. What do you think?  

Gui Congyou: During the 40 years of reform and opening-up, China actively carried out trade and investment cooperation with other countries, which facilitated China’s all-round economic development and also brought benefits to other countries. If it is as you said that some conditions for Chinese investment abroad and foreign investment in China are not completely reciprocal, then it is determined by reality. The level of economic development of developed countries such as the US and European countries is far higher than China. China is still the world’s largest developing country, and it is neither fair nor objective to have a simple comparison of investment conditions between developing countries and Western developed countries whose development level is far higher.

That said, from the perspective of developing our own economy, adjust industrial structure and upgrade consumption, China has implemented a host of new measures to open up wider. Our goal is to further improve business environment, and both Chinese and foreign companies will be treated equally. World Bank’s latest report shows that China ranks 46th out of all 190 economies of the world in terms of business environment, up 32 spots from last year. From the beginning of this year, China slashed import tax for over 1000 products and cut the overall tariff level to 7.5%. In addition, China has significantly widened market access, shortened the negative list and lowered equity limits for foreign investment in financial and insurance sectors. We have completely canceled foreign ownership limits in the automobile industry, and foreign companies are allowed to set up wholly-owned subsidiaries in China. The famous US carmaker Tesla is already building its fully-owned plant in Shanghai. These are clear proof that China is determined and has taken concrete measures to open up wider. It is not advisable to require absolute reciprocity for investment conditions between developing and developed countries, and it is hoped that those who criticize China will see the enormous progress China made in opening up.

Q: We noticed that China’s investment in Sweden considerably increased in the last decade. Chinese companies are not only interested in big Swedish companies, for example Chinese investors bought Volvo Cars and shares of Volvo Group, they are also interested in small-and-medium sized high-tech companies in Sweden. And most companies that make investment and acquisitions in Sweden are private companies. What does the Chinese Government think of overseas investment by Chinese private companies?

Gui Congyou: One important experience of China’s fast growth in the 40 years of reform and opening-up is to vigorously attract foreign investment. Since a long time ago, Sweden’s big-name multinational companies, such as Ericsson and ABB, have been investing heavily in China, making contributions to China’s economic and social development. Swedish companies have cumulatively invested USD 5 billion in China. Swedish companies are welcome to seize opportunities presented by China’s industrial structural adjustment and consumption upgrading and continue to expand investment in China. Swedish investment in China is the more the merrier. I hope I can convey this message to the Swedish business community through you.

As Chinese economy continues to develop, a large number of Chinese companies, especially private ones, are growing rapidly. They are well-positioned and very willing to invest abroad. This is both delivering the benefits of China’s reform and opening-up to other countries and returning the long-term investment of other countries in China. As a country with a highly developed market economy, high quality products and advanced technologies, Sweden is an important partner of investment cooperation for China. Private economy is an important part of China’s socialist market economy. It accounts for over 60% of China’s GDP and is playing an ever more important role in driving national economic growth, creating jobs and improving people’s life. Given the important role of private companies, it is natural that they are the major players of Chinese investment abroad.

Q: Is there an overall plan for Chinese private companies’ investment abroad? Is such investment directed by the Chinese Government or themselves?

Gui Congyou: Investment of Chinese private companies is first and foremost a business behavior, which is determined by the development plan of companies. There are also cases where such investments went wrong or failed because the investors, confined by their limited capabilities, did not fully understand the national conditions of the destination countries. The Chinese Government encourages Chinese private companies to invest abroad, and provides service and guidance. Relevant departments and diplomatic missions will provide briefings on national situation of the destination countries, for the reference of investors. The Chinese Government also offers guidance for outbound investment of Chinese private companies through formulating industrial policies. Simply put, when Chinese companies invest abroad, they need to follow both industrial policies of China and the industrial policies of the recipient country.

Q: The world is now focusing on cooperation in two areas. One is environmental high tech, and the other is the Belt and Road Initiative. How do you think of China-Sweden cooperation in these two areas?

Gui Congyou: China-Sweden cooperation in these two areas has new opportunities and promising prospects. Both China and Sweden are firmly committed to the Paris Agreement on climate change and the 100% fulfillment of their obligations under the agreement. Instead of taking GDP growth as the sole target, China has prioritized green, environmental-friendly and sustainable development. The green economy has become the main theme of China’s economic development. Sweden is a world leader in green economy and sustainable development. China and Sweden natural partners in this field. Chinese companies take green and environmental technologies and clean energy as the key areas for cooperation with Sweden. Many Chinese government and business delegations coming to Sweden have visited the Hammarby Sjöstad. This year, several Chinese cities have signed cooperation agreements with Hammarby Sjöstad. The Board of Hammarby Sjöstad is also actively helping some Chinese cities train experts in smart city construction. I can't remember how many times I have visited the Hammarby Sjöstad. I believe that green and sustainable development cooperation between China and Sweden in their joint efforts to address climate change will become an increasingly significant part in the cooperation between the two countries.

Over 270 years ago, the Swedish ship Götheborg sailed across the vast waters to China, marking the start of China-Sweden cooperation along the Maritime Silk Road. Our two countries are also natural partners under the BRI framework. The Swedish government and business community have a strong interest in BRI cooperation, and tangible results have been achieved with the joint work of both sides. BRI is first and foremost about infrastructure connectivity. Last August, China Eastern Airlines launched a direct flight from Shanghai to Stockholm. This is the second direct flight between China and Sweden since Air China opened the Beijing-Stockholm air route 30 years before. In mid-September, the first China-Sweden freight train was opened, connecting Insjön, Dalarna County, Sweden, and Ganzhou, Jiangxi Province, China. This train carries high quality spruce material from Dalarna to Jiangxi, and then bring goods from China and other countries along the route back to Sweden. The trip takes only 16 days, with low freight costs and high efficiency. The Port of Gothenburg Authority has also proposed to open direct services at sea from Gothenburg to China, and we are actively working on it. In addition, trade and investment cooperation is also an important part of BRI cooperation. We also hope to expand exchanges and cooperation in such fields as finance, people-to-people exchanges and culture, to keep enriching China-Sweden BRI cooperation.

Q: Now some people in Sweden are speculating whether China is coming here to build high-speed rail, including those within the country and those connecting Sweden with Norway. At the same time, the Swedish society is also worried about large-scale Chinese investment. What do you think?

Gui Congyou: You have just been to China not long ago and took a high-speed train. I believe your personal experience said enough about China's high-speed rail. We know that the Swedish government has been discussing the construction of high-speed rail in recent years, but there is no decision yet. We are open to work with Sweden in building high-speed rail. As long as there is a need from the Swedish side, we are willing to provide necessary assistance and conduct cooperation in technology, capital and construction.

As for some people in Sweden who are worried about Chinese investment, I don't know what they have to worry about. As Chinese companies go abroad to make investments across the world, China's outbound investment keeps expanding, surpassing USD 100 billion annually. Chinese investment has stimulated local economic growth and employment, bringing tangible benefits to local people. Chinese investment in Sweden has reached USD 3.6 billion cumulatively, creating more than 20,000 jobs. After the acquisition of Volvo Cars, Geely quickly opened up the Chinese market for Volvo Cars and drove up its sales in other countries around the world. Volvo Cars sold about 120,000 vehicles in China last year, and about 600,000 worldwide, which is unimaginable 10 years ago when this company was on the verge of bankruptcy. Employment in Gothenburg depends mainly on the automotive industry. If Volvo Cars had not been revitalized by Geely, it’s hard to imagine what the employment situation in Gothenburg would be like. Geely and Volvo Cars also invested hundreds of millions of dollars to set up a research and development center in Gothenburg, bringing new job opportunities for the local people. We are happy with such cooperation. What’s worth worrying in such cooperation? China’s outbound investment, like China’s foreign aid, has no political strings attached and does not interfere in other countries’ internal affairs. The Chinese Government has always required its companies to abide by local laws, regulations and customs, and has taken disciplinary measures against bad behaviors. If you find any Chinese company investing in Sweden that fails to comply with Swedish industrial policies or Swedish laws, regulations and customs, you can report to us directly and we will urge it to make corrections immediately. China is constantly improving its investment environment to create better conditions for foreign companies to invest in China. We also hope that Sweden will provide corresponding convenience for Chinese companies.

Q: The Swedish societys doubts about foreign investment are not only targeted at China but also at other countries. For example, after the two pharmaceutical companies in Sweden, Pharmacia and Astra, were acquired by US and British companies, many production and R&D departments were moved out of Sweden. What do you think about this?

Gui Congyou: Investment cooperation is conducted by enterprises and should follow market principles. If the Swedish side has any concern in this regard, you can negotiate with the US and UK investors and ask them to take your reasonable concerns into account.

Q: Now Chinese companies not only invest in traditional industrial projects in Sweden and other Western countries, but are also entering the media and cultural industries. For example, Tencent is the major shareholder of the Swedish online music company Spotify, and China has also entered the media industry in Hollywood. Why do Chinese companies do this? Are there restrictions on Western companies investing in Chinas cultural and media industries?

Gui Congyou: The Chinese media and culture industries are willing to conduct mutually beneficial cooperation with countries around the world. Any investment cooperation is out of willingness from both sides. Chinese companies investing in Western media and cultural industries must respect the opinions of local governments and enterprises. Likewise, Western companies investing in Chinese media and cultural industries must also respect the opinions of Chinese governments and enterprises.

Q: Mr. Ambassador, do you have anything more to say about China-Sweden economic and trade cooperation?

Gui Congyou: The first China International Import Expo, which was just successfully held, has brought new opportunities for Sweden to expand its exports to China. Sweden maintains a surplus in trade with China and this surplus continues to expand, but in order to meet the Chinese people's demand for high-quality products, we are willing to further expand imports from Sweden. The Swedish Minister for Infrastructure Tomas Eneroth has led a delegation of over 200 government officials and business people to the Expo, and they witnessed the signing of contracts worth about USD 510 million. Swedish producers of pork, cheese and oats have also proposed to export to China, and we have worked actively to help them. If you and your colleagues have information about Swedish companies wishing to export to China, we are willing to provide assistance and services. It is not only my responsibility as an ambassador to promote China-Sweden economic and trade cooperation. The Swedish media should also play an active role and, through your reporting, introduce Swedish high-quality products to the Chinese people and Chinese high-quality products to the Swedish people. Let us work together to promote the sustainable and in-depth development of China-Sweden friendly cooperation in economy and trade and all other areas.

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