Remarks by Minister Li Kexin at ICAS Fall Symposium



Nov. 28, 2018, Rayburn House Office Building


Ladies and Gentlemen,


Thank you for inviting me to the ICAS Fall Symposium. I would be very honored to share with you on my perspective on the current China-US relations and one of the key issues that both China and US have significant stake in, the Korean peninsula nuclear issue. 


In two days time, on this Saturday, my president Xi Jinping will meet with President Trump at the margin of G20 summit in Argentina. There's definitely a lot of expectations on the meeting, because people find the bilateral relations very cloudy recently.


Trade friction is on the headline. President Trump doesn't like trade deficit, and he's been holding this view for years.  But if you look at the dominant role of US dollar in global financial system, the low savings rate in US, and today's picture of global value chain, it's difficult to draw a conclusion that China is ripping off US by having trade surplus. Actually China does not intend to pursue trade surplus. Excessive manufacturing in China does not necessarily lead to proportionate benefit, but clearly leave more pollution in the country. We are trying to buy more from other countries including US. That's the purpose of the Import Expo we held in Shanghai early this month. In terms of tariff, since we joined WTO, our average import tariff has lowered to 7.5%, compared to 40%, the average in developing countries.


Of course the structural issues on market access are more complex and difficult to address. But we are open to them. Most of the issues such as IPR, technology transfer can be discussed and I believe we can find a way out. As a matter of fact, these issues were by and large covered by the Bilateral Investment Treaty (BIT), we negotiated with the Obama administration, just one step short of completion.


That means the whole menu of options is on the table. If you want to talk seriously, we can make a deal. But the problem with our American friends is that, they take a one-way approach, asking the other party to "do homework", and they won't move an inch. This is not the way of negotiation, which is always two-way traffic. US side should also make compromise. They believe putting the tariff in place will press us to make concessions. This will not work on us.


And we are still confused about who is the real interlocutor for trade talks in this administration. Surely you can say the President makes the final decision, but trade covers a wide range of issues that much work should be done at  working level. Then one day you reach an agreement, and it is just turned down the next day, that's the frustration you could easily imagine.   


On the security side, we have many interactions on South China Sea, Taiwan, etc. I'd like to point out that, it is the US military ships and planes coming very near to some of our islands from time to time, not our ships and planes to Los Angeles or Honolulu. Freedom of navigation has never become a problem in real life in South China Sea. We built civil facilities and necessary defensive facilities on the islands. We've been talking Code of Conduct with our neighboring countries in the region and making substantial progress. On those major issues concerning sovereignty like Taiwan, I don't think we can make any compromise.


And even more serious, the cloud starts to shadow people- to-people contacts. Some US officials claim Chinese students are spying in this country, and they want to restrict visa issuance. Confucius Institutes teaching Chinese and Chinese news agencies are also treated with suspicion.


All these thorny points were culminated in Vice President Mick Pence's speech on Hudson Institute October 4th. People may ask, what's wrong with China-US relations? Is there going to be a new cold war between the first two economies in the world?


On January 1st 2019, we will have the 40th anniversary of China-US diplomatic relationship. In the past four decades, our two countries did have some bumpy roads, but we are getting closer and closer. The 600 billion dollars trade volume vis-a-vis almost zero 40 years ago, is a simple and striking example for our interaction. 360,000 Chinese students studying in US are bringing benefit, ideas and mutual understanding to this country.


But why there's a rising voice against China? I think the root cause is the feeling of uneasiness in this country. This is a different America than what we found 10 or 15 years ago. You see more anxieties, complaints, even anger here. The economy has not recovered from 2008 financial crisis in real sense. There's pros and cons for globalization. I believe US has benefited hugely from globalization. There are winners, and there are losers in some sectors and some areas. But it is up to yourself on how to manage the complex situation. It is basically a domestic issue. But unfortunately China is catching us, and quickly, as the No. 2 economy in the past years. Then we are conveniently targeted as a revisionist in the world order, taking advantage of WTO rules, encroaching US economy, etc. This is surely not fair.  


People easily focus on China's economic size today, but it is very important to understand China's national strategy. Our strategy is simple, that is to realize the nation-wide full development, from poor to prosperous. There's a huge development agenda for us. We are determined to lift 30 million people above the poverty line by the year of 2020, a daunting task ahead. We aim to substantially tackle the issue of pollution of air, water and land, in the same time frame.


For this purpose, we want to have good relations with all countries. I believe countries running different systems can come to good terms. China's relationship with the Republic of Korea is a good example. Since we set up diplomatic relations in 1992, our two countries have intertwined so closely that it is far beyond many's expectation. Of course we want to have good relations with US, no conflicts, no confrontation, mutual respect, and we are confident to have a win-win situation. Two major countries in the world  can co-exist peacefully if we drop the zero-sum game.


As China is still in the process of development, there's definitely room for improvement. This year marks the 40th year for China's openning-up and reform, but it should be an on-going process. President Xi at Boao forum announced a whole package of reform and market access measures and further enhanced at the recent Import Expo. These measures are being implemented and will make Chinese market more friendly to business.


So our intention is clear and there. This peaceful development trajectory will lie ahead for the next 5 years, 10 years, 50 years. This is the permanent road map we've already adopted, no change. Now it is up to the US politicians to make a choice, friend or foe, partnership or rivalry.


If we put aside ideologies, actually our two countries have no other choices but to cooperate with each other. The Korean peninsula issue is the one China and US must join hands to meet the challenge.


Our position on the Korean Peninsula nuclear issue is consistent. We are committed to denuclearization, to peace and stability on the Peninsula, and to achieve the goal through dialogue and consultations. Development of nuclear weapons will not bring security to the DPRK It will only escalate the tension and conflict in the North-east Asia, and pose grave threat to China, the US and the international community. We oppose any nuclear weapon on the Korean Peninsula, and will not recognize the DPRK as a nuclear-weapon state. At the same time, we will seize all opportunities to push forward the dialogue and negotiation for peace.


We believe the Korean Peninsula is faced with a unique historical opportunity of political resolution. The DPRK is sincere in realizing denuclearization, and the DPRK has decided to shift its strategic focus to economic development and improving the living standards of its people. This acknowledgement has been widely accepted by the international community.


The ROK and the DPRK have seized the opportunity of the Pyeongchang Winter Olympics to achieve a turnaround in their relations. The two countries have opened in a new chapter of reconciliation and cooperation. This year, the two sides interacted frequently, and released positive signals. The leaders of the two countries held three summits within one year. They stepped across the military demarcation line in Panmunjom hand-in-hand, and signed the Pyongyang Joint Declaration. Jointly, they undertook to turn the Peninsula into a peaceful homeland to achieve the goal free of nuclear weapons and nuclear threats. So far, Inter-Korean relations have made tremendous progress. As a close neighbor to the Korean Peninsula, China consistently supports the ROK and the DPRK to improve relations through dialogue, achieve reconciliation and cooperation, and realize independent and peaceful reunification. Under current circumstance, we will firmly support the efforts of the two sides to turn their leaders' consensus into concrete actions, build and enhance mutual trust, and advance the reconciliation and cooperation process on the Peninsula.


We support the US and the DPRK to push forward dialogue and negotiation, and China is glad to see substantial progress made by the dialogue. President Trump and Chairman Kim held a historic summit in Singapore last June. The two sides reached important common understanding on full denuclearization and the building of a peace regime on the Peninsula. We speak highly of the vision of President Trump on the bilateral contacts between the US and the DPRK. Now, the US and the DPRK are preparing to hold the second summit in the near future. The key of peaceful negotiation is not through a one-way lane in which one side has to accept all the conditions raised by the other. China believes the  peaceful negotiation should move forward the denuclearization and building a peace regime on parallel tracks. We think it's US should attach importance to the reasonable demands by the DPRK on the security and development and respond positively. We think it's necessary for the US to consider invoking the reversible provision of the UN Security Council resolutions. The US should seriously consider the issuance of an end-of-war declaration accordingly and timely, so favorable conditions would be created for building mutual trust among all parties concerned. China strongly believes it's possible that new progress would be made on peaceful negotiation, as long as the US and the DPRK could meet each other half way and accumulate trust.


China and the US share the overall goal and hold extensive common interests on the Korean Peninsula nuclear issue. This year has seen important, positive developments on the Korean Peninsula. Among all efforts, the coordination and cooperation by China and the US are crucial. The Korean Peninsula issue should be the shining point of the two countries' cooperation. China is ready to develop even closer coordination with the US side, and make due contribution for the peaceful resolution on this issue. At the same time, the two countries' cooperation must be based on mutual respect on each other's interests and concern. The anti-missile system deployed on the Korean Peninsula by the U.S. poses a serious threat to China's strategic security. The unilateral sanctions and "long-arm jurisdiction" imposed by the U.S. on Chinese entities and individuals according to US domestic laws are not acceptable, either. Such actions are obstructing cooperation between China and the US. We hope the US side can stop and revoke the relative measures concerned, so the two sides could cooperate in a better condition.


So, as two important countries, China and US both face the  challenges of domestic issues, economic growth, governance, justice and fairness, but also we take the common global responsibilities. We have no reason to be hostile to each other. The lucky thing is that people in our two countries have a good feeling towards each other, and there's a very strong basis of friendship at local level. Even in this building (Rayburn), though most of time I come here for sticky issues, we do have a lot of friends. They understand China and think the bilateral relationship is important.


On November 1st , President Trump had a long telephone call with my president. They had very good exchange of views on trade, Korean Peninsula and others. They decided to meet up in Argentina. After that, our trade teams have been working hard to compare notes. We held the Diplomatic and Security Dialogue in DC. All these will contribute to the historic summit on Saturday. I believe the two leaders will give guidance to us and restart a good process to enhance the bilateral relations.


Yes we have some cloud over our heads, but I can say we begin to see the silvering light, and I believe we will finally have the sunshine.  


Thank you for your attention!

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