On September 22, 2015, on the eve of his state visit to the United States (US), President Xi Jinping gave a written interview to "The Wall Street Journal" and answered questions on China-US relations, bilateral cooperation in Asia-Pacific, international and regional affairs, exchanges between the two peoples, improving global governance system, China's economic situation, China's comprehensive deepening of reforms, foreign enterprises' investment in China, China's Internet policy, anti-corruption and others.
When answering questions on the Asian Infrastructure Investment Bank (AIIB) and improving global governance structure, Xi Jinping pointed out that the global governance system is built and shared by the world, not monopolized by a single country. China certainly has no intention to do so and will not do so. China is a participator, constructor and contributor of the current international system, and has always done its part to uphold the international order and system with the United Nations (UN) as its core and the purposes and principles of the UN Charter as its foundation.
Many visionary people in the world hold that as the global landscape evolves and major transnational and global challenges facing mankind increase, it is necessary to adjust and reform the global governance system and mechanism. Such reform is not about dismantling the existing system and creating a new one to replace it. Rather, it aims to improve the system in an innovative way. "When all means are exhausted, changes are necessary; once changes are made, things will improve." Whether for a country or the entire world, adaptation to keep pace with the times is necessary in order to maintain its vigor. To build a more equitable, just and effective architecture of global governance meets the common aspiration of all countries. China and the US share broad interests in the field of global governance and should work together to improve the global governance system. This will not only leverage our respective strengths to enhance cooperation, but also enable our two countries to jointly respond to major challenges facing mankind.
China owes much of its progress in development over the past decades to international cooperation; we thus feel duty-bound to make contributions to international development endeavors. Many other developing countries have also expressed similar strong wishes to China. The AIIB is established mainly as a response to the need of Asian countries for infrastructure development and their aspirations for further cooperation. According to the projection of the World Bank and the Asian Development Bank, from 2010 to 2020, the annual shortfall in funding for Asian infrastructural development is around 800 billion USD. The AIIB serves as a new option to meet this shortfall, and it is therefore welcomed by both Asian countries and the wider international community. But as the funding shortage is huge, it is clear that the AIIB as only one channel cannot possibly meet such demand alone. As an open and inclusive multilateral development agency, the AIIB will complement other multilateral development banks. In addition to Asian countries, countries outside Asia such as Germany, France and the UK have also joined the AIIB. China welcomes the US to join the AIIB. This has been our position from the very outset.
I don't believe any country is capable of rearranging the architecture of global governance toward itself. Such practice goes against the trend of the times. The improvement of global governance architecture should be decided by all countries. As the UN summits commemorating the 70th anniversary draw nearer, China stands ready to work with all the other UN member states to build a new type of international relationship with win-win cooperation at its core, improve the architecture of global governance and build a community of common destiny for mankind.
When answering questions on China's policies and positions in dealing with regional and international affairs, Xi Jinping stressed that China pursues an independent foreign policy of peace and is willing to stay committed to world peace and common development. In today's world, it is impossible for China to develop on its own; only when the world thrives can China prosper. China has never been absent in efforts to promote world economic recovery, seek political settlement of international and regional hotspots and respond to various global problems and challenges. This is what the international community expects of China, and to do so is China's responsibility.
Both being permanent members of the UN Security Council, China and the US shoulder the important responsibility of upholding world and regional peace and security, and our interests converge in a broad range of areas. China is willing to join hands with the US to tackle major global and regional issues. As a matter of fact, we have done a great deal together in this area and will continue to do so. China and the US have been engaged in close coordination and cooperation in addressing various international and regional issues as well as global challenges, ranging from the DPRK nuclear issue and the Iranian nuclear issue to Palestine-Israel peace talks, South Sudan, climate change and major epidemic diseases. Admittedly, there are differences in our respective thinking on and approach to some issues. However, differences are the reason why we should complement each other and find the best solutions to issues.
In addressing international and regional issues, China adheres to the principles of equality, fairness and justice, advocates cherishing harmony and calls for seeking political settlement of relevant issues through peaceful negotiation. In addressing these issues, we should base our position and policy on the merit of each particular case and endeavor to uphold justice. We oppose arbitrary interference in other countries' internal affairs and stand for resolving issues through consultation. No matter how difficult and complex the challenges are, the international community should meet them with confidence and strive to resolve them through peaceful means.
The political settlement of the Iranian nuclear issue represents a major achievement, and China and the US worked hard to make this possible. It shows that our propositions and approaches have worked well. China will work with all parties involved to ensure the comprehensive deal is effectively implemented.
China's position for denuclearization of the Korean Peninsula is firm and clear-cut. At the same time, we believe that the denuclearization, peace and stability of the Korean Peninsula should be achieved through peaceful means. The current situation on the Peninsula is intricate and sensitive. China is willing to maintain close communication and coordination with the US and relevant parties to properly address issues relating to the Peninsula and ensure long-term stability of Northeast Asia.
When answering questions on the Chinese dream and the similarities and differences between the Chinese dream and American dream, Xi Jinping pointed out that the Chinese dream is fundamentally about making life better for the Chinese people. One should approach this concept from two angles: history and reality. Starting from the Opium War in 1840, the Chinese nation went through a century of social turbulence, foreign aggression and the sufferings of war. Yet our people stood on their feet and struggled tenaciously for a better future. They never gave up the longing for their cherished dream. To understand today's China, one needs to fully appreciate the Chinese nation's deep suffering since modern times and the profound impact of such long-term suffering on the Chinese minds. That is why we regard the Chinese dream of the great rejuvenation of the Chinese nation as its greatest dream since modern times. The Chinese dream is as much the dream of every Chinese as it is the dream of the whole nation. It is not an illusion, nor is it an empty slogan. It is deeply rooted in the hearts of the Chinese people.
Every country and every nation has its own dream, and dreams bring hope. During my last visit to the US, my old friends in Muscatine, Iowa, talked to me about their dream. I have the deep impression that the Americans and people in all other countries share the same dream about the future: world peace, social security and stability, and a decent life. Naturally, owing to differences in history, culture and stage of development, China, the US and other countries may not have the exact same dream, and they pursue their dreams in different ways. But all roads lead to Rome. The dreams of various peoples, however different in meaning, are sources of inspiration for them, and all these dreams create important opportunities for China and the US as well as other countries to engage in cooperation.
When answering questions on the South China Sea, cybersecurity and important factors maintaining China-US relations, Xi Jinping stressed that in approaching China-US relations, one should see the larger picture and not just focus on differences between the two countries, just as a Chinese saying tells us, "When important things are addressed first, secondary issues will not be difficult to settle." Together, China and the US account for one-third of the world economy, one-fourth of the global population, and one-fifth of global trade. If two big countries like ours do not cooperate with each other, just imagine what will happen to the world. Both history and reality show that China and the US stand to gain from cooperation and lose from confrontation. When President Barack Obama and I met at the Annenberg Estate in California in the summer of 2013, we made the strategic decision of jointly building a new model of major-country relationship between China and the US with non-conflict or confrontation, mutual respect and win-win cooperation as its core. In the past two years and more since then, guided by this consensus, our exchanges and cooperation across the board have kept deepening and been upgraded. We maintain close and effective communication and coordination on almost all major international and regional issues and global challenges. Facts have shown that the interests of China and the US have grown increasingly intertwined. The growth of the China-US relations has not only benefited our two peoples, it has also enhanced peace, stability and development in Asia-Pacific and the world.
Naturally, China and the US have some differences; even family members don't always see eye to eye with each other. Our two countries should understand and respect each other, expand common ground and properly handle differences, and respect and accommodate each other's core interests and major concerns. On issues that can be resolved, the two sides should meet each other half way and make joint efforts to seek a solution; as to those issues that cannot be resolved for the time being, we should manage them in a constructive way, make sure that they are not exacerbated or escalated, and prevent them from derailing the overall relationship of the two countries and cooperation that has served our two peoples so well.
The Nansha Islands have been China's territory since ancient times. This is fully backed by historical and legal evidence. China's development and maintenance of facilities on some of our garrisoned islands and reefs in the Nansha Islands does not impact on or target any other country, and it should not be over-interpreted. These facilities have been built to improve the working and living conditions of the Chinese personnel on the maritime features, provide international public goods and services, and better uphold navigation freedom and safety in the South China Sea.
China is a firm defender of cybersecurity. China is also a victim of hacking attacks. The Chinese government does not engage in theft of commercial secrets in any form, nor does it encourage or support Chinese companies to engage in such practices in any way. Cybertheft of commercial secrets and hacking attacks against government networks are both illegal and should be cracked down upon according to law and relevant international conventions. China and the US share common concerns on cybersecurity. We are willing to strengthen cooperation with the US on this issue.
I will have in-depth exchanges of views with President Barack Obama on bilateral relations and the international situation, and engage the American public in order to jointly chart the course for growing China-US relations. I hope that this visit will send a positive message to the international community that China and the US will strengthen cooperation and jointly meet global challenges.
When answering questions on China's national defense policy, Xi Jinping pointed out that China has always pursued a defense policy that is defensive in nature and a military strategy featuring active defense. In strengthening our defense and military building, China is not going after any kind of military adventure. It never crosses our mind. China has no military base in Asia and stations no troops outside its borders. China is a big country that has vast territorial land, sea and airspace, and very long borders. We need to maintain proper investment in our defense and keep the troop size at an appropriate level. To demonstrate China's determination to uphold peace and development, I announced not long ago a troop cut by 300,000. China has long pledged never to practice expansionism or seek hegemony. History has and will continue to prove this.
China has contributed more peacekeepers than any other permanent member of the UN Security Council. The Chinese military has played important roles in antipiracy escort operation in the Gulf of Aden and in the shipping of chemical weapons out of Syria for destruction. Most operations of China's military in our neighborhood are helping some countries to deal with natural disasters. China's military will do still more within its capacity to provide public security goods to the international community.
Both China and the US are major countries in the Asia-Pacific region where their interests intersect most closely and they interact most frequently. Both China and the US hope to see peace and stability in the Asia-Pacific, as it serves their common interests as well as those of the countries in the region. Asia-Pacific should be a cooperative ground for enhanced China-US coordination and collaboration rather than their Coliseum for supremacy. Our attitude is this: we welcome whatever that contributes to regional peace and stability, and oppose whatever that may lead to conflict and turmoil in the region.
In Asia-Pacific, both China and the US should vigorously implement the principles of mutual respect and win-win cooperation. The Chinese military participated in the "Rim of the Pacific Exercise" for the first time in 2014. The two militaries are stepping up the two "Confidence-Building Mechanisms". We hope to identify still more converging grounds in the Asia-Pacific region for the two countries, continuously build up mutual strategic trust and work with other countries to maintain regional peace, stability and prosperity.
When answering questions on China's economic situation and the measures the Chinese government is currently taking to shore up confidence among Chinese and global investors, Xi Jinping stressed that China's economic growth is still one of the fastest in the world. In the first half of this year, the Chinese economy grew by 7 percent, which is hard-won considering the intricacy and changeable nature of the overall global economy. A growth rate of around 7 percent would be sufficient to reach our development goal of doubling the 2010 GDP and per capita income by 2020.
The Chinese economy is still operating within the proper range. What China needs is a higher quality and efficiency of economic development and addressing of problems of unbalanced, uncoordinated and unsustainable development, so that our economy will be put on a more solid basis and go forward more steadily. We are stepping up efforts to shift economic development model, make structural adjustments and place greater emphasis on developing an innovation- and consumption-driven economy. It is our hope that by solving these problems, China's economy will transform itself and retain its robust dynamism for development.
Against the overall global economic backdrop, many countries have encountered difficulties. The Chinese economy is also under downward pressure, but it is a problem in the course of progress. What I want to emphasize, in particular, is that whatever happens, China will stay strongly committed to deepening its reforms on all fronts while opening still wider to the outside world. We will work coordinately to ensure growth, promote reform, make structural adjustment, improve people's well-being and forestall risks, and we will enhance and innovate macro-regulation and ensure steady and fairly rapid economic development. China is continually promoting a new type of industrialization, IT application, urbanization and agricultural modernization. China enjoys a high household savings rate, huge potential in consumption, diligent workforce, expanding middle-income population, robust development momentum of the service sector, and a vast and potential-rich market. All these are the foundations and prerequisites for China to maintain a medium-high growth in the years to come.
To understand China's economy, one needs to take a longer view. If we liken it to a large ship on the sea, we will ask whether it is sailing in the right direction and whether it has sufficient engine power and energy to stay long. Any ship, however large, may occasionally get unstable sailing on the high sea. Investors will come to a right judgment if they have a full understanding of China's progress in economic development since the start of reform and opening-up, of China's strategies formulated recently to ensure sustained and steady growth, and of the relevant data and trends in China's economic performance. The report released by the American Chamber of Commerce in Shanghai showed that about 95 percent of the surveyed businesses have planned to increase or maintain their investment in China. That is a decision made by over 300 American entrepreneurs, a decision I believe all smart investors will make.
When answering questions on China's comprehensive deepening of reforms, Xi Jinping pointed out that an important goal for China's current reform in economic system is to enable the market to play a decisive role in resource allocation and make the government better play its role. That means we need to make good use of both the "invisible hand" and the "visible hand".
The ups and downs of stock markets are caused by the very nature of such markets, and the government normally does not intervene. The role of the government is to maintain an open, fair and impartial market order, protect the lawful rights and interests of investors, especially small- and medium-scale investors, promote the stable growth of the stock market in the long run, and defuse massive panic. The recent unusual fluctuations in the Chinese stock market were mainly the result of previous rapid surges and big fluctuations in the international market. The Chinese government has taken some measures to defuse panic in the stock market and avoid systemic risks. Such steps have proved successful. And similar steps have also been taken in some mature foreign markets. After a mix of stabilizing steps taken, the market has entered a stage of self-correction and self-adjustment. To develop the capital market is a key goal of China's reform, which will not change just because of the current fluctuations in the stock market.
In 2014, we advanced reform in various areas in a fast yet steady manner, and 80 major reform tasks were basically completed. On top of that, the relevant government departments completed 108 reform tasks, with 370 reform outcomes delivered in various sectors. Since the beginning of this year, we have introduced over 70 major reform plans. On September 15, we discussed and adopted a number of reform plans, including the implementation of a system of negative list on market access, policies to support the development and opening up of key border regions, a decision to accelerate the improvement of the pricing mechanism, and a plan to encourage and regulate the injection of non-state capital in investment projects launched by state-owned enterprises in accordance with due procedures. This year, we have decided to launch over 100 key reform projects, and more major economic reform projects will be introduced. Those reform projects that facilitate growth, structural adjustment, people's well-being and risk prevention will be prioritized. And substantive reform plans will be vigorously implemented in such areas as fiscal policy, taxation, finance, opening up, judiciary and people's well-being.
This round of reform in China is comprehensive in nature and it is being pursued with unprecedented intensity. We have made enormous efforts and managed to overcome some long-standing obstacles. These reform projects have upset the vested interests of some people, and caused changes to the career and life of some people. It is only natural that there will be difficulties; otherwise it will not be a reform. That is why I said that we must be bold enough to crack hard nuts and ford dangerous rapids during reform and that only the daring will prevail at key stages of reform. At the same time, reform calls for down-to-earth efforts. To set unrealistic expectations, play to public opinion by talking big or just scratch the surface will not work. Like an arrow shot that cannot be brought back, we will forge ahead against all odds to meet our goals of reform.
When answering questions on RMB exchange rate and realizing the capital account convertibility, Xi Jinping stressed that China has been working to improve the market-based RMB exchange rate regime. Recent measures to improve the quotation of the RMB central parity is a case in point, as it gives greater say to the market in deciding the exchange rate. Given the complexities in the current international economic and financial conditions and the apparent divergence in market makers' expectations of the future trend of the RMB exchange rate, there had been a long-standing gap between the central parity and market exchange rate of the RMB. With improvements to the quotation of the RMB central parity, the RMB central parity will better respond to supply and demand in the foreign exchange markets, and systemically avert the sustained large gap between the RMB central parity and market exchange rate. Since the quotation of RMB central parity was improved on August 11, initial progress has been made in correcting the deviation. Given the current economic and financial conditions at home and abroad, there is no basis for sustained depreciation of the RMB. Reform of the RMB exchange rate formation regime will continue in the direction of market operation.
China put forward the goal of convertibility of the RMB under the capital account back in the early 1990s. Over the past 20 years and more, China has been working toward this goal. Currently, there are only very few transactions that are still banned under the RMB capital account. China is advancing the convertibility of the RMB under the capital account in a steady and orderly manner.
There has been a recent drop in China's foreign reserves. This mainly reflects improvement to the mix of local currency as well as foreign exchange assets and liabilities of domestic banks, enterprises and individuals. There are three main reasons: first, some assets in foreign exchanges were transferred from the central bank to domestic banks, enterprises and individuals, including an increase of 56.9 billion USD in the balance of foreign reserve deposits of domestic banks in the first eight months of this year, with a 27 billion USD increase in August alone. Second, outbound investment by domestic enterprises has grown rapidly. Third, domestic enterprises and other market entities are reducing foreign financing steadily, which helps reduce risks including high leverage operation and currency mismatch. These changes are normal capital flow, which is moderate and manageable. Foreign investors who aim at long-term investments are still investing in China. China's foreign exchange reserves remain abundant and are still very large by international standards. With improvement to the RMB exchange rate regime and progress in RMB internationalization, it is quite normal that China's foreign reserves may increase or decrease, and there is no need to overreact to it.
When answering questions on China's introduction and utilization of foreign investments, Xi Jinping pointed out that utilizing foreign investment is our long-term policy. Such policy will not change, nor will our protection of the lawful rights and interests of foreign companies in China, and our commitment to better services in favor of foreign companies in China. Foreign investment, which has provided China with necessary capital, advanced technologies, valuable managerial expertise and abundant talents with international vision, all needed for the country's modernization drive, has played a significant role in promoting China's economic development.
China respects the international business practice of non-discrimination and has fulfilled its national treatment and other commitments upon WTO accession. We give equal and fair treatment to all market players, including foreign investment companies in China, and welcome all forms of cooperation between transnational corporations and their Chinese counterparts. In recent years, China has taken a series of investment facilitation measures, significantly canceling restrictive items and adopting a management model based on pre-establishment national treatment plus a negative list approach. By doing so, we aim to timely address the legitimate concerns of foreign investors, protect their lawful rights and interests, and foster an environment with open and transparent laws and policies, highly efficient administration and equal competition.
According to surveys by the UN Conference on Trade and Development and other authoritative international organizations, China remains the world's most attractive investment destination. Claims about a changing investment climate in China and foreign investors losing confidence in China are not backed by facts. In 2014, China received 120 billion USD in foreign investment, more than any other country, and continued to be the leading destination among the developing countries for 23 years running. In the first eight months of this year, the actual amount of foreign investment used by China totaled 85.3 billion USD, up by 9 percent from the corresponding period of the previous year. China will further ease market access for foreign investment. At the same time, we will improve regulation system of foreign investment, amend relevant laws on foreign investment and protect the lawful rights and interests of foreign investment companies.
It is my hope that other countries will also keep their markets open to Chinese investors. We are against protectionism and discriminative policies of all forms, stand ready to properly settle economic and trade disputes with relevant countries through consultation, and promote a balanced multilateral economic and trade system that focuses on development and seeks win-win results.
When answering questions on Internet management and China's opening up, Xi Jinping stressed that as one of the greatest inventions of the 20th century, the Internet has turned the world into a "global village" by profoundly changing the way people live and work and vigorously boosting social development. Though highly global, this "new frontier" is by no means a "land beyond law". Rule of law also applies to the Internet, with the need to safeguard a country's sovereignty, security and development interests.
Freedom and order must be upheld side by side in both cyberspace and the physical world. Freedom is the purpose of order, and order the guarantee of freedom. We need to fully respect the netizens' rights to exchange ideas and express their wishes, while at the same time, establish a sound cyberspace order to better protect the lawful rights and interests of all netizens. The Internet in China is booming, providing immense opportunities and market horizon for businesses around the world. We welcome all foreign companies to develop in China and will respect and protect their lawful rights and interests provided that they abide by the laws and regulations of China and do nothing to undermine China's national interests and interests of Chinese consumers. The international community should work together to build a peaceful, secure, open and cooperative cyberspace on the basis of the principles of mutual respect and mutual trust.
China recognizes the positive role of foreign nonprofit organizations (NPOs), welcomes and supports their development in China, and stands ready to provide them with necessary facilitation and assistance. Taking seriously the provision of services to and regulation of foreign NPOs in China, we will regulate, in accordance with law, their activities and protect their lawful rights and interests. All foreign NPOs should obey China's laws and carry out their activities on a law-abiding and orderly basis.
When answering questions on the anti-corruption campaign carried out by China, Xi Jinping pointed out that cracking down on corruption is what all countries must do and what their peoples wish to see. The ultimate purpose of the Communist Party of China (CPC) is to serve the people wholeheartedly. The CPC owes its governing status to the support of the people, so we must maintain its flesh-and-blood relations with the people. The CPC does not operate in a vacuum, so it has unavoidably found itself with problems of one kind or another. Corruption is such a persistent one. The CPC must be courageous enough to face up to the problem and go out to correct it through self-purification and self-rectification. Our people hate corruption more than anything else and we must act to allay their concerns. Therefore, we decided to go after both "tigers" and "flies", wrongdoers regardless of their ranks. Since the 18th National Congress of the CPC, we have intensified anti-corruption efforts, dealt with a large number of corrupt officials in accordance with law, including some who used to hold very high offices, and won extensive support and thumbs-up from the Chinese people.
On institutional building in this respect, let me share with you two remarks I made. The first is that we must keep power in the cage of systemic checks. The other one is that transparency is the best preservative against corruption. As we go further in the anti-corruption campaign, we will focus more on institutional building so that officials will not dare and cannot afford to be corrupt and, more importantly, have no desire to take that course. Right now, we are formulating and updating relevant laws and regulations to truly put power inside a more closely knit cage of effective checks. With respect to asset disclosure by officials, we adopted relevant regulations back in 2010 to require such reporting which was subject to random checks and verification every year. The proportion of verified reporting has increased steadily, and no one would take exception. Should anyone be found to be dishonest, they will be punished accordingly.
I once said that the fight against corruption never ends. Our zero tolerance to corruption will never change, nor will our determination, courage and severity with which we punish it in order to rid the party of corruption. All acts of corruption must be dealt with. Anti-corruption efforts will not hurt economic development. On the contrary, fighting corruption, including such malpractice as rent-seeking, will help build a clean government, remove hurdles that impede market operations, promote fair rules and bring about a better investment and business environment.
When answering questions on the interactions between the Chinese and the US people, Xi Jinping stressed that thirty years ago in 1985, I led a delegation to Iowa to study agricultural technology. It was my first visit to the US. I was deeply impressed with the advanced US technology and the warmth and friendship of the US people. Since then, I have made several trips to the US and hosted many US friends in China. I could tell from these personal experiences that the Chinese and the US people cherish very friendly sentiments toward each other. My wife is a performing artist and music teacher for long. In recent years, as the WHO Goodwill Ambassador for Tuberculosis and HIV/AIDS and the UNESCO Special Envoy for the Promotion of Education for Girls and Women, she has had many exchanges with organizations and people from the US and other countries. She shares my impressions.
Interactions between countries start with their people. Exchanges and friendship between our two peoples have a long history. Over 230 years ago, the US merchant vessel "Empress of China" sailed across vast oceans to China. Over 70 years ago, the US people resolutely defied sea and gravity to help the Chinese people in their heroic fight against the aggression of Japanese militarists. Thirty-six years ago, China and the US established diplomatic relations, ushering in a new chapter in the annals of friendly exchanges between the two peoples. What has happened proves that China-US friendship transcends time and space.
As an ancient Chinese philosopher Mencius said, "It's only natural for things to be different." Lack of mutual understanding between countries is indeed a problem, but this is life. With so much difference in ethnicity, history, culture, religion, social system, development level and lifestyle, there are things about others that one may find hard to understand. This is for sure, but I think anything that is seemingly incomprehensible can be understood provided that one is ready to learn and make an effort to understand it instead of dismissing it altogether. Every civilization, distinct and colorful as it is, possesses the value for its existence. A country or a nation should cherish and protect its own values and culture, and at the same time, recognize and respect those of others. While recognizing and respecting one's own civilization achievements, a country or a nation must not shut its door to the outside, still less, indulge in self-aggrandizement. As an old Chinese saying goes, "Learning alone without exchanges with others will lead to ignorance." We should be ready to learn from all other civilizations of the human society and carry forward their time-honored and ever-fascinating values that transcend time and national borders and retain appeal in modern times. China is ready to work with the US and others in the international community with a view to seeking win-win results in development and seeking common progress through cooperation, so as to deliver greater happiness to the Chinese people and ensure the fruits of peace and development for people around the world.