China Forum

The text below is based on a transcript.

I would like to welcome you all. We are honoured to have two distinguished speakers. I mean, they are the ones to listen to, so I will be brief.

I will just share a few reflections from my perspective, and then I hope we will be able to exchange reflections – between the audience and the panel.

Now, 2010 – as it looks in January – will be yet another dynamic year in Norwegian–Chinese relations. As Philip (Lote) was saying, there is EXPO 2010 and a lot of activity around Shanghai in May and beyond.

We are in the process of negotiating a Free Trade Agreement between Norway and China, with a great deal of involvement of my Ministry, but also of Minister Giske and the Ministry of Trade and Industry. Haakon Hjelde is in the chair there. This is a big and complex agenda, but very exciting.

We continue our substantial dialogue on human rights. As you know, this is a channel that Norway and a few other countries have with China – and also a complex undertaking. But I am convinced that this is a very worth-while exercise to be engaged in.

And there will be many bilateral visits and further development of economic ties.   

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Norway’s exports to China increased by 14% last year, and China’s exports to Norway increased by 13%. So we actually had a larger export increase than they did. We saw a growth in value of almost 40% in our exports. So, again China is a key feature in Norway’s economic life.  

And those who followed closely developments on the Oslo’s Stock Exchange at the end of last week will know that one of the main reasons why the index fell on Friday was due to indications from Chinese officials of new regulations in China. Again we are now seeing China on the global scene.

In Norway we are now preparing for the Vancouver Olympics. We are preparing to fill the league tables with gold, silver and bronze medals. We will see how the Chinese do there as well, but we should also be concerned about other league tables these days.

We have taken note of the fact that China has overtaken the US as the leading climate gas emitter. Not per capita, but as a country. We continue to assimilate figures demonstrating China’s performance, and I often ask myself – and perhaps you hear this from my experts – are all these figures showing growth, value, output and volume  really measured according to our standards? We are not talking about an OECD member here. So are we getting the real figures? We can discuss this. But the phenomenon of the emergence of China is, of course, unquestionable.

China overtook Germany in 2009 to become the world’s leading exporter. Its share of world exports jumped to almost 10% last year – that is up from 3% ten years earlier. We expect China to overtake Japan as the world’s second largest economy this year, and in 2030, according to experts, China will be the world’s largest economy surpassing the United States. It will not be surprising if that happens sooner.

China’s share of world markets will continue to rise. Projections from the IMF’s World Economic Outlook suggest that China’s exports will account for 12% of world markets in the next couple of years, up from 10%. And Chinese investments abroad will increase at a very rapid pace.

I studied another table last week that I found interesting – that was on the size of Chinas currency reserves measured against the value of the US Stock Exchange. How much of the US Stock Exchange can a country buy with its currency reserves? In 2000, the Chinese currency reserves could buy 2%. In 2005 it could buy 5% – and today it could buy almost 30%. So this is the rise we have seen. I think this sends a message of what capital accumulation really means.

By the way, if Norway spent its Pension Fund on the US Stock Exchange, we would be able to buy 5%, which is also an impressive figure. We would not, of course... But these are figures which I think are quite interesting.

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Then politically, and I will now come to that, as our experts will be speaking about this after me. We are going to face China as a confident country on the world scene. So, we are in a way, I think, struggling to digest the fact that not only a country, but a whole continent is coming on board, into an already overloaded international system. And what role will China play in this system?

I became Foreign Minister in October 2005, and one of my first missions was to go to Hong Kong to the WTO Ministerial. Although it was hosted in Hong Kong, China played a very passive role. It was not in the inner circle and not among the active few who really determined the outcome of that conference.

Three years later, WTO negotiations broke down in Geneva with China in the driving seat. And since then, there is absolutely no question. We used to talk about G4 in the WTO; now it is definitely the G5. And China is making alliances that are really highlighting that “the old days” – when the EU and the US could determine WTO’s agenda – belong in another century.

And we saw this of course in Copenhagen when China not only put its own national interests on the agenda, but also forged alliances with groups far beyond, and this really determined the outcome.

So, I think these are key issues that we need to discuss, and we should be cautious about concluding what this all really means. But I think the image of China going on board the international system – and not knowing exactly what this will mean to trade frictions, to political frictions – is a difficult one.

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I will share just a few more reflections. How will the international system be influenced and reshaped by China? China has been a member of the Security Council for many years, so it has been in the inner circle of the UN. But now we see China taking active part in the G20, and we see China as a component of the G2 when we talk about US–China relations.

We have an economic power with the ability to project its influence. And I think history has taught us that countries with such economic power will project an influence – but in what way? China will probably do so differently from other major global players. But how will it do it? How will China decide to promote its power regionally? You can feel its influence as you travel through the regional capitals in Asia. What effect will this have globally?

I was told by a researcher on China that China has not lost a soldier in foreign operations since 1979, i.e. since the Vietnam War. I think this observation shows a country that is projecting its influence through other means. At the same time, we know there are other major powers that are losing soldiers in this way.

So, we see a conquest – I would say – by involvement and investment in Africa, in Latin America and in Asia in connection with natural resources and through other means. I wonder what exactly does this huge economic performance really mean – in terms of political influence?

We see it in Afghanistan, where China is responsible for an extraordinary investment – 3.5 billion dollars in a copper plant, with a dedicated railway to transport this resource to China.

But its political involvement is a big question. Afghanistan’s instability is in this region, it is not directly our instability – but it could be China’s instability. So how will China respond to this? We know that China knows very well that it may be have a secondary role as a future focus for trans-national terrorist attention. Now China does not have a primary role, but it could take on a primary role through its international performance.

How will China guard its interests and how many of these interests are at stake?

For a country that is no longer just a passenger, but now has to take responsibility, in the driver seat, what course will it take? What will map will it follow? And what will its intentions be?

On climate change, of course, China will be the key. No country is worse hit by climate change than China. So if China takes a long perspective of things, it will have to look beyond its immediate interests and do something about it.

On trade, I think we saw this, as I said, in the WTO and the Doha round. Another thing we saw, was a group of developing countries that feared not so much US pressure when they opened up their markets, but protection against the Chinese export machine.

And we received, as Ministers, letters from the car industry in India, fearing competition from the Chinese car industry, i.e. letters not from Europe, but from India. So, we see new kinds of complex alliances.  

And then, of course, as I said, when you look at the regional dimension in and around China, in Asia, all those tensions, for how long can China afford not to take a more active role? From Sri Lanka to Afghanistan, including the instability of Pakistan, a country with which China has enjoyed a very privileged and substantial relationship for a long time, how long can China not be in the driver’s seat in relation to all these things?

And then, its relations with the United States, will they be stable and how will they evolve? How are these countries linked together – in this China–US relationship – where the one’s vulnerability is part of the other’s strength, and visa versa. 

And then, of course, on to Chinas vulnerability, and my last point. We should ask ourselves: Have we become star-struck by China? We tend to overlook the tremendous vulnerabilities of this country, which is so much more than a country. In social, environmental, political and economic terms.

Yes, there can be no democracy without a market economy. But it is still an open question whether you can have a market economy without a democracy. In the short term – yes, you can. Franco could, Pinochet could. But what about the long term? What will this do to citizens living in a country with such huge disparities between the poor and the affluent? How will they view this? How will the party and the leadership deal with diversity? And how will the affluent people with education deal with their own individual rights? Their global, universal rights? And what effect will this have on the understanding of universal human rights and the role that China is taking on in the global arena, in terms of defining what universal global rights are?

We are saying that freedom of expression and the Universal Declaration of Human Rights are “Western values”.  They are global values. They are universal. But we know that the interpretation of universal rights depends on who out there is defining, interpreting, speaking out for them. So what will it mean to have China on board this debate too?

So here are a few questions, and I think the questions are as stimulating as the answers. 

But we will have some indications of the answers today from our speakers, and then we will have an interesting debate in the panel. So, thank you and welcome to this seminar. Have an enjoyable afternoon.

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