Chinese Premier Wen Jiabao said that he hoped the textile issue between China and the United States could be properly tackled through consultation.  

During an interview given to Leonard Downie, executive editor of The Washington Post, at Zhongnanhai in Beijing Friday, Wen said he was "not only surprised, but also shocked" by the US restrictive action on Chinese textiles.

"The Chinese people have been surprised and shocked for what the US has done," he said, adding that this unilateral restrictive action, involving textile products only worth US$400 million to 500 million and without any prior discussion with the Chinese government, seriously wounded the feelings of the Chinese people.

"I wonder if you have taken note of the response by the international community and the reaction of experts in the field, such a decision has hurt the US market," Wen said.

Invoking a Chinese saying -- We should not be afraid of the dark clouds blocking our view because we are already at a high elevation, the premier said, "With respect to our joint cooperation in trade and in cooperation in other areas, it is important to adopt a strategic perspective like the view you would have when you are already on top of Mount Tai. Then all other mountains would be dwarfed."

He hoped that China and the US could establish a mechanism for regular coordination and cooperation to tackle the problems that might come up.

"This will be one of the proposals I will bring to the United States because I think such a mechanism would play a positive role in solving problems," he said.

The establishment of such a mechanism will provide guarantees for equal consultations as a way to handle disputes between China and the United States. Arbitrarily imposing sanctions or restrictions will not help solve the problem.

On the contrary, he said, it will hurt the interests of both sides.

"I hope the textile issue can be properly tackled through consultation between the two sides."

Wen said that problems that crop up in trade and economic cooperation between China and the United States must be handled properly because the expansion of trade and the development of economic cooperation between the two sides serve the fundamental interests of the Chinese and American peoples.

"In 1972 when the door was open to our relationship 30 years ago, our trade was practically nil." At the time Dr. Henry Kissinger visited China, each visiting American to China was only allowed to carry US$100 to spend in the Chinese market, the premier recalled.

China only started to have statistics about trade with the United States in 1979, when the trade volume was less than US$2.5 billion. Now, after 25 years, the joint cooperation and trade between the two sides has developed significantly and trade volume has already reached US$100 billion, a 40-fold increase.

"The development of such a trade relationship has served the interests of both peoples," he told Downie.

Wen said he had been aware of the US concern over the huge trade imbalance, and he would like to give a few explanations for that.

First, such a trade imbalance is to a great extent structural and a result of shifting commercial relations. One example is while the trade imbalance that exists between China and the United States is going up, China's trade deficit in its trade with Asian countries is also going up at the same time.

"In the first 10 months of this year, China's exports grew by 32 percent, however our imports grew by 40 percent," he said.

Second, Sino-foreign joint ventures or wholly foreign-owned enterprises contribute to 65 percent of China's total exports and more than half of China's exports involve the processing of imported materials or parts, and the majority of profits actually go to the foreign investors. These enterprises include the US-invested enterprises in China, such as Motorola and Wal-Mart.

Third, what China sells to the US market are the products that US consumers need, and Chinese products are affordable but of very good quality. So China's exports actually help stabilize the price in the US markets and also satisfy the needs of US consumers.

Fourth, it is not China's aim to seek long-term and excessive trade surpluses. Its aim in trade policy is to have a basic balance between imports and exports. China is willing to open up its markets to buy more from the United States and other countries, especially to purchase high-tech products.

Wen said that not so long ago, China sent a few purchasing missions to the United States and they signed contracts worth billions of US dollars. That demonstrates China's sincerity. At the same time, China hopes the United States would grant market economy status to China and lift restrictions on China and open up its market.

He said that a few years ago, China placed an order for a Loral satellite and paid a deposit of more than US$130 million. However, the relevant US departments do not agree. So the contract has not been implemented and the US$130 million deposit has not been refunded.

"In reality, these restrictions can in no way hinder China's development," the premier said.

"In the past few years, China has continuously sent satellites successfully into orbit and we also have our space program. For instance, some digital machine tools, some computers -- with respect to these projects, China already has very strong R&D capabilities and in certain areas are actually at the forefront."

Nevertheless, the United States still places these products on the list of restricted items, he said.

(Xinhua News Agency November 24, 2003)