Premier Li Keqiang chaired the executive meeting of the State Council on Dec 24, when the decision was made to step up financial support for companies planning to operate abroad, so as to facilitate industrial upgrading.
Premier Li has just concluded a three-nation visit to Eurasia, which resulted in cooperation agreements worth tens of billions of US dollars.
“In the past, we exported a container of goods in exchange for a color TV. Today, China’s exported equipment has more added value,” Li said at the meeting.
He also said that China should transform itself from being the world’s factory that only produces consumer goods into an important base that exports advanced equipment.
After signing deals worth about $14 billion, China and Kazakhstan agreed on another cooperation framework worth $18 billion - an unexpected result achieved during Premier Li’s visit to Kazakhstan from Dec 14 to 15.
Li recalled more details of his tour at the executive meeting.
Kazakhstan had originally only expected to increase exports to China in the sectors of energy and farm produce, but - after he learned more about Kazakhstan’s Bright Road program - Premier Li proposed a package of capacity-building cooperation initiatives.
The Bright Road program - put forward by Kazakh President Nursultan Nazarbayev a month ago - focuses on the development of infrastructure, including roads and homes.
But the Premier learnt that Kazakhstan does not have a cement plant or flat glass plant, and it only has one small-scale steel plant - a situation which certainly does not meet the requirements of the program.
“How about if we cooperate on this program? China can install production equipment in your country and help to realize the Bright Road program,” Li told Nazarbayev - who was reportedly amazed by the suggestion and showed much interest.
The Kazakh government made plans and secured the required funding immediately after the meeting.
On his second day in the country, Premier Li and his Kazakh counterpart reached the tentative agreement worth $18 billion during a breakfast meeting.
Nazarbayev gave high marks to Premier Li for his pragmatic and efficient diplomatic style. And he even described the $18 billion deal as “Li’s deal”.
At the executive meeting on Dec 24, the Premier said that China has excess of high-quality capacity in China-Kazakhstan cooperation sectors such as steel, cement and flat glass - as well as cooperation concerning power plants.
He also said that - as China tackles economic downward pressure and insufficient domestic demand amid a sluggish world economy - most developing countries, especially the emerging economies, have a high demand for infrastructure to boost their economic growth.
“This provides a rare opportunity for Chinese equipment manufacturing to go global,” Premier Li said.
Compete and upgrade
The land-sea express route between China and Europe shows that China’s support for local companies planning to operate abroad will not only help to shift the excess capacity - it will also benefit economic restructuring and promote industrial transformation.
Premier Li reached a consensus with his counterparts from Serbia, Hungary and Macedonia on building the land-sea passage - during the leaders’ meeting between China and 16 Central and Eastern European (CEE) countries in Belgrade, Serbia, on Dec 17.
The Greek parliament approved a friendly negotiation protocol regarding the port of Piraeus, jointly operated by China Ocean Shipping Company (COSCO) and the Greek port authority, allowing the Chinese company to invest $280.7 million to expand the No 3 wharf of Piraeus.
This marks a substantive step in the establishment of the land-sea express passage.
Premier Li said at the meeting that the protocol’s ratification will lead to a faster land-sea passage for Chinese companies to enter Europe, and this will greatly help Chinese equipment to go global.
“In the past, we exported a container of goods in exchange for a color TV. Today, China’s exported equipment has more added value,” Li said.
“More importantly, the overseas projects must meet international standards, which will enable Chinese companies to compete in the global market, thus upgrading related industries,” he added.
The Premier also said that China’s equipment exports will not only enable large companies to go global - it will also help small- and medium-sized upstream and downstream businesses to go global.
People’s livelihood counts
At the meeting, Premier Li called for more efforts to broaden financing channels.
He said the government should promote the use of foreign exchange reserves - in addition to exploring modes such as PPP (public-private partnership) and BOT (build-operate-transfer).
“China has a massive foreign exchange reserve. If we just buy government debts from other countries, the returns will only be a small sum of interest. But if we use the reserves to support Chinese equipment to go global and promote industrial upgrading, it will better help improve people’s livelihood,” Li said.
He also said that China has reached a new stage, requiring that it should transform itself from being the world’s factory that only produces consumer goods into an important base that exports advanced equipment.
Chinese companies and products should be tested in the international market with higher standards, and the firms should achieve upgrading amid fierce competition, the Premier said.