China: a global partner
Speech by Ms. Arancha González, Executive Director, International Trade Centre
Delivered on 14 March 2014 at Peking University, China
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Vice President of Peking University
Members of the Faculty
It is a deep honour for me to address you today and to tour the halls of this prestigious university. This is a place that has helped develop some of the most influential Chinese thinkers. It is a laboratory of economic, political and social thought leadership and the physical structure is a reflection of the architectural importance and influence of Chinese culture.
I am also very excited to be at Peking University and be honored by the GuangHua School of Management. I am a firm believer in the power of education, as I am in grooming and nurturing young talents. The students of today will be the leaders of tomorrow. This is why I like to spend a bit of my time interacting with students around the world.
This is not my first time to China. I have been here many times before in previous professional incarnations at the European Commission and at the World Trade Organisation. This is however the first time in my new role as Executive Director of the International Trade Centre (ITC).
ITC's primary focus is helping small and medium sized enterprises (SMEs) to internationalise. To internationalise in this context is to become more competitive and export ready; to increase productive capacity; to enhance understanding of the market; to create employment opportunities and to support growth and development through trade. The ITC does this through providing the support and the tools to help SMEs reach these heights. We help SMEs to recognise and realise their potential as global incubators for growth. We also do that by partnering with trade support institutions, our multipliers on the ground.
A large part of China's economic success has been built on the work of Small and Medium Enterprises. From small 'mom and pop' shops selling dim sum and 'lo po bang' to modern organisations within the value chain providing components to produce electronic tablets and cars. China is a country made up of hundreds of thousands of SMEs in the formal and the informal sector. SMEs contribute 60% of China's industrial output and create 80% of China's jobs and it is estimated that the number of SMEs will grow at an average annual rate of 8 percent. One only has to look at the Chinese government's 12th Five-Year Plan, which contains key strategies focused on supporting SMEs, and one only had to look at the recent discussions at the National People's Congress on SME financing to comprehend the importance which China gives to these actors. After all, China is a country of entrepreneurs and SMEs are the conduits of this entrepreneurship
One may not immediately see a similarity between China and the ITC. We are a United Nations - WTO organisation of 300 staff stationed in Geneva, Switzerland while China is a country of 1.4 billion with an extra 50 million in the wider diaspora. We have a modest annual budget of around 50 million while the GDP of China is 8.2 Trillion. But there are similarities. Both the ITC and China are maturing through 'trade impact for good' as a central premise of their 'raison d'etre'. Trade is one of the elements that have made China an economic miracle. And one that we often take for granted because we are a generation which has always been exposed to a China of annual growth figures above the global average and with a growing middle class and a solid footprint on the world's political stage.
But this was not always the reality. Between 1981 and 2008, the proportion of China's population living on less than $1.25 a day fell from 85% to 13.1%. Over 600 million people were lifted out of poverty. This is the equal to the population of the United States, Brazil, France and Canada combined. Not too long ago there was consumer concern about the quality of Chinese goods and services. Now Chinese expertise and inputs contribute to building some of the most widely known technology products in the marketplace. The rise of China has been steady but impactful. I would go so far as to say that the rise of China has been the global trade game changer of the last fifty years.
This has meant that China is often seen by other developing countries as a beacon and a blueprint for their own development trajectories. China is now Africa's largest single trading partner. Last year China-Africa trade reached USD 212 billion, up 6% from the USD 198 billion in 2012. In what I can modestly term a somewhat muted global recovery, trade between these two entities: the continent of Africa and China has increased. This trade has had great impact on African growth and movement up the value chain. This relationship is increasingly premised on investment and capacity building rather than solely on the extractive industry. China offers new possibilities to Africa and many other developing countries in Asia, the Pacific and in the Latin America and the Caribbean which could expand the production base and diversify the market opportunities and there is even more than can be done to invest in manufacturing to help them move-up the value chains.e
With this growth come responsibilities. China and other emerging economies are in many respects stepping up to these responsibilities but there is great potential to take these partnerships to a higher and more sustainable level. The ideal opportunity is the discourse which is taking place at the United Nations on the post 2015 process. This platform provides an opportunity for a partnership led approach to tackling poverty, global unemployment and global inequalities- both economic and social. ITC has been very much involved in this debate for a number of reasons:
- One, It is widely recognised that there will be an employment shortfall of around 500 million jobs by 2030 but that the vast majority of these will have to be filled by SMEs. ITC's modus operandi is helping SMEs to realise this potential
- Two, Trade and economic growth issues need to be at the core of the post 2015 development and sustainable goals. Without a strong, predictable, balanced and sustainable economic base I fear there will not be enough to fortify the health, education, peace, stability and environmental strategies, and
- Three, the most vulnerable populations- women and girls and the youth- need to be given special attention. The debate around these vulnerable populations must be on empowerment. ITC is passionate about the empowerment of women and youth. I am passionate about the potential of this economic empowerment to serve as a means to poverty eradication and creation of decent jobs.
Here I would like to focus on this topic of women's economic empowerment. Fact one: in developing countries women owned companies represent close to 40% of all SMEs. Fact two: When women are not economically empowered, this adversely affects development as women reinvest up to 90% of their earnings back into the social unit including on health and education of children. This is compared to around 40% by men. Fact three: women want to be empowered. Women want to be involved in productive activities. Women can offer and lead on innovative business solutions.
On youth issues, China has reflected the improvement of social welfare with a focus on providing jobs to college graduates and workers laid off in industries as one of the country's six top economic priorities for 2014. This is a smart decision. With the youth we have a population that thinks beyond the curve. That uses information technology and social media to conceive, produce and trade goods and services across borders without leaving the comfort of their rooms. This is a demography that has to be effectively harnessed as it is a central component of creating a modern and efficient economy. And on the subject of social media you would be pleased to know that I am now a member of WEIBO so I invite you to follow what we do at the ITC both there and on twitter.
Moving forward there are three policy recommendations that I would like to leave with you today as it relates to women's economic empowerment and as it relates to partnerships. This is a challenge- a challenge to China and a challenge to you, the next generation of global leaders.
First, increase sourcing from women entrepreneurs. Government procurement is an important aspect of international trade, given the considerable size of the procurement market, which is between 10 to 15 % of GDP. In 2010, more than US$11Trillion was spent by governments on sourcing goods and services. This represents huge untapped potential for women who shockingly only constitute an estimated 1% of these contracts. ITC works to bring corporate and government buyers together, with carefully selected women entrepreneurs who are positioned to do business. The aim is to help establish targets and policies, foster partnerships to facilitate catalytic relationships between buyers and women vendors and then identify specific actions to ensure women can close the deal.
But to do this we have to ensure the capacity is there amongst the women entrepreneurs. And this brings me to my second policy recommendation- we, collectively, need to help address the supply-side constraints including building the productive capacity of these entrepreneurs. This is true for all SMEs but especially so for women-owned businesses. The global Aid for Trade agenda has helped to focus attention on the need to build this supply side capacity but there is much more that the public and the private sector can do in partnership. This is a viable business venture. It is not charity. Investing in women and in building SME productivity is good business.
The ITC has well-established competency in this area and we see emerging economies such as China as new partners in this area of supporting economic empowerment for entrepreneurship.
And here I would end on my final recommendation: partnership. China and other emerging economies have much to contribute to the global discourse on trade and development issues. Trade-led growth and innovation is now firmly in the DNA of the Chinese society. The country has much to teach the world. And you, the leaders of tomorrow have much to share. Partnership must become part of the fibre of China's interaction with other developing countries and even with international organisations such as the ITC. There is too much that China can teach and share and that can be harnessed for the improvement of lives in other developing countries, particularly in Least Developed countries (LDCs), to not allow these partnerships to promulgate and prosper.
In was indeed a pleasure for me to address you today and I very much look forward to receiving any questions and comments from you. And as you continue your education at the university and move into your chosen professions I wish you great success and 辛苦了(xīnkǔ le)!