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International Production Capacity Cooperation Opens New Opportunities for Developing Countries to Accelerate Infrastructure Development

Written By Li Ruiyou, Ambassador of China to PNG

Published on Post Courier on 15 July 2015

International cooperation on production capacity between China and foreign countries has become a hot topic in current international affairs.

During his recent visits overseas, Chinese Premier Li Keqiang has been dedicated to advancing international production capacity cooperation. From late 2014 to middle 2015, China and several developing economies have scored remarkable achievements in their production capability and equipment manufacturing cooperation, including Kazakhstan, Egypt, Kenya, Indonesia and some Latin American countries.

Why is China advocating the International Production Capacity Cooperation?

After decades of development, China has now grown into one of the world's major industrial powers and lies in the middle of the global manufacturing chain. A large number of industries in areas of building materials, non-ferrous metals, ship-building, textile, high-speed rail and nuclear power in China are advanced in technologies and operate at modest cost. These industries are, therefore, more fitting to the needs and absorption capacities of developing countries. Therefore, for their distinct Chinese features as well as world-level competitive edge, they have been well received by many countries.

Developing high-efficient industrial projects through production capacity cooperation helps developing countries attract foreign investment for infrastructure development, especially in areas of transportation, energy and communications.

For developing countries in the process of industrialization, international production capacity cooperation can serve several purposes. It supports industries of both recipient and exporting countries by setting up the much-needed manufacturing assembly lines; building industrial parks to further process resources; extending the manufacturing and value chains; promoting the development of SMEs.

Who will the international production capacity cooperation benefit?

The international production capacity cooperation will benefit all cooperative parties.

China's promotion of international production capability cooperation follows the grand trend of the changing global industrial chains. A latest study by Britain's Standard Chartered Bank shows that the restructuring of the global supply chains will reshape the pattern of global trade in the next 10 years.

As Chinese Premier Li Keqiang said in Latin America in May 2015, countries should make use of their complementary advantages and strive to develop a real economy against the backdrop of the global economy's slow recovery.

Through international production capacity cooperation, Li said, developing countries can achieve accelerated growth with relatively low costs, China can boost the upgrading of its industrial chains, and developed countries can explore a bigger market.

International production capacity cooperation, which involves bringing in facilities, production lines, technology and management experience from other countries according to a country's own needs, will effectively reduce construction costs, create jobs for local communities and promote the diversified development of domestic industries.

In the meantime China's cost-effective facilities, production lines, technology and management experience can help boost the economy of the developing countries that do not have enough funding for investment in infrastructure development.

What principles has China upheld in its efforts to promote international production capacity cooperation?

First, China carries on international production capacity cooperation with market principles. It respects the status of companies as the main players and let the market play the decisive role in allocating resources in accordance with accepted international practices. Companies involved will be assured of independent decision-making and sole responsibility for their own profits.

Second, China aims at win-win cooperation, aligning the development strategies and industrial cooperation of both countries on the basis of voluntarism, equality and mutual benefit.

Third, China embraces openness and inclusiveness. It follows international rules and bases the cooperation on comparative advantages of each country. China is also ready to exploit tripartite cooperation with a view to combining the manufacturing advantages of China, the advanced technologies of developed countries and the needs of developing countries.

Fourth, China attaches importance to environmental protection and green growth. What China offers is not the outdated or obsolete industries, rather its superior, advanced and green production capacities like clean and neat factories, advanced and user-friendly equipments, fast and safe trains, wide and flat roads. This is what many developing countries would like to have in their pursuit of industrialization and development.

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