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World
Relationship Based on Firsts
 NO. 2 JANUARY 12, 2017

Swiss Ambassador to China Jean-Jacques de Dardel (COURTESY OF THE EMBASSY OF SWITZERLAND IN CHINA)

Ahead of the Annual Meeting of the World Economic Forum (WEF) in Davos, Switzerland, Beijing Review interviewed Swiss Ambassador to China Jean-Jacques de Dardel. An edited excerpt of the interview follows:

Beijing Review: In recent years, China and Switzerland have maintained intensive high-level exchanges, as frequent bilateral meetings between senior officials demonstrate. What do you think are the major reasons for such interactions between the two nations?

Jean-Jacques de Dardel: China and Switzerland have maintained a diverse and in-depth bilateral relationship in a variety of areas, such as politics, economy, culture as well as science for 66 years. Both sides are unceasingly working toward deepening relations. The most notable recent testimony of this enhancement is the opening of the Swiss Consulate in Chengdu, the fifth official representation of Switzerland in China. At a time of budget constraints at home, we are expanding our presence in China, which reflects the growing importance that we attach to our most important trading partner in Asia and to its priorities and initiatives (western development strategy, the Belt and Road Initiative and the Asian Infrastructure Investment Bank).

What is more, from the very start of our bilateral relations—we were one of the first Western countries to recognize the People's Republic of China—Switzerland frequently took on the role of a pioneer by establishing "firsts" or almost "firsts" in its relationship with China. Let me give you a few examples: We were one of the first countries to establish a sister city relationship in 1982; it was between the cities of Kunming and Zurich. A Swiss company—Schindler—founded the first industrial joint venture in China. Also, China and Switzerland have held a regular human rights dialogue since 1991, which—at the time—was the first bilateral dialogue of its kind. In 2007, Switzerland was among the very first to recognize China's market economy status. Another instance is the free trade agreement (FTA) between our two countries. It was signed in July 2013 and enforced in 2014. Switzerland was the first continental European country—and the first among the world top 20 economies—to sign an FTA with China. On a multilateral level, Switzerland is also one of the founding members of the Asian Infrastructure Investment Bank, supporting China's initiative from the very beginning. These undoubtedly are the fruits of strong bilateral ties between our countries, which are maintained amongst others with a frequent exchange on the highest level. Besides, these high-level exchanges are a crucial component of the Innovative Strategic Partnership—the first to date and unique—signed in April 2016, which aims at both strengthening and deepening our cooperation, while simultaneously keeping up the pioneering spirit that is so essential to our friendship.

Sino-Swiss relations are at an all-time high and the upcoming state visit of President Xi Jinping to Switzerland will undoubtedly contribute to uphold that momentum.

Chinese Ambassador to the WTO Yu Jianhua holds a joint press conference with Swiss Minister of Economic Affairs Johann Schneider-Ammann in Basel on July 1, 2014, in celebration of the China-Switzerland FTA formally coming into effect (XINHUA)

What's your comment on the FTA's role in the development of Sino-Swiss economic relations? And, what benefits has the FTA brought Switzerland?

Switzerland is the first and so far only continental European country that has concluded an FTA with China. It entered into force on July 1, 2014 with the aim to improve mutual market access for goods and services, and enhance legal security for the protection of intellectual property and bilateral economic exchange in general, thus contributing to sustainable development and deepened bilateral cooperation. It represents a true win-win situation as both economies are complementary. With a comprehensive coverage, the FTA establishes preferential trade relations for goods and services between Switzerland and China, facilitates two-way trade and generally improves framework conditions and legal security for economic exchange.

Swiss companies have already started to put a specific focus on diversifying trade beyond their traditional export markets to Asia and to China in particular. It is worth noting that Switzerland's trade with China grew since the implementation of the FTA. According to Chinese statistics, in the first 11 months of 2016, Switzerland was China's seventh largest European trading partner, while Italy and Spain were respectively sixth and eighth. Switzerland was the 10th most important source of imports for China, second only to Germany in Europe.

Swiss direct investment in China has seen strong growth during the past 15 years. Today, more than 800 Swiss companies are present in China. At the same time, Chinese investment into and the presence of Chinese companies in Switzerland have been growing. More and more economic decision-makers in China are likely to take a strong interest in developing their businesses in Switzerland.

In the first two years after the bilateral FTA entered into force, Sino-Swiss trade further gained in relative importance and there is much to suggest that the FTA will continue to create new opportunities for trade and investment and to have a positive impact on the Swiss-Chinese relationship.

How do you assess the development of China's market economy since China joined the WTO in 2001?

Since its accession to the WTO, China has experienced a very steep growth and became the world's economic locomotive. In 2001, at its WTO accession, China's GDP stood at $1.33 trillion, ranking the sixth in the world. In 2015, China's GDP reached $10 trillion. That is an eightfold growth within 15 years. China overtook Japan as the leading Asian exporter in 2004, three years after its accession to the WTO. China surpassed the United States in 2007 and Germany in 2009 to become the world's leading exporter. China's importation of goods and services also soared. Currently, China is the world's second largest destination for all exports.

Considering the progress that was made on the economic front and the longstanding strength of Swiss-Chinese relations, it should not come as a surprise that compared to other advanced economies Switzerland granted China market economy status at a relatively early stage. For similar reasons, we remain hopeful that the implementation of key economic reforms announced during the 18th Communist Party of China Central Committee's Third Plenum will secure further progress.

Official data show that bilateral trade in 2015 was valued at $44.27 billion, with China importing goods from Switzerland worth about $41.1 billion. Thus, there seems to be a lot of room for development of bilateral trade. What efforts can the two countries jointly make to promote their trade relations?

In Switzerland we think the outlook on the trade and investment between our two countries is positive. The present situation in China not only allows adjustments, but also new business opportunities for innovative companies. As a country considered today to be the most competitive and the most innovative worldwide by many rankings, Switzerland has always had a strong track record in fostering economic relations with the world. In this regard, the FTA is opening countless windows of opportunities in knowhow exchange, investment, technology transfer, research and education, innovation, culture, and business creation. There are also numerous established dialogue and exchange mechanisms between the two countries such as in finance, intellectual property, labor and employment issues, and environment. As a result of the mutual commitment, the bilateral trade has been growing at an impressive pace. According to Swiss customs statistics, it increased by 12.6 percent in the first 11 months of 2016 while total Chinese foreign trade growth remains negative.

The Swiss and Chinese economies are complementary, with components from both countries often integrated at assembly lines at both ends of our bilateral trade relationship. This being said, we do not just export to each other but re-export each other's products to each other and to the rest of the world. For instance, it is a little known fact that in 2015 exports from the Swiss precision instrument and watch industries increased by 4.9 percent year on year, while exports from China in the same category grew by 17.4 percent year on year. By enhancing this development through continuous product innovation and smart integration in our respective markets, we do not just promote bilateral trade but foreign trade as a whole while global trade growth remains sluggish.

Chinese leaders have been attending WEF annual meetings in Davos for the past years. In your opinion, what's the significance of the Chinese leaders' participation against the current backdrop of a sluggish world economy and widespread anti-globalization sentiment?

The participation of Chinese leaders sends a strong signal that China is endeavoring to take a stronger role on global issues. Established in 1971, the Davos Forum remains the foremost creative force for engaging the world's top leaders in collaborative activities to shape the global, regional and industry agendas each year. In 2016, a series of events happened in the international arena: Brexit referendum, migration, terrorism and the rise of protectionism and populism. This year's forum will provide a platform for world elites to work together in finding a common purpose to achieve a positive outcome.

China has demonstrated in recent years that it will play a larger role internationally. The recent unprecedented market development in China demonstrates the potential for greater market integration. The establishment of the Asian Infrastructure Investment Bank, the implementation of the Belt and Road Initiative, and the inclusion of the renminbi in the special drawing rights basket, the foreign exchange reserve assets defined by the IMF, are all concrete example of a China that is taking a more active and stronger role internationally.

Copyedited by Bryan Michael Galvan

Comments to liuyunyun@bjreview.com

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