China faces huge environmental pressures. We hope other countries can understand our measures to reduce the quota for both domestic and overseas consumers. We are also, in accordance with the requirement of the State Council, completing industrial policies for rear earth mining. Relevant departments, including the National Development and Reform Committee, the Ministry of Industry and Information Technology and the Ministry of Commerce, are working together to enhance administration of rare earth. We also hope that other countries could exploit their own rare earth with environment-friendly technology.
At the current pace of rare earth use, it will not be long before the world's reserves are depleted. We hope to work with Japan and other countries to find alternative materials or new methods of mining rare earth.
'Going out' strategy
China launched the strategy of "going out" because China happened to be at that stage of its development when China ran a balance of payments surplus and accumulated huge foreign exchange reserves. We notice Germany's export is almost equivalent to China, but its foreign exchange reserve is far less than China's. The reason is Germany has done a much better job at "going out."
Western countries' "going out" strategy is much more than entrepreneurial investment; it also includes personal travel, education, consumption and many other aspects. Although China has opened the market for outbound travel, overall demand is still low. Meanwhile, only a small number of families can afford to send their children to study abroad.
Last year, China's outbound direct investment in non-financial sectors was $59 billion, while inbound direct investment China absorbed last year totaled $100 billion. China is likely to see inbound and outbound direct investment reach equilibrium in the next five to 10 years.
Nearly two thirds of China's outbound investment was concentrated in nearby countries. More Chinese enterprises are looking to invest in the United States, but so far these efforts have been riddled with setbacks, such as the failure of the deal between Huawei Technology and the U.S. 3Leaf Systems. I hope China and the United States can reach an agreement on protecting mutual bilateral investments so that China's overseas investment is protected by law.
There will always be risks to invest overseas. The guideline we follow is "government offering guidance and enterprises making decisions." In this sense, governments have three roles to play. First, we need to make enterprises fully aware of the risks involved. Since many factors are simply unpredictable, our help is often limited. Second, the government needs to enhance risk controls. Third, we need to establish and complete an emergency mechanism.
A decade of openness
China's admission into the WTO was an important milestone in the country's opening up. In the past decade, China has become an active and mature participant in the WTO.
China's average tariff dropped from 15.3 percent a decade ago to 9.8 percent at present. China has opened more than 100 sectors in the service trade and widely sorted out legal issues involving over 3,000 laws and regulations. Meanwhile, China has learned and applied international trade rules to accelerate the establishment of a steady and foreseeable trade system. China has adopted the WTO principles of non-discrimination, transparency and fair competition to foster market awareness, a sense of legality and knowledge of intellectual property rights among the Chinese people.
The past 10 years have seen China grow into the world's major growth engine. The country's exports and imports are, respectively, 4.9 and 4.7 times greater than they were a decade ago. And last year, China became the world's second largest importer and its trade volume accounted for 10 percent of the world's total.
China has also become a major investment destination as a growing number of foreign enterprises keep their eyes fixed on the Chinese market. By investing in China, foreign enterprises have shared in the success of the country's development.
As Premier Wen Jiabao said in his government work report, China's development could not be achieved without the world's development. We will push forward Doha Round negotiations, intellectual property rights protection and new international economic orders featuring fairness, justice and win-win results.
During the 12th Five-Year Plan period (2011-15), China will attach more importance to changing the trade growth model, including general trade, processing trade, service trade and service outsourcing. We will also insist on encouraging both exports and imports, and expand imports. We will increase our imports from least developed countries and major trade surplus economies. We also hope that those countries with trade imbalances are able to alleviate their control on exports to China and work with China to deal with trade frictions.
In addition, we will encourage Chinese companies to invest overseas and seek international cooperation, and encourage foreign enterprises to invest in China. We will make it easier for Chinese companies going overseas by enhancing laws and regulations on promoting and protecting investment. China has signed bilateral investment treaties (BIT) with many countries and is engaged in talks with developed countries including the United States to sign the BIT. I believe that all these efforts will help Chinese enterprises in their overseas endeavors.
Regarding foreign investment, we will revise the Catalogue for the Guidance of Foreign Investment Industries together with the National Development and Reform Commission. We will also direct foreign capital to invest in hi-tech, energy-saving and environment-friendly industries, the modern service sector and China's central and western regions.