Q: China has emerged as a major exporter of textiles. To what would you contribute that?
A: I am not an expert on textile industry. But I do know that China has become a major producer and exporter of textiles and clothing. Its market share has risen from 14.6% in 2000 to 22% in 2004. My personal opinion is that there are three major factors that may have contributed to the success of the industry.
---No. 1, long history. China has been good at making textiles and has been engaged in textile trade for a long, long time. As you may know, as early as 3,000 years ago, the aristocrats in Egypt regarded it as a privilege and honor to wear Chinese silk. About 2,000 years ago, the famous Silk Roads were created both on land and at sea,through which large quantity of silk was exported abroad. China has been very professional and experienced in the textile industry. This is its comparative advantage.
---No. 2, rich labor recourses. China's population is as big as 1.3 billion, about 30 times larger than that of South Africa. It has abundant labor resources. It is another comparative advantage.
---No.3, vigorous technical innovation. China joined the WTO (World Trade Organization) in 2002. It was a very tedious process for China to become a WTO member. During all those 15 years when China was fighting for its entry and preparing for its qualification, China did a great deal of homework to restructure its economy, particularly the traditional industries like the textile which lagged far behind the advanced western countries. For instance, about 15 years ago, many textile factories were still using obsolete looms made in the 1920s and 30s. In order to make sure that traditional industries of China would not be knocked out by the other developed countries when China enters into the WTO whose principle motto is free trade, the Chinese government made a decisive decision to rejuvenate its textile industry, so as to remain competitive in international trade. The measures taken by China included following:
---First, changing from extensive operation to intensive operation. By this move, we meant to realize efficient and scaled production of textiles by decreasing the number of spindles, reducing the number of employees and carrying out recapitalization, meaning to put money into the most productive enterprises.
---Second, large scale of independent technical renovation by Chinese scientists and technicians. By doing so, productivity was enhanced a great deal. We call this "self-reliant effort".
---Third, introducing in advanced foreign technologies and technical know-how. For instance, even in the last 5 years, China was still spending 18.8 billion US dollars on importing textile manufacturing equipment that are state of art. We call this "blood transfusion".
---Forth, absorbing huge foreign investment in the industry. By now, about one third of the exported textile products are made by enterprises that have foreign investments. That means if you do not have necessary fund to import foreign technology and equipment, you can attract foreign investment to do so. This is a win-win situation. You can keep as many workers as possible in the industry while foreign investors get their due profits. We call this "going to the high sea by borrowing ships".
---In one word, it is these reform and restructuring measures that have made it possible for China to possess the textile manufacturing system that is world's largest in scale, comprehensive in structure and competitive in trade. The reform measures were successful, but the reform process was painful. We had to close down the small scaled and technologically outdated factories. We had to channel redundant textile workers to other trades through training. It was a difficult and enormous job. But it has been paid off.
Q. China and South Africa have been in negotiations for quite some time now, what progress has been made?
A. In this globalization process, it is rather natural that problem might crop here and there in international trade and cooperation. In China, we have a saying which is to the affect that even the teeth and tongue may collide. What is important is that trade frictions should be resolved through consultations and negotiations in a friendly and mutually accommodative manner. With the joint efforts from both sides, China and South Africa have initialed a draft agreement on the textile issue after several rounds of negotiations. The main contents are two, No. 1, China will exercise voluntary restriction on textile export to South Africa. No. 2, China will provide training for personnel in the textile industry so as to improve its productivity and competitiveness. The two sides will work out the details for the implementation of the agreement once the South African government gets the legislative approval of the draft agreement. China stands ready for further and continued actions.
Q. In your opinion, is the South African textile industry worth saving or is it too late?
A. The textile sector is not only meeting the major part of the domestic needs of South Africa, it is also the 11th largest export industry. It counts for 1.2% of the GDP of South Africa. We are very happy to see that the far-sighted people in both government and in the industry are pushing for formulation of strategies in supporting and restructuring the industry so as to regain its competitiveness. I believe that as long as the government, the textile entrepreneurs and textile workers can work together in unity, the South African textile industry can be revitalized and thriving. In my personal opinion, a national or local industry can be best protected by joining competition, rather than by taking protectionist measures.
Q. China has acquired a great amount of experience in business, in which way could China assist the South African textile?
A. China pursues a win-win situation in its trade and economic cooperation with other countries. To achieve this objective, I personally believe that there are many things that we can do in relation to South Africa:
l First, reducing its export of textiles to South Africa as a temporary measure.
l Second, helping South Africa with human resources development.
l Third, sharing the experience with South Africa, such as revitalizing the industry through introducing in advanced foreign technology, importing new equipment, attracting foreign investment, improving management and coordinating efforts among government, enterprises and workers.
l Forth, sharing experience on connectional change. China used to be a very closed country, perhaps the most closed country in the world for a certain period. But nothing was competitive then. After opening up and reform, we become gradually competitive in many areas. This means a great deal for China. It may mean something for other countries also.
l Fifth, entering into joint venture if both side so wish.
Sixth, making preferential loans available for South Africa in modernizing its textile industry if it is needed.