China tracks path to bright future

The Fortune Global Forum - a major event on the diary of chief executives for multinational corporations - is dominating Beijing this week.

Corporate jets line the runway at Beijing International Airport, limos are out in force and the city's plushest hotels are full.

The Chinese Government has put at the business leaders' disposal the Diaoyutai State Guest House and the Great Hall of the People for their talks on The New Asian Century.

This year's forum comes at a time of increased trade friction between China and the world's richest consumer market since the United States imposed safeguards to curb textile imports.
Anti-China sentiment in Washington has grown with the loss of US jobs to growing foreign competition from China and India.

As a US Treasury report is due in response to claims that China is manipulating its currency to give its exporters an unfair trade advantage, the potential for the forum to become politically charged has been high.

Pointedly, Chinese President Hu Jintao did not address either the trade dispute or international calls for the yuan to be revalued at an opening banquet on Monday.

But on forum fringes, Chinese officials have painted the US trade dispute as a protectionist response to China's increased competitiveness on the world stage.

This is not lost on the predominantly US companies from the Fortune 500 list which have moved their manufacturing to China to take advantage of lower costs.

As Hu noted: "Many of you have been vigorously involved for years in pushing economic and technological co-operation with China."

Business heavy-hitters, who had to move to the Great Hall of the People after heavy rain ruled out a spectacular event at the Temple of Heaven, supped up Hu's pledge to undertake more reforms to ensure China becomes a more open and prosperous society which puts the people first.

Key points from Hu's address include:

* China will improve legislation to protect foreign investors, revamp foreign economic management, step up protection of intellectual property rights and work harder to create a better environment for trade and economic co-operation with the rest of the world.

* China's goal for the first 20 years of this century is to seize the window of strategic opportunities to build a prosperous society to benefit its people.

* By 2020, China will have quadrupled GDP to about US$4 trillion with a per capita level of US$3000.

* China will improve democracy, advance science and education, enrich culture, foster greater social harmony and upgrade the texture of life for the people.

* With surging economic globalisation, China and Asia are becoming a new growth engine for the world.

Although Hu's message was geared at CEOs from global corporations, there were some subtle messages that China's role as a growth engine could not come at the expense of its own people, particularly those in rural areas.

China was still a developing country and would remain so for many years.

Its rapidly developing policy framework - with its people-first focus - poses some predicaments for New Zealand.

Since Prime Minister Helen Clark's Government acknowledged China as a market economy last April, 40 other countries have followed suit.

The trade agenda is being led by China's Ministry of Commerce. But there has been bureaucratic pushback from the Agriculture Ministry over how Chinese farmers will respond as the rate of liberalisation in their sector moves faster than laid out in China's accession agreement with the World Trade Organisation.

Next week, New Zealand will get a taste of just how far that thinking has percolated down the line when Chinese officials arrive in Wellington for the third round of negotiations on a bilateral free trade deal.

* Fran O'Sullivan has received assistance from Asia New Zealand to attend the Fortune Global Forum.