Chinese Ambassador to Russia Li Hui: China advocates further talks to settle Iran’s nuclear problem
Chinese Ambassador to Russia Li Hui in an interview with Interfax spoke about the need for diplomatic effort to settle the Iranian nuclear issue and Chinese-Russian trade economic relations, in particular the use of national currencies in mutual settlements.China is calling for diplomatic efforts to be stepped up to resolve Iran‘s nuclear crisis. "We have always believed that talks are the optimal way of settling this issue. The parties concerned continue to make diplomatic efforts, which still have space for application," Li said.
China, which is one of the six parties brokering the settlement concerning Iran‘s nuclear ambitions, alongside France, Russia, the United Kingdom, U.S. and Germany, is a strong opponent of nuclear proliferation, the Chinese ambassador said. "But we think that all countries have the right to use nuclear energy for peaceful purposes," he said.
The Chinese side believes that "diplomatic efforts must be stepped up, a more flexible and pragmatic policy applied, progress ensured in dialog and talks, and steps made towards an early resolution of Iran‘s nuclear issue for the sake of guaranteeing an effective international nonproliferation system, and peace and stability in the Middle East, he said.
"The Chinese side is ready to make further efforts to attain this goal," Li said.
Speaking about bilateral trade and economic relations with Russia, the ambassador expressed hope that China and Russia in 2010 will overcome the negative dynamics in the development of bilateral trade.
"I am sure that the volume of trade turnover between China and Russia will grow in 2010. We would want it to be greater than in 2008 when it exceeded $55 billion," he said.
He voiced hope that in 2010 the Russian GDP would grow positively impacting trade and economic cooperation between China and Russia.
He recognized that under the influence of the global financial crisis bilateral trade slumped 31% in 2009. However, "the general quality of trade and economic cooperation has improved," he said.
The economies of China and Russia supplement each other to great extent and have enormous unused development potentials, the ambassador said. Chinese-Russian bilateral trade fell 31.8% to $38.8 billion in 2009 from $56.83 billion in 2009.
"In 2009 the two countries signed many cooperation agreements, in particular agreements on financial, energy, scientific and economic cooperation. Investments also grew. As the economies of China and Russia revive, the trade turnover of our two countries will gradually grow," he said.
To this end, China and Russia should implement the existing agreements, expand cooperation in investments, engineering, ship building, railway transportation and energy, the diplomat said.
Russia and China must advance trade and financial cooperation, create favorable conditions for mutual settlements in national currencies and expand cooperation between regions, he added.
However, it is problematic to increase the share of payments in national currencies in trade between China and Russia because the Chinese yuan is not a freely convertible currency, and no official exchange rate between the yuan and the Russian ruble has been established.
"At present, the scale, volume, and share of payments in national currencies [between Russia and China] is not big. The Russian ruble is used in the settlements much more than the Chinese yuan. The ruble payments have accounted for 99% of all payments [since March 2003]. The main reason for the small share of payments in national currencies is that the yuan is a non-convertible currency. As long as no official exchange rate between the Chinese yuan and the ruble has been established, the payments are in fact being made using the U.S. dollar," Li said.
"In addition, there have been quite significant ruble exchange rate fluctuations, which also affects the expansion of payments in national currencies," he said.
At the present time, "the channels for the transportation of cash between Russia and China have not been fully developed, and the customs fee and the payment for the transportation of cash is quite big," he said.
"The two countries‘ enterprises do not have enough information about payments in national currencies, and there is a habit of using the dollar," he said.
There have been two stages in the transition to mutual payments in national currencies in trade between China and Russia, he said.
"The first started in March 2003, when an experiment was launched to make payments in national currencies in our countries‘ border regions, mainly the province of Heilongjiang and its Russian partner regions. The second stage began in 2007 when the People‘s Bank of China and the Central Bank of Russia signed a specific agreement on using the Chinese yuan and the ruble in payments in China and Russia‘s border regions," he said.
"Over time, this practice has existed in border trade and tourism, trade transactions in China and Russia‘s national currencies accounted for 1% of the entire trade turnover between the two countries," he said.
"The share of mutual payments in yuan and rubles in the Heilongjiang province increased to 7.1% in 2008 from 0.5% in 2003. However, under the influence of the global financial crisis in 2009, the amount of transactions in the Chinese and Russian national currencies through the two countries‘ banks has decreased," he said.
In the future, "the payments in national currencies between China and Russia will play an active role in preventing the risk of the exchange rate of third countries‘ currencies and would promote stable development of bilateral trade," he said.
"I am sure that when circumstances allow for this, both countries will increase the share of payments in national currencies in their bilateral trade and investments," he said.