EDITOR’S Note:

Paul Kavanagh, Ambassador of Ireland to China, talked to Shanghai Daily reporter Chen Huizhi during the Asia Pacific Ireland Business Forum 2016 held in Shanghai on November 4. He talked about China’s new economic development priorities, Irish businesses’ presence in China, and opportunities for further collaborations between Ireland and China.

Q: China has opted for more sustainable development and balanced economy now that it has been rapidly developing for over 30 years. What does this mean for China and how do you see the progress toward China’s new ambition?

A: I remember China from 1979 when I was part of the team that set up the Irish embassy in Beijing, and now it’s like a different planet.

China has gone through a huge transformation which has delivered magnificent benefits and achievement for the Chi­nese people. We see hundreds of millions of people brought out of poverty. We see a whole array of industries grow up and the education sector to provide peo­ple to operate those industries.

But it has also brought prob­lems, because it was so quick. Ireland had a similar experience at a different scale. We modern­ized very quickly, but we made some mistakes. We paid for those mistakes and we learned the lessons. It seems to me that the reform agenda of the Chi­nese leadership, particularly as imparted in the Third and the Fourth Plenum of 2013 and 2014, and the Thirteenth Five-year Plan, are very well judged and very well chosen.

The economy is rebalancing from heavy investment to con­sumption, from manufacturing to services, to bring imports into alignment with exports, to bring outward investment into align­ment with inward investment, to rebalance regionally the de­velopment of the country, and to make urbanization and eco­nomic development sustainable. That brings with it a necessary slow down in growth.

This makes China different to Western countries, for example, that are always struggling for the maximum level of growth. China is no longer doing that. It has a more intelligent policy to put growth on a sustainable basis because the previous sys­tem was not sustainable. China has had the honesty to acknowl­edge that and to put in place the strategies to overcome it.

Q: What are the impressions of Irish business people on the current status of China’s economy?

A: I think the Western media is far too negative on the Chinese economy. Every time I make a speech back home in Ireland, I say to Irish business people, don’t be blinded by this pervasive negativity and you should get good advice on China from people who have a track record of giving good advice. I’ve been around long enough time to know that the “China crisis” is an old story.

There are many people in the West who have predicted the collapse of the Chinese econ­omy and got it wrong so many times. Of course there are chal­lenges and difficulties when a country like China has made so many advances, but my advice to Irish business people is, pay attention to what’s happening in your sector in China.

There are several big Irish companies that have invested in China. For example, in the area of building materials, CRH (Ce­ment Roadstone Holdings) has about 40 plants in northeastern China. Now that is a sector that has been under pressure. I know that they’re looking at whether they’re going to diversify their business in China, but they fully intend to remain here, and they’re not going to run away.

Then you have, down in Shen­zhen, CPH (Charleville Plant Hire) which is a supply chain employer. In recent years it has employed up to 5,000 people in Shenzhen, being big suppliers to Microsoft and Apple. They surge and decline in employment lev­els and are very flexible.

I asked the founder of the company: Is the future of your industry assured in Guangdong because you’re having wage pressure and competition from Vietnam or Bangladesh? And he said, look, to be sure there is the wage element, but the biggest attraction and the biggest assets of the workforce and the situation in Guangdong is speed and adaptability, the agility of the Chinese workforce.

He said, I can put a new prod­uct and a new line of production on the assembly really quick, at the speed that you’ll find great difficulty finding in other countries. In terms of that, our Irish mentality is very similar because we also have a highly skilled workforce in Ireland. The Irish and the Chinese know instinctively that nobody owes you a living and you have to earn your living, and as a country we have to earn our living too.

Q: What are the plans of Ire­land to be engaged with China further down the line and to impart its best practices?

A: In Ireland, we have studied China’s new five-year plan very carefully and found that the pri­orities that China has chosen for itself to go forward in the further transformation and upgrading of the Chinese economy in the next five years are perfectly aligned with what Ireland is good at, what has fueled Ireland’s emergence to one of the best economies in the world and what Ireland is already offering to China.

Ireland has had the fastest eco­nomic growth in Europe in the last three years, and that’s on the basis of innovation, science and technology, high knowledge and high value, which are the essen­tial core of China’s Thirteenth Five-year Plan. We already have a number of areas of coopera­tion with China. There’s growing Chinese investment in Ireland including in ICT, in financial services, particularly in leasing but not exclusively, and in tech­nology. Ireland has significant investment here in building materials, supply chain, home appliances, technology, financial services and so forth.

The beginning of last year saw the beginning of the China Ireland Growth Capital Fund which has two partners, China Investment Corporation (CIC) on the Chinese side and the Irish Strategic Investment Fund on the Irish side. The fund was capitalized at US$100 million, with US$50 million from each side. It was put in place, and essentially it has done its job to invest in high-tech growth companies from Ireland that want to reach out for partner­ships with Chinese companies and develop into the Chinese market and then globally. The fund is almost exhausted after very high-grade investment in four growth companies with business in big data, cloud computing, commercial drones, etc. The partners of the fund are now engaged in a discussion with a view to forging a phase two of the fund which will be much bigger and might bring in other investment partners.

Ireland and China are closely compatible also for the reason that China wants to develop its food and agribusiness sector, and Ireland is the world leader in sustainability in this sector. We have the lowest carbon foot­print of our cow and dairy herd in all of Europe, and we export to 170 countries with safe and top-quality food. Our food export to China has tripled in the last three years, our seafood multi­plied by five, and it’s continuing to grow strongly. But it’s not only a question of exports. It’s a ques­tion of building partnerships in agriscience and agriresearch.

With the national institutes in the dairy sector that are located in Harbin, Heilongjiang Province, one of the Irish corporations has worked to develop the national standards of China for casing, which is a very important ingredient in the dairy sector. This is the kind of collaboration for development of the Chinese sector that we want to develop more and more with China.