Kuala Lumpur Malaysia, 12 December 2005
Mr. Chairman,
Ladies and Gentlemen,
Dear Friends,
It gives me great pleasure to attend the East Asia Summit Leaders Dialogue and share my perspectives on East Asia economic cooperation with representatives from the business community. Let me also take this opportunity to express my heartfelt appreciation to the host for his kind invitation.
The world economy is going through profound changes, as evidenced by accelerated economic globalization and regional cooperation, faster movement of productive factors and relocation of industries and a new wave of technological revolution. East Asia now has a rare historic opportunity to realize leap-frog development. However, economic development now involves greater risk and international economic competition is getting fiercer. The gap in wealth is widening; the international economic order remains unjust and trade protectionism persists in new forms. How to seize opportunity to speed up development while avoiding risks in the rapidly changing world economy is a question that deserves our close attention.
Over the years, countries in East Asia, embracing economic globalization, have made great strides in economic and social development by carrying out economic restructuring, opening wider and promoting regional cooperation. East Asia, an emerging region with the most robust economy and greatest potential for growth in the world, is in the global spotlight. On the other hand, East Asia has its share of problems, such as low level of industrialization, imbalance in economic structure, increasingly acute ecological and environmental problems and intra-regional disparity. To ensure sustainable, fast and harmonious economic growth remains a major challenge for East Asia.
In face of the new situation, we should draw both experience and lessons from past development endeavors in East Asia, be forward-looking and innovative, enhance cooperation and explore and pursue a strategy that will bring about better and faster development in the region. With this in mind, the East Asian countries have created this new platform of East Asia Summit. I believe that this Summit, together with other regional cooperation mechanisms, will, by helping pool wisdom and resources and enhancing economic complementarity, lead us onto a path to development that is suited to the region and encourages both intra-regional cooperation and further opening up, thus bringing about fresh progress in the regional development that benefits all.
Ladies and Gentlemen,
In the past 27 years since China embarked on the reform and opening-up program, its economy has been growing rapidly at an average annual rate of 9.4%. In 2004, China's GDP reached US$2 trillion. The number of poor rural population had dropped to 26 million from 250 million. China's economy accounted for 4% of the world economy, which was only 1% in 1978. China has come a long way in its drive for modernization.
But we are also keenly aware that China is not developed and will remain so for a long time to come, and it faces many difficulties and challenges. Although China has a sizable economy, its per capita GDP is behind that of 100 countries. We face many problems such as uneven development between urban and rural areas and among different regions, huge pressure on employment, lack of innovation, low level of industrial technology, outdated and inefficient mode of production and increasingly adverse impact exerted on resources and the environment by economic and social development. We need to make committed and long-term efforts to resolve these problems.
China is now in a new historical stage of development endeavor. We are drawing up the 11th five-year guidelines for economic and social development. In the next five years, we will pursue a scientific development strategy in guiding China's economic and social development and resolve problems in the modernization drive by sustaining economic growth and deepening reform.
We will maintain fairly fast and steady growth of the economy, speed up restructuring in key sectors and promote economic growth by stimulating domestic demand.
We will step up efforts to change the mode of economic growth, pursue a new approach to industrialization and build a resource-effective and environment-friendly economy.
We will enhance independent innovation making capacity, develop core and key technologies, speed up application of research achievements and upgrade industries.
We will pursue a coordinated approach to development, improve rural infrastructure and pursue strategies of developing Western China and of revitalizing the old industrial bases in Northeast China. Our aim is to bring about closer economic integration between urban and rural areas and among different regions of the country by giving full play to their respective advantages.
We will build a harmonious society by boosting education, health, culture and other social undertakings, creating more employment, building the social security system and ensuring fair opportunity for all.
We will deepen reform and open China further, be an active player in economic globalization and adhere to an opening-up strategy of mutual benefit.
Looking ahead, we are full of confidence. Our goal is to double China's per capita GDP of 2000 by 2010, and after that, to bring China's GDP to US$4 trillion and its per capita GDP to US$3,000 in another 15 years. This will turn China into a country of moderate prosperity.
Ladies and Gentlemen,
China cannot develop itself in isolation from the rest of the world, and particularly East Asia. Thanks to pursuing a policy of "building good relations and partnership with neighbors", China enjoys close relations with its neighbors. This has laid a solid political and economic foundation for enhancing its cooperation with other East Asian countries. On the political front, China and ASEAN have, through the effective 10+1 cooperation mechanism, forged a strategic partnership and issued the Declaration on the Conduct of Parties in the South China Sea. China is the first country outside the Southeast Asian region to have acceded to the Treaty of Amity and Cooperation in Southeast Asia, and it will soon become a development partner of the East ASEAN Growth Area. Economically, China and ASEAN are working to establish a free trade area. The two sides have concluded the agreement on trade in goods, and started negotiations on service trade agreement and investment agreement. Pending the establishment of the China-ASEAN Free Trade Area, the "Early Harvest Program" was implemented in January 2004 and general tariff reduction for trade in goods was launched last July. China supports enhancing financial cooperation among East Asian countries, and has signed Currency Swap Agreements worth US$15.5 billion under the Chiang Mai Initiative. It has offered full support in terms of capital, technology, and market access in promoting Greater Mekong Subregion economic cooperation. Moreover, acting on its own initiative, China has provided special preferential tariff treatment for 950 products from Cambodia Laos, and Myanmar, and cancelled the matured government debts of some least developed countries in Asia. China provides annual training for about 500 people from ASEAN countries under the China-ASEAN framework.
China is committed to East Asia cooperation in the interest of fostering a harmonious, secure and prosperous neighborly environment. China hopes that such cooperation will promote regional peace and prosperity and create a friendly international environment that will facilitate its development endeavor. China is proud to be a good neighbor, good friend and good partner of other Asian countries.
Ladies and Gentlemen,
China's development not only benefits its 1.3 billion people, but also provides more opportunities for other East Asian countries.
With import growing by an average annual rate of over 15% in recent years, China is ranked world's third largest and Asia's largest importer. In 2004, China's import from other Asian countries and areas grew by 35% over 2003 to about US$370 billion, accounting for 65% of its total import. With domestic demand growing, China will import more than US$2 trillion of goods in the next five years.
Overseas investment by Chinese companies has also registered over 20% annual growth, with 80% of it made in Asia. As Chinese companies continue to expand in business, China will contribute more significantly to Asia's economic growth.
China is committed to maintaining Asia's financial stability. Back in the 1997 financial crisis, China resisted pressure to devalue its currency, thus contributing to Asia's economic stability. Over a decade ago, China set itself the goal for reforming the renminbi exchange rate regime, namely, establishing a managed floating exchange rate regime based on market supply and demand. We have since then worked to pursue this goal by improving the renminbi exchange rate regime. China took a crucial step in reforming the renminbi exchange rate regime last July. Instead of pegging the renminbi to just American dollar, we adopted a managed floating exchange rate regime based on market supply and demand under which the renminbi is adjusted with reference to a basket of currencies. The exchange rate was also properly adjusted and floated. In introducing this reform and adjustment, we have taken full account of both China's economic and financial stability and the impact of such reform and adjustment on the economic and financial stability of China's neighbors, the whole region and the world at large. We will continue to do so in the future.
China will take an active part in energy cooperation on the basis of mutual benefit. To effectively meet energy challenge is the common responsibility of all countries. China is ready to strengthen energy dialogue and cooperation with other countries to ensure global energy security and stability. China is both a major energy producer and a major energy consumer. It meets over 90% of its overall energy demand with domestic supply. China will adhere to the policy of meeting its energy need mainly through domestic supply. We will promote both energy development and energy conservation, and give top priority to energy conservation. Our goal is to cut the use of energy per unit of GDP by about 20% by 2010, and achieve energy conservation and efficiency for the whole country. This is an important strategy that China pursues to achieve sustainable development.
Ladies and Gentlemen,
China has embarked on the path of peaceful development, a path dictated by its need for development. China has a large population but a weak economic foundation. Its development is uneven, as many areas remain backward. For China to be fully developed, it will take the unremitting efforts of several generations, or even a dozen generations of the Chinese people. China thus needs a durable and peaceful international environment that enables it to concentrate on economic development. In doing so, China mainly relies on its own strength, its vast domestic market and abundant workforce. But China also needs extensive international cooperation. China will continue to seek peace and development through cooperation, and will strive to achieve development that will bring about peace, openness, cooperation and harmony as well as benefit to both itself and other countries.
The business community plays a crucial role in promoting economic development, and serves as a bridge that forges strong economic and trade ties between China and other East Asian countries. We hope that the business community will work with us, seize the opportunity offered by the sound economic growth of both China and the region, expand exchanges, strengthen cooperation and thus make greater contribution to the economic and social development of East Asia.
Thank you.