Work Together for a Better Asia Pacific*
October 7, 2013
Distinguished Chairman Wishnu Wardhana,
Ladies and gentlemen,
It is a great pleasure for me to have the opportunity to join you, distinguished representatives of the Asia Pacific business community, in this island paradise.
Bali is not only a world-renowned tourist attraction, but also the birthplace of the Bali Process and the Bali Road Map. And now, hosting the APEC Economic Leaders' Meeting, Bali carries the expectations of Asia Pacific and the rest of the world.
The world economy is still struggling towards recovery, and the Asia Pacific economy, while enjoying positive growth, is confronted with new challenges. People around the world are looking to this year's APEC meeting to give new impetus to regional and global economic growth.
Ladies and gentlemen,
The world economy is still in the middle of profound readjustment. While there are signs of recovery, there are also problems of fragile foundations, inadequate momentum and uneven pace. Major developed economies are far from resolving their structural problems, making it all the more necessary to strengthen macro-economic policy coordination. Emerging market economies have slowed down, and now face more external risks and challenges. The WTO Doha Round negotiations are fraught with difficulty, and trade and investment protectionism is resurfacing in new forms. To achieve a full recovery and healthy growth of the world economy will be a long and tortuous process.
Confronted with these new challenges, both developed and developing economies are looking for new drivers of growth.
Where can we find them? In my opinion, they can only be found through reform, readjustment and innovation. The Asia Pacific region has long been an important engine of world economic growth. To push for a recovery in the sluggish world economy, economies in the Asia Pacific region should have the courage to do what has never been done before and build an open growth mode featuring innovative development, interactive growth and converging interests. Only by so doing can the Asia Pacific economies play a leading role in the recovery of the world economy. A Chinese poem runs, "When one doubts whether there is a way out from the endless mountains and rivers, one suddenly finds a village shaded by soft willows and bright flowers."1
This is exactly what China is doing. China's economy grew at a rate of 7.6 percent in the first half of this year. This is, indeed, somewhat lower than the previous growth rate of over 8 percent, which has caused worries about the prospects for the Chinese economy. Some wonder whether there will be a hard landing, whether sustainable, healthy growth is still possible, how China will deal with this situation, and what impact this will have on the Asia Pacific region. Here I wish to share with you some of my observations.
To begin with, I want to emphasize that based on a comprehensive analysis of all factors, I am fully confident about the future of China's economy.
I am confident because first of all China's growth rate is within a reasonable and expected range. From the previous double-digit growth rate to 9.3 percent in 2011, 7.8 percent last year and 7.6 percent in the first six months of this year, the change in pace of growth has on the whole been smooth. In fact, the growth rate of 7.6 percent makes the Chinese economy the fastest growing among all major economies. The fundamentals of the Chinese economy are good; GDP growth and other major economic indicators are within the expected range. So everything has been going as expected, and nothing has come as a surprise.
The slowdown of the Chinese economy is an intended result of our own regulatory initiatives. This is because, according to a thorough calculation done at the time we set our mid- and long-term development goals to double the 2010 GDP and per capita income by 2020, it is judged that a 7 percent annual growth rate would suffice. Moreover, we have recognized that to ensure long-term economic development China has to press ahead with structural reform, even if this requires some sacrifice of pace. In whatever undertaking, one has to look far and plan wisely to take care of both short- and long-term needs. Killing the goose to get the eggs or draining the pond to catch the fish is no formula for sustainable development.
Second, I am confident because the quality and efficiency of China's economic development are improving steadily. China's economy in the first six months of this year has generally made smooth progress. By "smooth" I mean our economic growth has been within a reasonable range, and by "progress" I mean the shift of our growth mode has picked up pace. China is moving from over-reliance on investment and export in the past to increased dependence on domestic demand, especially on consumption. The economic figures for the first half of this year show an increasingly visible role of structural adjustment in boosting growth. Domestic demand has contributed 7.5 percentage points to the GDP growth, with 3.4 percentage points coming from consumption. We no longer take the GDP growth rate as the sole criterion for success; instead, we are focusing more on improving the quality and efficiency of growth. This has proved a responsible approach for both China and the rest of the world.
Third, I am confident because China has a strong domestic driving force for growth. This force is increasing and will continue to get stronger. The ongoing process of a new type of urbanization will create space for hundreds of millions of Chinese to move from villages to cities in pursuit of a better life. The improvement of education in China will bring about a modern, professional workforce of higher caliber, broader vision and better skills. China's vigorous implementation of the innovation-driven development strategy will more closely link science and technology with economic growth, and foster innovation and emerging industries. The continued expansion of domestic demand and consumer market in China will unlock considerable potential for growth. And, above all, China is committed to putting people first and making development benefits accessible to more people across the country. All these will translate into a strong home-grown force for our economic advance.
Fourth, I am confident because the Asia Pacific region enjoys sound development prospects. Thanks to the concerted efforts of all its economies, the Asia Pacific region boasts a high level of free movement of capital, information and people, and an increasingly clear division of labor. A substantial Asia Pacific market is emerging. The new scientific and industrial revolution that is now in the making will add to the existing strength of the region. The Asia Pacific economies are also in a much better position to fend off risks, with more flexible exchange rate schemes, notably larger foreign exchange reserves and various multilateral and bilateral financial arrangements providing institutional protection. China has faith in the development prospects of the Asia Pacific region. Benefiting from overall economic growth in the region, China has achieved its own development. At the same time, China's development has also contributed to regional economic growth. I believe that such interaction will gain even stronger momentum, thus creating more opportunities for the development of the whole region.
I am firmly convinced that the Chinese economy will maintain its sound growth. At the same time, we are soberly aware of potential problems and challenges from falling demand, production overcapacity, local debts and shadow banking, and we are paying close attention to possible impacts from external forces. In this connection, we are taking prudent and proper measures to forestall any potential problems.
Ladies and gentlemen,
The Chinese economy has entered a new development stage. Its growth mode and structural readjustment are undergoing profound transformation. In this process, there will inevitably be one challenge after another. Efforts to meet these challenges will be accompanied by the throes of readjustment and other troubles in the development process, which will prove to be unavoidable.
Rainbows mostly appear after wind and rain. As someone aptly put it, "No mountain is too high for a man to scale and no road too long for a man to walk." However high the mountain may be or however long the road may seem, we will be able to get there as long as we stay the course and keep moving forward.
If China is to make progress, it must drive all-round reform and opening up to a deeper level. To live up to the new expectations of our people, we must, with firm confidence in reform and opening up, greater political courage and wisdom, and stronger measures to advance reform and opening up, free our minds, unleash and develop social productivity, and unlock and enhance the creative forces of society.
China is drawing up a master plan for the continuation of reform in all respects. Our general approach is to press ahead with reform in the economic, political, cultural, social and ecological fields in a balanced manner, address the challenges cropping up in the course of development, remove institutional obstacles to sustainable and healthy economic growth, and create a new impetus for economic development through reform.
We will improve our basic economic system, strengthen the market system, advance institutional reform in macro regulation, fiscal and tax systems, financial sectors and investment, extend the market-oriented reform of interest rates and the exchange rate, make the RMB exchange rate more flexible, and achieve, over time, the convertibility of the Renminbi under the capital account. We will continue to reform the administration system, transform the functions of the government, streamline government and delegate powers, in order to have a clearly defined relationship between the government and the market and let the market play its basic role in allocating resources to a greater degree and in a wider scope. We will improve the management of science and technology, enhance innovation capability, and build a system for technological innovation which is led by enterprises and guided by the market and which integrates the efforts of enterprises, universities and research institutes. We will ensure and improve standards of living on a priority basis, promote social equity and justice, achieve higher quality employment, further the reform of income distribution, and improve social security and basic public services. We will step up environmental protection and resource conservation to create a good working and living environment for our people and respond to global climate change.
We will follow a more proactive opening-up strategy, improve the open economy which is mutually beneficial, diversified, balanced, secure and efficient, encourage coastal, inland and border areas to draw on each other's strengths in opening up, develop open areas that take the lead in global economic cooperation and competition, and establish pilot open areas that drive regional development. We will continue to attach equal importance to export and import, and promote balance in foreign trade. We will attract foreign investment and encourage companies to "go global" at the same time, and enhance international investment cooperation. We will promote investment- and trade-related institutional reforms, and improve relevant legislation to create a legal environment in which foreign companies in China can operate in a fair manner. We will make overall planning for bilateral, multilateral, regional and sub-regional opening up and cooperation, accelerate the implementation of the FTA strategy, and promote communication and exchanges with our neighboring countries.
We are aware that the reform is a profound revolution that involves adjustment of major interests and improvement of systems and institutions in various fields. China's reform is sailing in uncharted waters with tough challenges. The problems we face in the current phase of reform are especially difficult. It is extremely important that we press ahead without letting up. If we hesitate and become indecisive, we will not be able to make breakthroughs, and all our previous gains may be lost.
China is a big country. We cannot afford any drastic mistake on issues of fundamental importance, as damage from such mistakes will be beyond remedy. Our position is that we must be both bold enough to explore and advance, and prudent in carefully planning our actions. We will stick to the right direction and press ahead with reform and opening up. We will have the courage to crack the "hard nuts," navigate the uncharted waters and take on the deep-rooted problems that have piled up over the years. We must not stop our pursuit of reform and opening up – not for one moment.
Ladies and gentlemen,
The nations of the Asia Pacific region are a big family, and China is one of the members. China cannot develop in isolation from the Asia Pacific region while the Asia Pacific region cannot prosper without China. Sustainable and healthy development of the Chinese economy will bring greater opportunities to the development of the region.
China will firmly uphold regional peace and stability, and help cement the foundations for a mutually beneficial situation in the Asia Pacific region. I want to repeat what I noted at the Boao Forum for Asia and other events this year: "Peace, like air and sunshine, is hardly noticed when people are enjoying it. But none of us can live without it." Without peace, development is out of the question, like water without a source and a tree without roots. We Chinese often say, "A family in harmony prospers." As a member of the Asia Pacific family, China is ready to live in amity with other family members, which help each other. We hope that all members of the Asia Pacific family will cherish the peace and stability we now enjoy, which has not come easily, and will work together for a harmonious Asia Pacific of enduring peace and common prosperity.
China will work energetically to boost regional development and prosperity, and broaden opportunities for mutual benefit in the Asia Pacific region. China is the biggest trading partner, largest export market and a major source of investment for many Asia Pacific region economies. In 2012 China accounted for more than 50 percent of Asia's economic growth. By the end of the same year China had approved more than 760,000 foreign commercial investments, and attracted around US$1.3 trillion in foreign direct investment. China has signed 12 free trade agreements with 20 countries and regions, with six more under negotiation. Most of China's free trade partners are APEC members. In the coming five years, China will import over US$10 trillion-worth of goods, invest over US$500 billion overseas and send over 400 million tourists abroad. China's growing domestic demand, particularly consumption and investment demand, will offer foreign investors more opportunities for cooperation.
China will commit itself to building a cross-Pacific regional cooperation framework that benefits all parties. The vast Pacific is free of natural barriers, and we should not erect any man-made ones. We should let APEC lead and coordinate our actions, and uphold the approach of openness, inclusiveness and mutual benefit. We should enhance coordination on macro-economic policies and regional free trade arrangements, promote regional integration, and avoid the Spaghetti Bowl effect, so as to build closer partnerships across the Pacific and jointly pursue long-term development of Asia Pacific.
Ladies and gentlemen,
"Boundless is the ocean where we sail with the wind."2 Like a vast ocean, the Asia Pacific region offers enough space for us to make progress together. Each and every APEC member has a stake in the future development of this region.
China has high hopes for this year's APEC Economic Leaders' Meeting. We stand ready to work with our partners in the region to build a beautiful Asia Pacific that leads the world, benefits all parties, and ensures the wellbeing of future generations. With this in mind, I would like to share with you my vision for the Asia Pacific region in four aspects.
First, an Asia Pacific region that seeks common development. The Asia Pacific economies have close ties and shared interests. We should draw upon our respective strengths, optimize the allocation of economic resources, improve the industrial layout, and build an Asia Pacific value chain and a large-scale Asia Pacific market where benefits are shared by all. The developed economies should provide stronger support and assistance to the developing ones, while the latter should for their part work hard to catch up. Only by narrowing the development gap can we all rise with the tide of development in this region.
Second, an Asia Pacific region that stays committed to open development. The end of World War II was followed by an economic boom of more than 25 years in 13 economies around the world. One common feature of the economies was their opening-up policy. We should follow the trend of the times, uphold a multilateral trading system that is free, open and non-discriminatory, and oppose all forms of protectionism. We should work together in building an open economy and a framework for regional cooperation, and, in an open and inclusive spirit, build the Asia Pacific region into a free trade area.
Third, an Asia Pacific region that promotes innovation-driven development. Growth will be unsustainable if it is solely driven by fiscal stimulus measures and unconventional monetary policies, and will be too costly if it is based on excessive consumption of resources and achieved at the expense of the environment. We need innovation in both theory and practice of development. We should abandon outdated mindsets, break away from old confines, and pursue green, circular and low-carbon development. We should continue to improve our capability in innovation so as to foster emerging industries, explore new forces for growth, and enhance core competitiveness.
Fourth, an Asia Pacific region that pursues interactive growth. The Asia Pacific economies are interdependent, with shared interests and a common future. The success or failure of one may ultimately lead to the success or failure of all. In this chain of dynamic interactions, one economy's development will have a knock-on effect on other economies. We should strengthen the sense of community and of common future, contribute to others' development with our own, tap fully into our respective strengths through coordination and interaction, pass on positive energy, and achieve sound interactions and coordinated development among all the Asia Pacific economies.
At present, the Asian countries, especially emerging markets and developing countries, are in great need of infrastructure. Particularly in the face of such severe challenges as mounting downward pressure and financial volatility, it is necessary for us to mobilize more funds for infrastructural development to maintain sustained and steady economic growth and promote economic integration in the region. To this end, we propose to establish an Asian infrastructure investment bank to help fund the infrastructural development of ASEAN countries and other developing countries in the region. This proposed bank would work together with the existing multilateral development banks in and outside the region to fuel the sustainable and steady growth of the Asian economy.
Ladies and gentlemen,
The business community is a major force for the development of economy and trade as well as an integral part of APEC cooperation. China places great importance on the role of the business community. We are ready to hear your views and suggestions, and facilitate your deeper and more rapid engagement, especially that of SMEs and micro businesses, in economic development and regional cooperation.
Last August China's business community established an APEC China Business Council. This provides an institutional guarantee for the business sector's further involvement in formulating economic and trade rules of the Asia Pacific region, and demonstrates the readiness of China's business community to undertake more international responsibilities.
More friends, more opportunities. Many of you present here are old friends of the Chinese people who have participated in all China's reform and opening-up endeavors. We will never forget our old friends, and we will be most happy to make new ones. China welcomes and encourages businesses from all economies, APEC members in particular, to invest and do business in China and take an active part in China's reform and opening up. The more friends we have, the more China's reform and opening up will thrive and prosper.
I hope friends from the business community will make full use of APEC as a platform to make your voices heard on how to improve trade and investment environment in the Asia Pacific region, and, with your strength in market information, technology incubation and innovative capability, put forward strategic and progressive suggestions for promoting trade and investment liberalization and facilitation, deepening regional economic integration and the future development of APEC.
Ladies and gentlemen,
China will host the 2014 APEC Economic Leaders' Meeting and the related events. Taking this opportunity and focusing on the future of APEC, we will seek to build closer partnerships, further pragmatic cooperation, and enhance the leading role of APEC in shaping the long-term development vision of the Asia Pacific region.
I hope that all of you, friends from the Asia Pacific business community, will meet in Beijing then for discussions and witness another important moment in the development of the Asia Pacific region.
* Speech at the APEC CEO Summit, Bali, Indonesia.
1 Lu You: Visiting a Mountain Village. Lu You (1125-1210) was a poet of the Southern Song Dynasty (1127-1279).
2 Shang Yan: Farewell to a Korean Hermit Returning Home. Shang Yan (date unknown) was a poet of the Tang Dynasty (618-907).
(Not to be republished for any commercial or other purposes.)