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Seize Opportunities; Forge a New Future of Asia Speech by Ambassador Wang Xuexian at the 6th Asia Economic Forum (Phnom Phen, Cambodia, January 20, 2010) Honourable Chairman, Ladies and gentlemen, I'm very delighted to come to the beautiful Phnom Penh again to attend the 6th Asia Economic Forum. First of all, please allow me to express my sincere thanks to the host of Asia Economic Forum (AEF) for their kind invitation and meticulous arrangement. When I was here for the 5th Forum last April, the global financial crisis was still rampant and world development confronted severe challenges. Many participants at that time were deeply worried about the future of Asia. However, the year of 2009 witnessed a united Asia making concerted efforts in tackling the challenges brought by the crisis. Asian countries have taken a series of active measures to overcome difficulties they confronted and scored remarkable achievements. Today, Asian economy as a whole has restored some growth momentum and is widely expected to become the very first region in the world to walk out of the shadow of the financial crisis. Asia accounts for over 60% of the world population and 25% of both world GDP and international trade. Bestowed with great potential in markets and vast space for development, Asia is playing an increasingly important role in world affairs. In the past years, a dynamic Asian economy with its high growth rate not only brought hope and confidence to world economy, but also laid a solid foundation for Asia to gain a favorable strategic position in the world. Asia should and is capable of maintaining economic growth tempo and realize full recovery so as to continue to lifting its strategic position and making greater contribution to world peace, development and cooperation. To this end, the following objectives should be pursued and concrete actions taken: 1. Consolidate the foundation to stabilize Asian financial and economic situation through continued effective measures. Since the breakout of the international financial crisis, Asian governments had in response taken large-scale economic stimulus programs, which proved to be crucial for reducing the severity of the crisis. At present, the full recovery of Asian economy is still faced with uncertainties and destabilizing factors. We should continue to implement proper financial and monetary policies and maintain the stimulus measures until recovery is assured, and at the same time be cautious in adopting the “exit strategy”. 2. Build a solid basis for sustainable development in the post-crisis era through the restructuring of economic system. The financial crisis exposed structural weakness in many Asian economies, China included. Accelerating the process of restructuring is not only the fundamental means to overcome the crisis but also the key measure to deal with the harsh international competition in the post-crisis era. In order to gain the initiative, Asian countries should take new strategic actions in line with their domestic situation. a. Gradually improve foreign trade structure and advance the upgrading of export product. Most Asian countries' growths are excessively dependent on export. Primary processing trade has taken up disproportional large share in foreign trade volume while high value-added products are often absent. Western capital have taken the lion share of the profits whereas Asia only got some marginal processing profits along with consumed resources and polluted environment, and was even labeled as "environment-polluter". In order to dramatically change this unreasonable situation, Asian countries have to resolutely promote export of products with self-owned brands and independently innovated key technology so as to fundamentally reverse the low-level circulation of simple processing and exporting, which will also help to optimize and upgrade our economic system. b. Reform the income distribution system to continuously expand domestic demand. As it is often the case that most Asian countries place more emphasis on growth than consumption, and the driving force of economic growth by consumption has been 2 somehow hurdled. Therefore, Asian countries have to work hard to enhance domestic consuming capacity and improve consuming environment. More importantly, many of our countries should adjust national income distribution practice, formulate a rational and fair policy of primary distribution in order to narrow the gap between the rich and the poor, and make sure that public consumption demand at various level are all properly satisfied. We not only need to make our "cake" of bonus much bigger by raising all people's income, but also distribute it fairly so as to provide more tangible benefits to low-income group in particular. c. Focus on developing tertiary-industry and improve industrial structure and layout. The global financial crisis has exposed the truth that tertiary- industry, especially the service sector, consists too small a part in many Asian countries' economy, Hence, Asian countries must change the concept that industry is more important than service, and coordinate the overall development of agriculture, industry and service industry. Meanwhile, service industry should become leading sector in national economy so as to facilitate the formation of a new pattern of economic growth driven by the parallel expansion of tertiary industry sectors. d. Foster and develop emerging strategic industries. Emerging strategic industries mainly include green energy, three networks connection (connecting telecommunications, TV and radio networks), information industry, biotechnology, nanotechnology, etc. The development of these industries will not only contribute to the recovery of the Asian economies, but also put the Asian economies in a better position in leading the sustainable social and economic development in the future. Asian developed countries such as Japan and South Korea had increased their investment in these areas. If Asian developing countries don't wish to remain ‘developing’ forever, we must devote more efforts to developing those emerging industries despite various difficulties. Joint efforts in research and development should be explored for common benefits in due course. 3. Strengthen the overall Asian inner dynamism of the economic development and master the destiny of Asia’s own development. The economic growth of Asia is highly dependent on the European and American markets. Anytime when Europe and US get cold, Asia will have to take medicine. And this time the financial crisis has once again 3 exposed the weakness of lacking of inner dynamism in Asian economies. Asia, proud of its big population, diversity, broad domestic markets, high saving rate, sufficient foreign exchange, has actually great inner growth potential. Hence, Asia should give full play to this advantage, deepen our cooperation and take our own needs and innovation as the main driving force for the economic growth in the future. Each country should develop the industries of its own characteristics, complement each other, arrange the industry layout in a more rational manner, and try every means to enlarge the inter-regional trade so as to achieve common prosperity. This January witnessed the formal launch of China-ASEAN Free Trade Area and Asian countries should take this momentum to push regional integration and continuously enhance the inner dynamism of economic growth. 4. Join hands to combat global challenges such as climate change, environmental degradation, energy security and food security etc.. Protecting environment and guaranteeing energy and food security is closely related to the stable economic development and people's welfare of Asia. With the fast economic growth, many countries in Asia have paid dearly in terms of the incessant environmental degradation, and the environmental problems have put Asia at a crossing-road. In this sense, each Asian country should raise environmental awareness, push forward circular economy and pursue the path of green development. By implementing sustainable development strategy, economic growth should be obtained on the basis of resource-efficiency and environmental friendliness, challenges of climate change should be tackled together and good environment should be the result of economic growth rather than its sacrifice. Global climate change is a major challenge calling for concerted efforts to respond. International community should adhere to the principle of common but differentiated responsibilities, and keep international cooperation on climate change on the right track in line with the provisions of the UNFCCC and its Kyoto Protocol. Developed countries should fulfill the task of emission reduction set in the Kyoto Protocol and take up their responsibility and provide new, additional, adequate and predictable financial support to developing countries and enable developing counties to have access to climate-friendly technologies. Developing countries should, in light of their national conditions and with the financial and technological support of developed 4 countries, work hard to adapt to climate change and do their best to reduce greenhouse gas emissions. In recent years, Asian countries' demands for energy have been rising persistently. Asia need to develop and implement a new energy security concept that calls for mutually beneficial cooperation, diversified forms of development and common energy security through coordination, enhance cooperation for mutual benefit in energy development and utilization, improve energy structure and build a global energy supply system that provides stable, clean, economical and safe energies. Food security concerns the livelihood of hundreds of millions of Asian people. Each country should, in the spirit of common development, actively coordinate policy and action, stabilize food prices and strengthen mutually-beneficial cooperation. A favorable condition can be created for food security though multiple efforts to increase food production, improve trade environment, enhance macro-coordination and hold down over- speculation. 5. Reform the international rules of game of globalization and increase the speaking right and leadership of Asian countries. The financial crisis has exposed the irrationality and injustice of present international economic system and rules of the game, and given rise to the call for international economic and political reforms. Before the financial crisis, the western countries promulgated its economic neo-liberalism, and the "Washington Consensus", which takes privatization, marketization and deregulation as its core, was worshipped and blindly followed by many countries. The move of "reforming the world" by the political neo-conservatives was nearly crazy. The facts have proven that these theories did great harm to many countries, especially the development of the developing countries, including many Asian countries. With a view to learning from past lessons and experience and avert falling into the same old trap again, the Asian countries should carefully and thoroughly reflect on these "mainstream" development modes and concepts, resolutely promote reform of international economic governance structure, increase the representation and voice of developing countries and help to advance globalization in the direction of 5 mutual benefit, win-win progress and shared benefits. There is no one-size-for-all development path and mode in the world, neither is there any development path and mode that never changes. The point is that it should suit the time, people's will and national conditions. We should blaze and follow our own path. 6. Seize the historic opportunity and build a harmonious Asia of lasing development and common prosperity. At present, the historic trend of seeking peace, development and maintaining cooperation has provided unprecedented opportunity for peaceful and harmonious co-existence of Asian people. Asia should conform to the trend and make great effort to push for the establishment of a harmonious Asia of lasing development and common prosperity, in which each country is equal, people live peacefully and harmoniously together with each other and with nature. In this regard, all Asian countries should politically respect each other and associate with each other on an equal footing in a common endeavor to promote democracy in international relations. Economically, we should cooperate with each other, draw on each other's strengths and work together to advance economic globalization in the direction of balanced development, shared benefits and win-win progress. Culturally, we should learn from each other in the spirit of seeking common ground while shelving differences, respect the diversity of the world, and make joint efforts to advance human civilization. In the area of security, we should trust each other, uphold good-neighbor policy and settle disputes through consultation, negotiation and other peaceful means, and work together to safeguard peace and stability of Asia. China belongs to Asia. China's development cannot be achieved without Asia and vice versa. China will continue to unswervingly follow the path of peaceful development and uphold a mutually beneficial and win-win strategy. We will take full advantage of the opportunity brought by Asian development to develop ourselves, and at the same time contribute to safeguarding peace and promoting common development of Asia though our own development. As an important force of safeguarding peace and development in Asia, China will continue to adhere to the foreign policy of building amicable relationship and partnership with our neighbours, and develop friendly cooperation with other Asian countries. China will continue to support Asia in playing an important role in international arena and make our contribution to further upgrading Asia's strategic position in the world. Thank you. 6