Ambassador Liu Jianchao delivered a speech at the Metro Manila Business Conference 2009
2009/08/04
 

On 31 July, Ambassador Liu Jianchao was invited to the Metro Manila Business Conference 2009, which is held by Metro Manila Chamber of Commerce and Industry, and delivered a speech to around 300 representatives from the Philippine business sector.

Please read the full text of Ambassador Liu's speech as follows.

 

 

President Edgardo Lacson,

Ambassador Donald Dee,

Vice President Antonio Keh,

Vice Chairman Enrique Lim,

Vice Chairman Samie Lim,

President Dr. Alfonso A. Uy,

Ladies and Gentlemen,

Good afternoon.

I want to start by thanking Metro Manila Chambers of Commerce and Industry (MMCCI) for having me here today. Through my recent homework, I know that the Philippine Chamber of Commerce and Industry (PCCI),the largest business community on the archipelago, has been long hailed as "the Voice of the Philippine Business". Representing the populous and prosperous Metro Manila, MMCCI has been playing an integral part in the flourishing economy of the Philippines. Your consistent contribution has made the voice of the Philippine business enriched and resonant.

On this occasion, I am truly honored to speak in front of so many business leaders and professional elites. Though still on the learning curve to better understand applied economics and business operation, I do know what really counts nowadays for business communities. That is something exactly embodied in this year's conference theme: Conquering the Crisis & Moving Forward.

Today, with a humble mind, may I share with you China's experience on this best chosen theme, from a more macro perspective.

On 15 September 2008, the global investment bank Lehman Brothers filed for bankruptcy protection, sending shock waves across the international financial system. This was soon followed by other bankruptcies, bailouts and takeovers of financial institutions in the United States and Europe. Although there is greater confidence now that the crisis had abated, the economic condition would nonetheless remain critical and uncertain, at least, until next year. The IMF and World Bank both came to the conclusion that the world economy in 2009 will contract for the first time in more than six decades and the world trade would likely sustain the hardest blow since World War II.

 

Geographical distance to the epicenter of the financial crisis obviously cannot guard Asia against harm. Pinch was felt and toll was taken. China has encountered unprecedented difficulties and challenges. We experienced enormous downward pressure on economic growth. Our GDP growth registered only 6.1% in the first quarter of 2009, representing a nearly 3% year-on-year decrease. Imports and Exports have been on decline with a total volume plummeting by 23.5% in the first half of 2009. Industrial production has notably slowed and industrial profits shrank by 21.2% in the first half year. Some enterprises are still struggling in hardships or even fighting for existence. Front and center would be the urgent need to put a brake on job loss and to relieve the country of unemployment pressure. The much thornier case facing China, however, is that the financial crisis coincides with a crucial juncture in our efforts to transform the growth pattern and adjust the economic structure. New challenges coupled with existing problems have made our task all the more arduous.

 

Ladies and Gentlemen,

 

To counter the devastating international financial tempest, the Chinese Government went all out to take domestic measures for steady and relatively fast economic growth. China made early and timely adjustments to its macroeconomic policies, adopted a proactive fiscal policy and a moderately eased monetary policy and formulated a package plan to expand domestic demand and boost economic growth. China increased government spending by great margin and introduced a large-scale and across-the-board stimulus plan, injecting USD 570 billion into national economy in two years. Structural tax cuts were carried out. Interest rates were repeatedly lowered. Liquidity in the banking system was increased. China pushed forward industrial restructuring and rejuvenation and promoted scientific innovation and technological upgrading. No efforts were spared in saving energy, tackling pollution and protecting environment. Decisive steps were taken to strengthen and modernize the social security net for unemployed and dislocated workers to help them navigate the turbulent economy. The Chinese Government also went the extra mile to stimulate consumption in rural areas by subsidizing white electric appliances sales to farmers at lower price.

Now, it's gratifying to see these measures produce encouraging initial results. China's GDP growth rate rose up to 7.9% in the second quarter this year, making it an average of 7.1% in the first half of the year, approaching the 8% target for 2009. It also represented the first pick-up sign after China's economic growth rate kept dropping for 7 consecutive quarters. There is probably some reason for us to expect China's economy to bottom out onto a stabilizing track, and then turn up later this year. The industrial production in China is now regaining its momentum by registering a growth rate of 7% in the first half of 2009. The same period of time witnessed a 33.5% growth in fixed-asset investment across China. From January to May this year, the total retail sales of consumer goods in China topped USD 715 billion, a 15% year-on-year increase. According to China National Bureau of Statistics, in the first half year, per capita disposable income of urban households and per capita cash income of rural households respectively went up 11% and 8%. Nearly 5.7 million jobs were created in urban areas for migrant workers, and 3.6 million for new university graduates. The pension and health care system were strengthened and streamlined.

It's indeed exciting to browse through these figures. However, a sober mind is something more needed to behold the whole picture. We should not ignore the fact that the current economic stabilization still remains tentative, lacking solid base and balanced pattern. There are some uncertainties hovering about: dwindling external demand, dropping industrial profits, surplus production capacity and growing unemployment pressure.

Crises are good opportunities for critical policies to be made that would be of great significance to a country in the future. China has such a critical decision to make: transformation of its growth pattern. In the past, when the world economy kept growing, the extensive and export-oriented operation with low-price strategy might work and turned out to be profit-making. Now, things have changed. The overseas markets are shrinking. Our enterprises should learn to adopt the concept of creation, innovation and optimization. Whether to undertake change in economic growth pattern not only poses as a make-or-break situation for individual enterprises, but also determines the economic performance and vitality of a country. We should try to find the handle to turn the crisis into opportunities to take on a better pattern of growth, namely, to work for a successful transformation while retaining a sound and fast growth.

Ladies and Gentlemen,

The bestseller The World Is Flat by Thomas Friedman expounds on the fact that the world economy has been incredibly integrated and the people throughout the world are tightly inter-connected. We are living in a world that has grown smaller than at any other time in history. Reckless speculation by bankers in New York has fueled a global recession that inflicts pain on workers and families across ASEAN countries and around the globe.

 

Therefore, the only way out of a recession that is global in scope should be a response that is global in cooperation. That is why the international community including China and the Philippines is pleased to see G20 agreements on a series of unprecedented steps that will be a turning point in our pursuit of a global economic recovery. All the countries are now moving aggressively to get banks lending again, spur growth and create jobs. All the countries are pondering over a most sweeping reform of our financial regulatory framework in a generation, a reform that will help end the risky speculation and market abuses that have cost so many people so much.

 

Along with the home front combat, China also joined the international campaign against this global financial mayhem. Despite various difficulties ahead, China has maintained exchange rate of RMB yuan basically stable. China has decided to provide USD 1.5 billion as the first portion of its financial support to the Global Trade Finance Program of the International Finance Corporation. The overseas procurement missions organized by the Chinese central and provincial governments demonstrate our firm commitment to staying open to the world and contributing to global economic recovery. Besides, China has also signed a dozen of bilateral currency swap agreements with its strategic partners totaling hundreds of billions of US dollars. The arrangements have enriched regional financial cooperation and strengthened regional liquidity assistance mechanism.

 

During the financial crises, we have one more common enemy which is the trade protectionism. Protectionism will in no way benefit the world economy and could jeopardize the international efforts against the crises. Therefore, it should never be practiced. At the same time we call for comprehensive, balanced, gradual and effective reforms of the international financial institutions, to give the developing countries a bigger voice.

 

Ladies and Gentlemen,

Back to early May this year, in Bali, Indonesia, China committed USD 38.4 billion at the ASEAN plus China, Japan and the ROK (10+3) Finance Ministers' Meeting to the regional reserve pool, core to Chiang Mai Initiative Multi-lateralization. China has also set aside 300,000 tons of rice as special reserves for the East Asia Emergency Rice Reserve to bolster regional food security. And China has announced establishment of China-ASEAN Investment Cooperation Fund and pumped USD 10 billion into it. In addition, China will also provide ASEAN countries with loans as much as USD 15 billion, including USD 1.7 billion concessional loans. In 2008, China's total import volume stood at USD 1.1 trillion. With stimulus package in place and domestic demand expanded, China would be a huge market of more than USD 10 trillion for the whole world in the next decade. ASEAN, the 2nd largest exporter to China, is surely to benefit more in the years to come.

There is no silver bullet for Asian countries to conquer the crisis. Asian countries have much more to do than just hoe their own potatoes. The cockroaches in neighbor's house, if not rid of timely, will come to your house someday. China and ASEAN countries are members of the Asian family. We share a strong aspiration to strengthen cooperation to buffer the global crisis impact and tide over the difficulties. We should renew our fruitful cooperation in fight against 1997 East-Asia financial crisis and support each other to overcome the on-going difficulties.

China will see to it that the cooperation with our ASEAN neighbors yield more progress and bear more fruits. The China-ASEAN Free Trade Agreement has been hailed as a milestone in pushing forward a closer and stronger relationship between China and the ASEAN countries. In 2010, a China-ASEAN free trade zone with a combined population of 1.9 billion and an aggregate GDP as much as nearly US$ 6 trillion would be in position. Starting from 1 January next year, about 93% of trade goods between China and the ASEAN countries will be exempted from tariff. The consumers on both sides will have wide-ranging choices of more than 7,000 zero-tariff items in the market.

Ladies and Gentlemen,

The world is now suffering from a sprawling crisis, and few of us have experienced anything like that ever before. However, the world is also embracing an opportunity unseen in history for global cooperation. China's interest has never been so closely linked with the world and vice versa. We see our role in the international community more as a cooperator and a contributor than a competitor. China is the largest developing country, and the Philippines is a country of rich resources and talented people. China's efforts accelerating industrialization and urbanization create tremendous market potential. Our two countries are bound to cooperate for win-win results.

This morning, I read Business World and learned that Acting NEDA Director-General Ronaldo Tungpalan were here yesterday talking about setting a new focus for 2010 stimulus plan in the Philippines. With full implementation of Economic Resiliency Plan (ERP) in 2009 and expected global recovery, the Philippines is now poised to eke out slight growth this year. Next year, the bulk of stimulus spending would zero in on larger infrastructure projects including transportation and water networks, where our two countries have had solid cooperation and enjoy greater potential to do so in the future. 

Earlier this year, State Grid Corporation of China was granted 25 years franchise of National Grid of the Philippines. The project represents the largest of that kind ever invested by China in the Philippines. In late may, a Chinese company signed a contract with the National Irrigation Authority on the Agno Integrated Irrigation Project, designed to nurture 35,000 hectares of farmland and benefit 28,000 Filipino farmers. Last Tuesday, another contract agreement was signed to kick off Phase II of Angat water utilization and aqua-duct improvement project.

Your country is also endowed with enormous potential of geo-thermo exploitation. Enormous would be the possibilities for both countries to jointly develop other clean and renewable resources such as wind and solar power. China is ready to continue to boost cooperation with the Philippines in even broader areas of infrastructure, mining, farming, telecommunication and education. We will continue the effective and fruitful cooperation with the Government of the Philippines, and we are also very much looking forward to working even closer with the private sectors which you very well represent. 

A stable, sound and dynamic Chinese economy will bring about great development opportunities for the rest of the world, including the Philippines. As China's economy picks up, the trade and economic cooperation between our two countries will grow closer and our strategic and cooperative relationship will be hoisted to a new high. Together, we can find better ways and enjoy brighter days.

Thank you very much.

 

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