Premier Zhu's Speech at US Asia Society's Annual Corporate Conference

Premier Zhu's Speech at US Asia Society's Annual Corporate Conference

Chinese Premier Zhu Rongji delivered an important speech at the US Asia Society's 11th Annual Corporate Conference in Asia, which opened in Shanghai on May 10. The following is the full text of his speech:

Mr. Chairman, Ladies and Gentlemen, Dear Friends, In the month of May overflowing with the spirit of spring, the US Asia Society meets here in Shanghai for its 11th Annual Corporate Conference. At the same time, China Investment Forum 2000 is also being held in Shanghai. Allow me to extend, on behalf of the Chinese Government and people, our warm welcome to all of you. With the advent of the new century, the scientific and technological revolution piloted by IT development is advancing forward at a lightening speed. It is profoundly altering the modality of production and people's way of life. And it has become a major driving force behind the contemporary economic growth. The process of structural readjustment and reorganization of the world economy is being accelerated, with new industries rising up and growing rapidly. In short, the trend toward economic globalization is visibly gaining momentum. It presents both new economic development opportunities, and inevitably, serious challenges to all countries, developing countries in particular. To promote economic globalization, it is all the more imperative to establish a fair and reasonable new international political and economic order. And furthermore, it calls for all countries in the world, developing countries in particular, to deepen their reforms, restructure their economy and improve their competitiveness.

Since the founding of the People's Republic some 50 years ago, earth-shaking changes have taken place in China. Especially over the last two decades and more since the introduction of the reform and opening-up, China has made universally acknowledged achievements in its economic development. Its economic aggregates and foreign trade volume have risen from the 11th and 32nd places in the world respectively in the 1970s to the present 7th and 9th. Its foreign exchange reserve and foreign investment are both the second largest in the world. From poverty to subsistence and furthermore to a fairly comfortable life, the 1.2 billion Chinese people have made historical progress in improving their lives. China today is enjoying political stability, economic prosperity, social progress and ethnic unity. And its people, in high spirit and morale, are full of vigor and dynamism.

At the important juncture of the turn of the century, China has come to a crucial stage of deepening reforms and readjusting its economic structure for its economic development. In spite of many favorable conditions on our road ahead, we also face a lot of difficulties and challenges. At the moment we are confronted with such problems as insufficient effective demand, an irrational economic structure, mounting employment pressure and a slowed-down income growth for farmers. These are problems that should not be neglected. They are also problems that are likely to occur in the process of development and can only be solved step by step through development.

Marked changes took place in China's economic development in the first quarter of this year. Our GDP increased by 8.1 percent, industrial added value by 10.7 percent with visibly better economic returns, the state revenue by 23.8 percent, and profits made by industrial enterprises by nearly 200 percent. All this is attributable to the following factors. Firstly, we have pursued a pro-active fiscal policy in China for the past three years, which has played an important part in spurring China' s economy. We have intensified efforts in the construction of infrastructure in particular, which has helped open up the traditional industrial market. Secondly, efforts have been made to put in place a sound social security system. We have increased the pension for the retired and the subsistence allowances for the laid-off workers and the salaries of the employees of the government bodies and institutions. All these measures have improved the expectations of our workers and staff members about the reforms, which has helped boost consumption. Thirdly, we have implemented a well-thought monetary policy, which has stabilized the exchange rates of RMB. In addition, we have adopted a tax rebate policy to encourage export. As a result, our export volume expanded from zero or even negative growth to a positive increase of 6.1 percent last year, and 39.1 percent for the first quarter of this year. Fourthly, we have increased input in science, technology and education to boost the development of high- and new- tech industries and improve our industrial structure. Fifthly, we have intensified the reform of SOEs (state-owned enterprises). Some of these enterprises have been reorganized, listed in the stock market and adopted a share-holding system. Some loss-making ones have started to make profits through better management, technical upgrading the debt-to-equity swap. In key large and medium-sized SOEs, the modern enterprise system has been, by and large, put in place. They have transformed their operational mechanism and instituted a sound supervision mechanism. All these measures will help most of the large and medium-sized loss-making SOEs out of the their predicament this year.

The process of China's accession to the WTO is now picking up speed. I believe that China's WTO membership will afford China an important opportunity to develop its opening-up to a new stage. We will speed up the opening-up process in such fields as energy, transportation, telecommunications and environmental protection. And at the same time, we will open wider to the outside world such service sectors as banking, insurance, tourism, commerce and trade. We will try to attract more foreign capital to the transformation and upgrading of our SOEs in various forms. We will review and, if necessary, amend the existing foreign-related laws and regulations in light of the requirements of WTO rules and set up an economic and trade system consistent with both the international practice and our national conditions at an early date.

China is the largest developing country and boasts a huge market potential. The improved living standards of over one billion Chinese and the upgrading of their consumption pattern will definitely create mammoth consumer demands. And the massive infrastructure construction, the upgrading of the industrial structure and the vigorous development of China's west will certainly push up phenomenal investment demands. In the next decade, it is estimated that China will have an average annual growth rate of 7 percent or so for its GDP and over 10 percent for fixed assets investment. Its import volume will have reached over two trillion US dollars. These foreseeable huge business opportunities in China belong not only to Chinese entrepreneurs, but also to those far-sighted and courageous businesspeople around the world. Opening up the Chinese market will become an important factor for world economic prosperity. We warmly welcome businessmen around the world and international investment agencies to China to make investment and do business. And we are looking forward to joining hands with them in creating a better future.

Ladies and Gentlemen,

As a member of the Asian community, we are very much concerned about the stability and development of the Asian economy. China's economy would not develop without Asia, and Asia's economic prosperity would also be impossible without China. Over the past decades, Asia has seen a rapid economic growth and has become one of the most dynamic regions in the world. We have noted with gratification that the Asian countries that were hit by the financial crisis are now experiencing an economic recovery. An important lesson that the Asian financial crisis has taught us is that we need to guard against financial risks, check excessive speculation and set up a sound, efficient and safe financial system. All countries must deepen their own national financial restructuring and improve financial supervision and regulation so as to place their financial sector in a better position to support economic growth and protect themselves from financial crises. At the same time, they must take an active part in the reform of the international financial system and strengthen global and regional cooperation in the financial area. I am convinced that the Asian economy will successfully readjust and improve its model of development, become dynamic and vibrant, and take an even more important position in the global economic pattern in the new century. We have full confidence in the bright future of the Asian economy.

I wish this meeting a complete success. Thank you.