19 April 2006
President Bernie Richmond,
Members of the New Zealand China Friendship Society
Ladies and Gentlemen,
My wife and I are very pleased to be here with you. I want to thank the Friendship Society for inviting me to speak to such a distinguished audience. The subject of my presentation this afternoon is: China's Scientific Approach to Development.
Before I start, let me give you're a short briefing on Premier Wen Jiabao's visit to New Zealand earlier this month. That visit was covered extensively in the press. It was brief but highly successful. During some 38 hours, Premier Wen met with Governor General Dame Silvia Cartwright, held talks with Prime Minister Helen Clark and many cabinet ministers, met with the leader of opposition, had luncheon with the MPs, attended the signing ceremony where four documents on bilateral cooperation were signed, appeared in a joint press conference, met with representatives of the Chinese communities from across New Zealand and had an interview with the editor of the largest daily paper, the Herald. He also managed to do a little running and jogging at the Botanic Garden, Mount Victoria and the waterfront when most people were still asleep. The visit was seen as a morale booster to the negotiators on a free trade agreement between the two countries. When asked by the Agenda program host of TV One, I said that the impression I got from the visit is that New Zealand stands a very good chance of becoming the first OECD country to conclude a FTA with China. I would also like to take this opportunity to convey the Premier's special thanks to all the New Zealand friends who have for years stood with us and dedicated to increased understanding and friendship between the two countries.
Ladies and Gentlemen, I chose this subject out of my acute awareness that China, the country I represent here, has undergone tremendous changes in the past twenty years and more thanks to phenomenal economic growth and massive social transformation, and that these changes have made a profound and far-reaching impact in the world.
While most people welcome the changing China as an opportunity, some cite its shortcomings and problems to argue that it is a threat. Ironically, there are plenty of facts and figures to support both views. To the majority, getting used to something that is moving so fast is not always easy. The visual and psychological impact can be disturbing just like a driver seeing a large trailer coming from behind at a high speed.
In fact, what is happening in China today is no more than an ongoing process of national revitalization, something the Chinese have been trying to accomplish for more than a century. As a country that is home to nearly a quarter of humanity and one that was once the No. 1 world power as recent as the 17th century, it is nothing to be surprised.
Last year, with a GDP of 2.2 trillion US dollars, China surpassed France and the United Kingdom to become the world's fourth largest economy. The per capita GDP was 1707 dollars. In 1978 when our reform and opening up program just started, China's GDP was just 210 billion US dollars with only 225 dollars for every man, woman and child in the country. In less than three decades, the size of China's economy grew more than 10 times, which is translated into an average annual growth rate of 9.8%. I remember when I was still a young interpreter in the early 1980s, I was asked to memorize many numbers to show what China was headed to or wanted to achieve in the years ahead. The blueprint drawn by Mr. Deng Xiaoping contained three stages. First, we would quadruple the 1980 GDP by the end of the 20th century (something like 1 trillion US dollars and a per capita level of 800 US dollars). Then we would quadruple the GDP figure again by 2020. And finally, we would turn China into a medium-developed country by the middle of 21st century. Judged by our performance so far, there seems little doubt that we will reach these targets even ahead of the schedule.
But, is it possible that our confidence might be misplaced? Are the conditions that have allowed our economy to grow so fast in the past still available in the future? Can China's resources, energy and environment, which is only fractional of the world's average, sustain such a high growth? Can we always get the things we need and sell the products we want through global trade? Will the international situation allow trade to go unhindered and undisrupted? Can China score well in the worldwide science and technology competition at the time that IPR becomes such a hot issue? Finally, what will China's future society look like and will the chosen development model be able to get us there without any revamping?
These questions have assumed greater urgency by the events in recent years. For example, rising oil prices, together with soaring prices of practically all kinds of raw materials, put China's reputation as the factory of the world on the line. The new restrictions against Chinese exports by the world's most powerful economies also threaten China's ability to finance its reform and modernization drive. Domestically, public debate on issues affecting people's daily life, such as industrial accidents, air and water pollution, food safety, education and health care, rural poverty, underdevelopment in central and western regions, income disparity, corruption and crimes, etc., is going on vigorously. What is obvious is that the people, while urging immediate solutions to the specific problems, want their government to address the overall strategy of development. It is against this backdrop that the Chinese government has proposed the scientific approach to development.
This new approach contains three key elements. The first, of course, is development. Development is of paramount importance for China. We have decided to change approach not because we want to slow down, reverse or even abandon development, but to pursue development in a better, faster and more cost-effective manner. The second is the people-first concept, which more than anything else highlights the difference between the new approach and the conventional one. It is the people, their prosperity, their empowerment and their happiness that justify development in the final analysis. The third element is the concept of harmony, which aims to promote a comprehensive, coordinated and sustainable development.
Nowadays, Western visitors to Shanghai, Shenzhen, and Beijing would be a little reluctant to call China as a third world developing country. But if you travel to central and western China, or just the remote suburbs of those glittering cities, you would not be so hesitant. What you find here is what we call uneven development, which is not uncommon in developing countries. As the world's largest and most populous developing country, one that is undergoing industrialization, urbanization and modernization all the same time, that unevenness in development perhaps is a lot more striking. What is more, the unevenness is not limited to the economic realm but has social and political dimensions. We all know that backward economic conditions often result in weak social fabric and inadequate institutional setup that are essential to economic development, whereas poor enforcement of laws and rules can further hinder economic progress in backward regions. This fact should be well known to the outside world. But there are still some, opinion leaders included, who seem to have overlooked this fact. The mistake they often make is to exaggerate the achievements of China to the neglect of its many difficulties and real problems.
There are legitimate concerns in the West over the way we manage the economy and handle the issue of development. The Chinese government is coming to grips of the problems. Let me now use the latest publications from China to outline for you what we plan to do in the immediate future.
Last month, China's National People's Congress adopted the Eleventh Five-Year Plan for the period from 2006 to 2010. This period is highly critical for China's successful building of "Xiaokang", a moderately prosperous society in all its aspects. This is the period in which China's per capita GDP will go up from 1000 to 3000 dollars, a period that many experts call the golden age of development. But it is also a period in which social unrest is most likely to occur. Thus we make sure that our effort to build a moderately prosperous society in China be guided by the six principles. Namely, there must be steady and fairly rapid economic development; there must be a change in the mode of growth; there must be stronger independent innovation; there must be balanced development between urban and rural areas; there must be harmony in society; and there must be deepening of reform and opening up.
While the five-year plan lays down quite a few targets for economic development, only two are in the form of actual numbers. One is the 7.5% annual growth rate, and the other is the required 20% decrease in energy consumption per unit of GDP. The plan also identifies seven tasks. Namely, building a new socialist countryside, promoting optimization in industrial structure, achieving a better coordinated regional development, building an environmental friendly society based on resource conservation, pressing ahead with reform and opening up, building a stronger nation through science and education, and bringing about a harmonious society. Together, they give you a feeling as to what are on their minds when China's leaders designed this new approach to development. Now, what do they mean to China and the rest of the world?
First, China will stay on the fast track of economic development. Deng Xiaoping's most famous quotation nowadays is one that described development as an absolute principle and as an issue of overriding importance. Just for the sake of creating enough jobs for some 20 million young, the laid-off and migrant farmer-workers a year, China must maintain a growth rate not lower than 6%. At the same time, greater emphasis will be put on technological upgrading, on indigenous R&D, on energy conservation and on innovation.
About the last point, we all know the crucial importance of science and technology to economic development. Yet China's technology progress contributed only 39% of China's growth in the past two decades. It compared rather poorly with Korea's 70%. As Minister of Science Xu Guanhua told me, China will increase that figure to 60% in the coming years. Chinese enterprises must invest more in research, from less than 1% of their sales now to the 3-5% average of the industrial countries.
Second, China will focus more on sorting out long-standing economic and social problems at home through reform and institutional development. The governments at all levels are urged to pay more attention to the everyday needs of the ordinary people, such as jobs, housing, education, health care, particularly those of the vulnerable groups, such as the disabled, the laid-off and the people still living below the poverty line. Rural development affects 800 million farmers, whose well-being holds the key to the country's long-term stability and prosperity. The Chinese government has abolished agricultural tax levied on the farmers since ancient times and decided to substantially increase financing of many long-awaited rural reforms ranging from education to medical services.
Third, China will make a bigger contribution to the world. As a major economic player, China is playing an increasing role in promoting global growth, trade and investment. Last year, China became the world's third largest trader with a volume of 1.42 trillion US dollars. At last year's UN Summit, China pledged 10 billion US dollars in the following three years to help other developing countries in the form of debt forgiveness, tariff reduction and exemption, soft loans and personnel training. At the recently concluded China and Pacific Island States Economic Development and Cooperation Forum, China again provided development assistance to the island countries. With a China that is becoming more prosperous, we will do still more for world peace and common development.
In order to achieve development, we need a peaceful and stable environment globally. That is why China, a permanent member of the UN Security Council, is always dedicated to defusing regional tension, working for peaceful settlement of disputes, striving for common development and addressing the root cause of the various social woes, he lack of development.
One last thing that deserves special mention here. Despite its economic success, China remains a developing country with a per capita GDP ranking way after the 100th place in the world. We still have a very long way to go before we can rank closer behind New Zealand. That makes you a good teacher for us and we shall learn from you for many, many years to come.
Ladies and Gentlemen, thank you for your attention. I am prepared to take up a few questions.