China's Role in the Region and in the World

             --- Speech at Macquarie University

14 December, 2004, Sydney

 

Dr. John Loxton,

Dr. John Sauders,

Other distinguished guests,

Ladies and gentlemen,

   

     It is widely acknowledged that one of the most important changes in the world is the rapid development of China.

     People are watching the growth of China and wondering what kind of role China is going to play in the region and in the world.

As an old Chinese saying goes, history is a mirror for the future. To understand the role of China, it's important to know its history.

China's geographic boundaries were more or less set during the Han Dynasty 2000 years ago. It shows that China has not been a country pursuing expansionist policy. Its political philosophy is based on harmony and good neighborliness.

    In most part of its long history, China was one of the largest economies in the world. In his book Reorient: the Global Economy in the Asian Age, Andre Gunder Frank used extensive research results to show that, between the Great Age of Discovery and the eve of industrialization in the 18^th century, China was the economic center of the world, exporting large volume of silk and porcelains. One of the proofs he used was that, more than 60% of silver, the hard currency at that time, was flowing into China.

     It is a good indication that China's traditional way of relating to the outer world is trading.

     During the 15^th century, a Ming dynasty official called Zheng He took seven voyages into the deep sea. He reached the land of nowadays Malaysia five times and went as far as the eastern shore of African. In the book 1421_THE YEAR CHINA DISCOVERED THE WORLD, the author Galvin Menzies presented many evidence to support his argument that Zheng He came to Australia earlier than Captain Cook.

     According to the record of history, Zheng He's largest fleet had 700 and more ships equipped with then-most-advanced cannons. But all he brought with were greetings from the Emperor and goods for trade.

     Peace and harmony has a very deep root in the Chinese political philosophy and culture and still has a strongly influence on China's foreign policy and its view of the world.

     For China, the theme of the world today is peace and development. The objective of China's foreign policy is: first, to maintain a long-term peaceful external environment for China's reform and development; second, to safeguard regional stability and world peace and to promote the common prosperity of the mankind.

    For the above objective, China has used its influence to promote peace and stability. Our priority is areas surrounding China. For example, we have actively mediated in the Korean Peninsular nuclear issue. We have encouraged reconciliation between Pakistan and India. We have taken part in the reconstruction of Afghanistan. We are also active partner in regional and multilateral security dialogues and cooperation. With regard to the territorial and maritime disputes, we are determined to seek peaceful settlement through negotiations with our neighbors.

    When talking about regional peace, I cannot avoid mentioning the Taiwan issue.

    Taiwan has been a province under China's jurisdiction since the ancient time. Chinese central kingdoms established administration on the island as early as the Han Dynasty 2000 years ago and continuously carried out effective rules. In 1624, the Dutch colonized Taiwan. But 30 years later, it was recovered after a bitter war. In 1895, the Chinese Qing Dynasty lost the war with Japan and was forced to cede Taiwan to Japan. But in 1945, in accordance with the Yalta Agreement and Cairo Declaration, Japan returned all the Chinese territories it occupied, including Taiwan.

     So legally speaking, the issue of Taiwan was resolved in the last century. The current situation in Taiwan was the result of the civil war as the Kuomintang government, which lost in the war, fled to Taiwan in 1949 and maintained a government on the island.

For more than half a century, there has been hostility and heated debate across the strait. But one thing both sides agreed was that, there was but one China and China should unite. The dispute was on which government should represent China.

In 1999, the then leader of Taiwan raised the issue of 'two countries'. In 2002 Chen Shuibian started talking about 'One side, one country'. That signaled his pursuit for Taiwan independence.

    Chen Shuibian's effort to completely detach Taiwan from China is very worrying to the Chinese people. We see it as a serious provocation aimed at splitting the country. It also poses serious threats to peace and stability across the strait. People on both sides of the strait belong to the Chinese nation. We want very much to find a peaceful solution of the issue. To this end, the mainland has shown great sincerity.

   On the other hand, the Chinese nation has a very strong sense of homeland integrity. Looking back at the thousand of years of history of China, losing any part of the land was always regarded as the biggest humiliation and could not be tolerated by the people. So there is in no way China would accept Taiwan independence. From the latest elections in Taiwan, you could see that many people there are not supporting the Taiwan independence policy.

     Like in many of our neighboring countries, the Australian government understands China's concern over the Taiwan issue. We appreciate the Australian Government's commitment to continue the one-China policy and will not support any movement that leads Taiwan to independence.

     Ladies and gentlemen, let me now turn to the modern development of China. To make a long story short, I will use 6 numbers to describe China today.

    "One", China is No.1 in terms of population, with the biggest market potential in the world. With a population of 1.3 billion, it is making unprecedented economic progress by achieving an average growth of more than 9% per year and completed the transition from planned economy to market economy in two decades time.

     "Two", China has the second largest foreign currency reserve which exceeded US$510 by the end of September this year. The UN Conference on Trade and Development concluded that China is the second largest engine for world economic growth, after the United States.

     "Three", China is the third largest importing country in the world. The volume of total amount of imports in 2003 reached US$ 413 billion. The estimate for this year is more than 500 billion.

     "Four", China is the fourth largest exporting country with the volume of total exports reaching US$ 438billion in 2003.

     "Five", China is the fifth biggest investing country. By the end of 2003, there are 7400 and more Chinese enterprises in over 160 countries and regions with a total investment of US$33 billion.

     "Six", China is No.6 in terms of its economic size. In 2003, China's GDP reached US$1.4 trillion. The GDP of 11 days now equals to that of the whole year of 1980.

     Many people are interested to know how China could make such big headways in such a short period of time.

     I think the main reason for China's success is to have found the right path for its development.

Actually, it took China over 100 years to look for a way towards modernization.

    Early in the last century, China worshiped the West. Some scholars proposed complete Westernization and China even tested on monopolized capitalism. In the 1940's, 90% of the wealth of China was in the hands of the Four Big Families.

    Later on, China copied former Soviet Union. In 1950's and 1960's, we introduced the industrial structure and economic management model of the Soviet Union. At that time, even the price of a box of matches was decided by the Political Bureau. But none of these brought modernization in China and the Chinese economy was quite a few times on the verge of bankruptcy.

    Having learnt lessons in the history, China started prudent and realistic reform steps in the late 1970's led by Mr. Deng Xiaoping. Twenty years of reform experience told us that in China, a country with a big population and diversified economic conditions, completely run-away liberal market economy could not solve all the problems. However, administratively controlled plannedeconomy did not work either. So we have designed and gradually developed a market economic structure based on China's own realities.

     Now in China, the market-regulative role is widely applied. According to an Australian economist, market determines 96% of the commodity prices, only 2.6% is government-controlled and 1.3% is regulated. Privately owned sectors make up over 25% of the national economy and over 70% of the tax revenue.

     But the government has not given up its role of macro control. The recent experience of Chinese government to address the over-heatedness of the economy, to curb deflation and prevent financial crisis is a proof that macro regulation and control is highly necessary for the healthy development of the economy.

     China's economy is deeply integrated into the world economy. It is making 40% of the air-conditioner and 50% of televisions and refrigerators produced in the world. 60% of garments 80% of toys are made in China.

     The out flow of Chinese processed commodities has played a very important role in curbing global inflation and in promoting world economic growth. The profit circulation between China and the outside world is working well both for China and for the people of many countries in the world.

     Out of 500 top companies in the world, 400 have set up offices in China. Among the 100 top science companies, 90 have set up research centers in China. They make huge profits through cooperation in China and reinvest big percentage of the profits back in China.

     December 12 is the 3^rd anniversary of China's entry into WTO. During the last 3 years, many changes have taken place in China. The import taxes have been reduced 3 times. The average tariff came down to 10.6%. For example, the automobile tariff was 80-100% before China's WTO membership. Now it came down to about 35% and will further be reduced to 25% in 2006.

     The domestic market is more opened to foreign companies. In Beijing alone, there are already 200 retail supermarkets or shops set up with foreign investment or joint ventures. That stimulated competition and fast up grading of the local market facilities, thus benefiting the customers. The Chinese people are able to buy more diversified products at even lower prices. For example, one can buy a new car at about AU$ 5000, which was unimaginable 3 years ago.

     The biggest change is the people's way of thinking. There is greater awareness of abiding rules and following international practices. There is greater transparency of the laws. There is also stronger sense of protecting the interest of the economic sector and government at all levels are required to open most part of its policy making process for supervision by the public.

     We cannot deny that there are many challenges confronting China. They include narrowing the gap between the east and the west and between the urban and rural sectors, fighting against corruption, upgrading the economic growth pattern, helping the farmers to keep up with the urban growth, tackling the serious energy and resource shortages and the environment consequences.

     The Chinese people and Chinese government are aware of the challenges. Having come this far, we start to realize that achieving only economic growth rate is not enough. It is important to improve the quality of growth. We know that we can't depend on high input and high output model forever. So the Chinese government formulated a new development strategy, namely to build a well-off society in an all-round way. There is more emphasis on science and technology and the concept of Green GDP is introduced. The aim is to narrow the gap between the eastern and western regions and between the urban and the rural sectors, to achieve coordinated economic, political, social and cultural development and to bring harmony between man and nature.

     The reform in China is also touching on the political sectors. As the chief reform architect Mr. Deng Xiaoping said in 1986, without political structure reform, economic structure reform cannot succeed in the end. China has chosen to take incremental reform in the political area. Now, direct elections have been applied in most of the rural areas and the election system reform has started in some coastal cities. The National People's Congress has significantly strengthened its role in legislation and supervision. The people's right to the access of information and media's role of supervision are respected.

     There are important changes in the way people acquire information in China. There are 300 million cell phone users and 87 million internet users. There are about 780 million e-mail messages passing through the internet every week.

     These major changes taking place in the economic and social life will inevitably lead to changes from state-centered policy to social-centered policy. The principle of respecting and safeguarding human rights and protection of legitimate private property is incorporated into the constitution. One profound change in China's political culture is the announcement by the ruling party to pursue "human-centered" policy.

 

     Having said all that, where is China?  What role China is playing and will play in future?

China is still half way on its historic pursuit for modernization. There is a long way to go before this big country and its huge population can all enjoy prosperity.

     The task of China, first and foremost, is to maintain its stability and develop its prosperity. By that, China would have made a quarter of the world stable and a quarter of the world living in prosperity. That, I see, is the biggest contribution China can make to the region and the world. In the mean time, apart from contributing to world economy, China will gradually build up its strength and increase its ability to help maintain world peace and stability.

Ladies and gentlemen,

     When China is working closely with the region and the world, Australia has become our important and indispensable partner. China and Australia have broad common interests in maintaining Asian-Pacific stability. Our two countries have no conflict of fundamental interest as neither of us regards the other side as a threat. We are both determined to fight terrorism and pursue economic prosperity in the region.

     Australia is an important force in Asian-Pacific region. We see Australia as a bridge towards the Western countries and China can also be a window for Australia to approach Asia.

Australia has rich energies and mineral resources, which China needs. Australia, with its political stability, advanced technology, mature financial market, can become China's natural and ideal partner in the fields of energy and mineral resources.

     Of course, our relations go beyond the resource sector. For example, when higher living standard in China is changing the diet of the Chinese people, there is good prospect Australian agricultural export to China. Another example is that Australia's highly developed science, and medical science in particular, can find opportunities for commercial production in China. There is also potential for wider cooperation in education, culture, tourism and sports sectors.

     In November, President Hu Jintao and Premier Wen Jiabao met Prime Minister John Howard respectively in Chile and Laos. Both sides were happy with the progress made in our relations and agreed to make joint efforts to further promote trade and cooperation in all fields.

     China and Australia are working on the feasibility studies of possible bilateral FTA. We are at this moment having the 3^rd round of discussion that is crucial for conclusions for the study. Of course, there are concerns on both sides about the possible impact. But generally speaking, our economies are complementary and FTA should result in a win-win situation.

     That is what I wanted to say today. I hope the world and Australia will view China's development from a positive angle and work together with China to make our region and the world a better place for our peoples.

Thank you.