Speech delivered at the "East Asia Investment Forum" by Wu Jianmin
Bright Prospect of Investment Cooperation in East Asia
Speech at East Asia Investment Forum
(July 2nd, 2005)
President of China Foreign Affairs University
Mr. Chairman, Ladies and Gentlemen:
East Asia Investment Forum convenes here at a good timing and bears great significance, because:
First, East Asia is at the eve of dramatic change and development; second, East Asia investment cooperation is, under the current situation, one with the greatest potential, broadest prospect and most profound influence.
To boost East Asia investment cooperation, the government, the enterprise, the academia and the media need to cooperate with each other to create synergy， hence the unprecedented East Asia prosperity.
Now, I would like to expound my views as follows:
- East Asia is at the eve of dramatic change and development
Looking back in history, we find it fair to claim that East Asia is in its prime since over a century ago. Still, I would argue that great changes and development are around the corner, because:
- East Asia is bathed in peace
Peace is the prerequisite for development. East Asia was ravaged by the turmoil of war in most of the 20th century. Not until the 1980s, when the shadow of war moved out of the region, did people in East Asia begin to develop themselves in peace.
- East Asian countries are striding on a road to development suited to their national conditions.
East Asia remains to be the region with the fastest economic growth in the world in the past 3 decades. The average growth rate in East Asian economy is around twice that in the world economy, which has demonstrated that East Asian countries have found the road to development suited to their national conditions.
- East Asia will be a highlight of world economic growth in the coming 3 decades.
East Asia, in comparison with NAFTA and EU, bears the greatest potential in economic development.
NAFTA boasts an area of 21 million square kilometers, a population of 400 million and the aggregate GDP of USD 11 trillion. As to the EU, the area is 4 million square kilometers, the population is 450 million and the aggregate GDP is also around USD 11trillion. In comparison, the 13 countries in East Asia have a total area of 15 million, a population of 2 billion, and an aggregate GDP of around USD 7 billion. Economists of the world share the view that East Asia will be the region with the fastest economic growth in the coming 30 years with the annual average growth rate about 2% higher than that of the world. Also, the population in East Asia is 5 times that in NAFTA and 4 times that in the EU. It is therefore no doubt that the development potential of East Asia is beyond comparison for the other two regions.
Based on the three judgment, we draw a conclusion: if economy in East Asia in the past 30 years borders on substantial growth, then, looking into the future, we foresee greater changes, progress and prosperity, of which the current achievements are but a prelude.
- East Asia Investment Cooperation: greatest potential, broadest prospect, and most profound influence
- Development Trend of East Asia Economic Cooperation Calls for Investment Cooperation.
East Asia economic cooperation made great headways in the past 3 decades, especially in intra-regional trade. In 2004, the intra-regional trade volume of East Asia accounted for 54% of its total foreign trade volume, while that of the EU was 64%, and that of NAFTA 46%. It is worth noting, at this point, that the proportion of intra-regional trade volume to the total foreign trade volume rose 20% since 1980. Theses figures demonstrate trade cooperation among East Asian nations have taken up considerable scale and depth.
Experience in regional development shows the timing for large-scale investment cooperation is ripe when regional trade cooperation attains a certain scale, nations maintain rapid momentum of economic development, and intra-regional economies show strong complementarity. So is the current situation in East Asia. Though the 13 nations in East Asia are apparently diversified in economic development level, such diversity reflects in turn the strong complementarity of East Asian economies, therefore favorable for investment cooperation.
- East Asia Investment Cooperation: Money in One Hand and Investment Demand in the Other.
Two questions must be answered when the topic of investment cooperation is picked up: “is there money?" and “is there demand?"
East Asia gives a positive answer to both questions.
First, we have the money.
Foreign exchange reserve of the 13 nations in East Asia keeps a hefty number of USD 240 million, roughly 2/3 of the total volume of global foreign exchange reserve. Most of this sum of money is deposited in the US and other western countries. Besides, large amount of capital is available among the public. In China, for instance, private capital worth of 2.5 trillion yuan (or USD300 billion) flows in the Changjiang River Delta. Private capital flowing in Guangdong Province is 1.7 trillion yuan (or USD 200 billion). Cases are similar in Japan, Korea and ASEAN countries.
Next, there is demand.
East Asian countries cry for substantial amount of capital for infrastructure development. Economists assess that in the coming 5 years, East Asian countries need at least USD1 trillion for infrastructure development, with an annual average amount of USD200 billion. Many ASEAN countries abound in natural resources. What they are lacking are capital and infrastructure. Provided part of the capital available in East Asia is directed to these regions, a win-win result of common prosperity will take shape.
- Political Will as a Prerequisite for Investment Cooperation Has Been Generated.
On November 29th 2004, “10+3" leaders reached consensus in Vientiane, setting as its long-term goal the establishment of an East Asia Community. This decision has far-reaching influence. It indicates that ASEAN+3 countries have realized that deepening East Asia economic integration serves interests of all parties. Though building an East Asia Community is sure to take a long period of time, as the ramifications of investment cooperation reach far and wide, it will extend common grounds of East Asian countries and lay solid foundation for East Asia Community building, thus fueling East Asia Community development and contributing to common prosperity.
- East Asia Investment Cooperation Requires Synergy from the Government, the Business, the Academia and the Media
- It is necessary to be aware that East Asia investment cooperation bears huge potential.
As coverage on East Asia investment cooperation potential is very limited in media of all East Asian countries, people are not very much aware of the unprecedented opportunities in East Asia investment cooperation. To capitalize on opportunities, it is first of all important to understand what kind of opportunity it is, or all is only hollow talking.
- The Government shall provide necessary framework for East Asia investment cooperation.
Investment cooperation goes further than trade cooperation, in which government role is essential, in that:
First, to make investment cooperation effective and orderly, a legal framework is needed to guide and protect investors with its provisions, as well as to check and fight against illegal behaviors in accordance with law. Such a framework, however, comes by through bilateral and multilateral negotiations of East Asian governments.
Second, necessary channels and mechanism shall be established. As we have mentioned before, Asia worries no money nor investment demand. Therefore, what we want are necessary channels and mechanism to satisfy investment demands of East Asia with money of the region, so that capital available is directed into places it is needed.
Third, the government needs to initiate major projects, for instance, the Pan-Asia railway and the Pan-Asia expressway, to push forward East Asia investment cooperation. The role of transportation is indispensable to further intensify economic cooperation. As is the common sense already, “where there is a way, there is affluence." If Pan-Asia railway and expressway projects can be completed in a relatively short period of time, deepening East Asia economic cooperation shall be given more momentum.
- Enterprises shall grasp opportunities.
China is at a new stage of opening-up, with the landmark of the “going-global" strategy advocated by the Central Government. Up to now, Chinese merchandize, service, and tourist have gone out of the China, while capital is largely held back. In fact, not only the return on capital investment is quite high, but it boosts equipment, technology and labor export, and strengthen the interdependence between the investor and the recipient for a win-win result. Enterprises shall repent in case such opportunities slip away simply because they are unaware or do not cherish.
- Diplomatic resources shall be put to active use for investment cooperation.
One senior official of our Central Government once said, “Diplomacy needs the least and yields the most." This is a very fair judgment, considering that most of the public are yet to understand fully the value of diplomatic resources, especially in foreign investment cooperation. Our enterprises and capital are ambitious to go global, yet this ambition is checked as we lack understanding of foreign investment environment, laws, local economic development, comparative advantages and disadvantages, and even key figures of the local economy. In such cases diplomatic resources can be deployed to effectively settle those problems.
Ladies and gentlemen,
This Investment Forum locates itself in Weihai city of Shandong Province. Rather than a random choice, this location reveals the economic growth prospect of Shandong Province under the farsighted leadership. Ever since its reform and opening up, Shandong develops fast with a sound momentum. Making use of its geographical advantages, Shandong has conducted fruitful cooperation with North East Asian countries. I am convinced, at the eve of East Asia dramatic change and progress, that Shandong Province will avail itself of this opportune moment to intensify cooperation with East Asian countries based on the existing advantages, so as to contribute to a better Shandong, and the prosperity and development of East Asia as well!
Finally, I extend my best wishes for a most successful East Asia Investment Forum!