HE Ambassador Zhang Keyuan attended the Forum for Business Education Research & Development organized by the University of Malta on 28th Sept 2011 and delivered a speech titled 'China: A Road of Peaceful Development', the full text of which is as follows: 

Dr. Ernest Azzopardi,
Hon. Karmenu Vella,
Ladies and Gentlemen,

I would firstly thank the organizer of the Forum, for providing me an opportunity to talk about China on the eve of China's 62nd Anniversary which falls just two days later on Oct 1. I very much appreciate the forum's interest in the development of the Chinese economy.

The Chinese economy has gained a wide attention in last few years especially since 2008, in the background of the world economic crisis. After three decades of double-digit growth, the longest in modern history, China has become world's second largest economy. In 2010, China's economic output reached USD 6.27 trillion, shared 9.3% of the world's total. China has achieved a historic transformation from a rigid, highly centralized and planned economy, or as some economists call it, a command economy, to a dynamic socialist market economy.

So is there any recipe for it? What does it mean to the world? And where is China going next? I believe these three questions contribute to my topic today: a road of peaceful development.

First, what's the recipe for the rapid and long economic growth in China?

I think there is one simple yet open formula, which is, China has found a development model well suited to its national conditions.

To understand this model, let's look at three key elements: independence, openness and cooperation.

- 'Independence'. As a country with a huge population, China can in no way rely on others in pursuing development. We must first and foremost focus on economic growth and social development through our own efforts. China believes that it can effectively participate in international division of labor, and promote mutually beneficial cooperation with other countries, only by keeping her own feet on solid ground. For example, the nation needs 500 million tons of grain, 40 million tons of vegetable oil and 82 million tons of meet annually. China has managed to realize self sufficient in grain supply and satisfy 20% of the world's population with just 7.9% of the world's farmland and 6.5% of world's fresh water. Without such independence in food supply, no country could feed China.

- 'Openness'. Initiated in late 1970s, China carries out a policy of domestic reform and open-up to the outside world. It takes an active part in economic globalization by joining the World Trade Organization. To honor its commitments to WTO, China opened its market and reduced its total tariff rate from 15.3% to 9.8%, and abolished most non-tariff measures. As the world's number one exporter and number two importer, 60% of the economic growth of China has been driven by trade. Interwoven its economic interests with more than 170 countries and regions, China has a growing stake in world and regional peace and stability.

- 'Cooperation'. China sees cooperation as an appropriate way to pursue peace, promote development and settle disputes. In this global village, we believe each country should draw on others' merits to offset its own weakness through fair competition, seeking opportunities for cooperation, expanding areas of cooperation, and creating win-win situation for everybody. China has maintained business and trade ties with 163 countries and regions. It has signed 10 free-trade-zone agreements, 129 bilateral investment treaties and 96 double taxation agreements with its trading partners. To promote common development and prosperity in the Asia-Pacific region, China has made a constructive proposal of "shelving disputes and seeking joint development" in the South China Sea, East China Sea and the surrounding areas. China wants to make sure that its own development and the development of other countries are mutually reinforcing, thus promoting the common prosperity of all countries.

Ladies and gentlemen,

Now we come to the second question: what does China's development mean to the world? The answer is mutual-beneficial.

Firstly, the world economy has benefited a stable development. China's import is USD 750 billion every year, and created over 14 million jobs for those exporting countries. As the leading global exporter, China's affordable products have helped improve people's living all over the world. After the international financial crisis in 2008, China took effective steps to restore economic stability and growth at home while contributed to the global revival by 50% in 2009 and 25% in 2010, according to the statistics of the World Bank, making it the leading engine of the global economy for two years. Since Europe's government debt crisis, instead of selling its euro assets, China has been buying bonds of several EU members to assist their efforts of recovery.

Secondly, the world economy has benefited a sustainable development. Over the past decade, foreign-funded companies in China have remitted a total of USD 262 billion of profits, with an annual increase of 30%. On the other hand, China's investment in other countries (ODI) reached $317 billion in 2010, overtook Japan and the United Kingdom to become the fifth-largest investor globally, generating local economic growth and jobs. China has also grant economic aid of RMB 256 billion to other developing countries, reduced and canceled debts incurred by 50 heavily indebted poor countries and least-developed countries. China has introduced zero tariff treatment to all least-developed countries.

Then, the third question, where is China going next?

Ladies and gentlemen,

China will be much stronger even at a lower growth rate from now on, yet instead of all positive developments, China will face huge challenges and it will remain a subtle big power for years to come. Let me give you a few facts.

China has a large population yet a weak economic base, there are well developed cities such as Beijing and Shanghai in the coastal areas while there are many more under developed poor regions in the west of the country, with 135 million Chinese still living with less than a dollar per day, 10 million without electricity.

Although China is the world 2nd largest economy, its per capita GDP in 2010 was only about USD 4,400, ranking around the 100th place in the world, about 50 places lower than that of Malta. For all its huge manufacturing capacity, China is still at the lower end of the value chain. Statistics show that China's energy intensity is 3 to 4 times that of the international average. So China still has a lot to do to raise the quality and efficiency of its economy.

The scale and magnitude of the difficulties and problems involved in China's modernization are unprecedented in today's world and rare in human history. Again I would say China will remain a developing country and a gentle giant for a long time to come.

With this broad picture in mind and in a forward looking manner, China adopted the 12th Five Year Plan in March this year, which sends out clear message on how China will go next. The key phrase in the new plan is, "a balanced, inclusive, comprehensive and green development".

1."Balanced" means China must upgrade its growth model and economic structure. It has set up a target annual growth rate of 7% in the next 5 years, instead of double digit growth over the past 3 decades. It is shifting to a slower economy that saves more energy, emits less green house gases, and maintain a more efficient and sustainable growth. The plan encourages more domestic demand and promotes balanced growth driven by consumption, investment and exports. The new blueprint will strengthen agriculture, increase the efficiency and competence of manufacture and give priority to emerging industries and the service sector. The plan also seeks coordinated, balanced development across urban and rural areas of China.

2. "Inclusive" means to make sure that all Chinese share the benefits of development. The government will allocate more taxpayers' money in social security, such as affordable housing and financial assistance for the poor, higher minimum wage, medical care, retirement pensions, and facilities for elders. Such steps not only enhance people's living, but also increase domestic demands which will in turn keep a balanced economy.

3. "Comprehensive", the government wants to ensure progress on every front, be it economic or social, political or cultural. It will stay committed to the rule of law, improve socialist democracy, guarantee government accountability, subject officials to scrutiny by the general public, encourage people's participation in state affairs as well as economic and cultural affairs. We will cherish and carry on with the political reform which has gone hand-in-hand with economic changes during the past 30 years.

4. "Green", the new plan stresses the need to reduce environmental costs of development. According to the plan, China has set bold targets in the next five years to raise the share of non fossil fuels and renewable energy in primary energy consumption to 11.4%; reduce energy and carbon dioxide intensities by 16% and 17% respectively; Cut the discharge of main pollutants by 8-10%; and increase forest stock by 600 million cubic metres and forest coverage over the country to 21%.

The above are main items of the plan and according to my own experience, the targets will be met, since this has been the case for most of the time.

Ladies and gentlemen,

On a separate note, here I would also like to touch upon the economic aspect of the excellent bilateral relations between China and Malta.

To my great satisfaction, the two-way trade between China and Malta in 2010 topped 179 million, up by 45% than the year before, and it reached 131.8 million in the first 7 month this year with Maltese exports to China increased to 40 million, an increase of 70% to the same period last year. In the context of a global economic recession, the remarkable growth between our two countries underlines a strong motivation for cooperation as well as the genuine efforts and contribution by the Maltese business circle.

Nevertheless, such volume remains a miserable small proportion in both China and Malta's total foreign trade. There is still large potential for us to explore. There are positive developments, such as, the Cisk beer won gold medals in a competition in Shenzhen and Farson gradually started its business in China, an importer from China wants to buy large volume of Maltese wines, the HSBC here in Malta is going to provide direct settlement in RMB to facilitate trade between the two countries, and the Maltese business circle established Maltese-Chinese Chamber of Commerce. On the other side of the coin, 175 China made King Long buses with EU-V emission standard have been introduced into Malta public transport system. The outlook is promising, but it requires the vision and collaborated efforts from us all.

Ladies and gentlemen,

China's development and transformation has been new to the world. There has been no historical parallel to the road China has been taking. The Chinese government just issued a white paper on "China's Peaceful Development", once again declared its national commitment to peaceful development. Looking ahead, I believe, as history has proved, that China's development is a blessing and opportunity for the whole world and it will remain a friendly, peaceful member of the world community.

Thank you.