Scientific and Sustainable Approach to Development and China's Economy in the 21st Century

 Special Message by H.E. Mr. Huang Ju, Vice Premier of the State Council of the People's Republic of China at the 2005 Annual Meeting of the World Economic Forum

(Davos, 29 January 2005)

Mr. President,

Ladies and Gentlemen,

Good morning. The Annual Meeting of the World Economic Forum 2005 has brought many distinguished personages and enlivened this snow-clad mountain resort of Davos. I feel honored to have the opportunity to be here with you and deliver a special message to this august assembly. I'd like to extend, on behalf of the Chinese Government and in my own name, warm congratulations on the successful opening of the meeting.

It is the shared wish of all peoples and a common responsibility for all countries to build a better and prosperous world through cooperation and development. I fully agree with the theme chosen for this meeting "take responsibility for tough choices" and wish to share with you some of my observations.

Our world is undergoing profound changes. Peace and development remain the theme of our times. A generally peaceful international environment provides favorable conditions for economic development. The fast advancing science and technology, nurturing new breakthroughs, have expanded the horizon of mankind and their ability to address the micro and macro problems of the world, presenting a new vista for development. Deepening economic globalization is accelerating the global movement of productive factors and industrial relocation, stimulating international economic and technical cooperation and facilitating worldwide flow of goods and resources as well as their rational distribution. At the same time, factors unfavorable for peace and development still exit. Local wars and conflicts keep cropping up. Terrorism, arms proliferation, epidemics and other non-traditional security issues have become more acute. Devastating natural disasters pose a grave threat to the survival and development of mankind. The disparity between the North and South grows further, worsened by new trade barriers and protectionism. Energy and other natural resources consumption is rising rapidly, with serious ecological and environmental implications.

At this time of opportunities and challenges, we should work together to explore the best way to development and seek solution to difficult problems. We should adapt ourselves to the changing times and strengthen cooperation in our common endeavors to build lasting peace and greater prosperity in the world. China strongly supports and actively participates in international cooperation for economic and social development, and thus calls upon the international community to make unremitting efforts in the following aspects:

First, enhancing international cooperation in the economic, technological and other fields. More exchanges in terms of capital, advanced technology, managerial expertise and human resources are of special significance in promoting all economies as such exchanges and cooperation help them learn from one another, share experience, bring their advantages into play and optimize the allocation of global resources. Countries and regions should further open their markets, ease restrictions on technology export, press ahead with trade liberalization and investment facilitation and remove trade barriers of all forms. The international community should join hands in responding to security, natural disasters and other challenges.

Second, establishing a resource-conserving and circular economy. The history of human development shows that development at the expense of resources and environment would end up the punishment of human race and impediment to development. For the sake of a better world and our future generations, we should choose a road to development driven by science and technology, that is economically viable, resource conserving and environmentally sound. We should encourage sustainable production, and consumption pattern as part of our effort to build a resource conserving economy and society. We should formulate plans for economic and social development based on the sustainability of nature while endeavoring to protect the environment and ecosystem by putting an end to destructive activities to our nature.

Third, working toward a just and equitable new international economic order. It is necessary to facilitate multilateral and bilateral cooperation in trade and promote regional economic cooperation. We need to make progress in the Doha round of trade negotiations and attain its objective as a "round for development". North-South dialogue should be promoted on the basis of mutual benefit and equal footing. The interests of developing countries should be taken into full account. Diversities should be respected and democracy in international relations and diverse development models upheld so that all countries, developing ones in particular, can benefit from globalization. In order to create an enabling environment for developing countries, we need to reform international economic, trade and financial systems.

Fourth, adopting a more proactive attitude to help developing countries speed up their development. It is the responsibility of the international community and the requirement of sustained development of the world economy to help developing countries develop themselves and close the widening gap between the North and South. Developing countries shoulder the primary responsibility in this regard, but developed countries have their own responsibility and must honor their commitment, namely, reducing debts and increasing official development assistance, helping them with human resources development and scientific and technological innovation, and tap the potential of domestic market with a view to building their capacity for self-development, taking effective measures to minimize the risks brought about by globalization so as to achieve common development and common prosperity.

China's economy is an important topic of this year's forum. I would like to take this opportunity to brief you on this topic.

Since reform and opening-up, China has entered a period of rapid development, huge progress and profound transformation unprecedented in history. From 1979 to 2003, China registered a 9.4% annual growth rate for its national economy, 7% for people's consumption level and 16% for total import and export volume. China has become one of the fastest growing countries in the world. In 2003, the per capita GDP of China, a country of 1.3 billion people, exceeded US$ 1,000 for the first time and its people have on the whole been able to live a moderately comfortable life. To address the outstanding problems in the national economy, the Chinese Government had taken a series of macro-control measures starting from the second half of 2003, which have yielded positive results within a short period. Some unhealthy and unstable factors in the economic performance have been contained and the national economy has maintained a momentum of stable and relatively fast development. China's GDP in 2004 is US$ 1.65 trillion, a 9.5% year-on-year growth, and its total import and export volume to exceed US$ 1.1547 trillion, rising from the fourth place in 2003 to the third in the world. The proportion of Chinese economy in the global economic aggregates has increased from 1% in 1978 to 4% and the proportion of foreign trade volume from less than 1% to 6%.

The sustained rapid development of China's economy is attributable to the following factors: the government's adherence to economic development as the central task, and solution to the problems on our way forward and to building socialist market economy as the direction of reform; our relentless efforts for institutional innovation, which has lent a strong impetus to socio-economic development; our policies of "inviting in" and "going out" and active participation in international economic and technical cooperation and competition in a bid to make full use of both domestic and foreign markets and resources; our recognition of the basic role of market in allocating resources and our application of macro-control measures by economic and legal means.

The first two decades of this century is a period of important strategic opportunities for China's socio-economic development. In the next decade and more, we will strive to seize the opportunity and concentrate on building a moderately prosperous society, so that in 2020 China's GDP will reach US$ 4 trillion, quadrupling that of 2000, and per capita GDP will reach US$ 3,000. By that time, China will be more developed economically, with an improved democracy system, advanced science and education and a flourishing culture, its people enjoying a better life in a harmonious society.

The jump from US$ 1,000 to 3,000 in per capita GDP will be a critical stage in China's modernization drive and an important period of profound changes in socio-economic structure. The experiences of many other countries have shown two possible consequences of this stage. One is constant socio-economic development and success in industrialization and modernization thanks to the right strategies and policies, and the other is marked by polarization between the rich and the poor, high unemployment rate, widening regional and urban-rural gap, acute social problems and ecological degradation as a result of wrong strategies and policies. In such circumstances, socio-economic development will stagnate and social disturbances and setbacks may occur. To address the possible contradictions and problems in the process of development, the Chinese Government has drawn up policies and measures, the most fundamental of which is to follow a scientific concept of development and apply this concept to guide our socio-economic development.

Our scientific and sustainable approach to development includes the following main points. First, adopt a human-centered development strategy, bear in mind people's fundamental interests in the course of development. We will try to meet people's growing material and cultural needs, and bring benefits of development to all people. Second, take economic development as our central task and promote economic, political and cultural advancement in an all-round way to achieve comprehensive socio-economic development. Third, balance urban-rural development, regional development, socio-economic development, harmonious development of man and nature and domestic development and opening-up. Fourth, coordinate economic development with population growth, resource availability and environmental protection and stick to a road of sustainable development consistent with the characteristics of a modern society, i.e. high productivity, prosperity and good ecological environment. Implementation of the above-mentioned scientific and sustainable approach to development aiming at the comprehensive, coordinated and sustainable socio-economic development calls for the following policies and measures, which we intend to adopt:

First, improve industrial structure and speed up the change of economic growth mode. Shortage of energy and resources and poor environmental sustainability are major constraints on China's economic growth and the Chinese Government has attached great importance to these problems. We will keep to the road of new-type industrialization, optimize and upgrade industrial structure so as to put in place an industrial pattern whereby the role of science and technology can be given full play, consumption of energy and resources reduced and environmental pollution checked. We will take more effective measures to reverse the situation of high energy and resource consumption, high pollution and comparatively low productivity and improve the quality and cost-effectiveness of economic growth. We will put resource saving before resource exploitation and rely on science and technology for environmental protection and pollution treatment. We will work hard to develop circular economy and improve the efficiency of resource consumption. We will also promote the public awareness in this regard and foster a production pattern and consumption attitudes beneficial to resource conservation and environmental protection with a view to building a resource saving and eco-friendly society.

Second, push forward economic restructuring, set up and improve institutional guarantees for comprehensive, balanced and sustainable development. The socialist market economy system has been basically built in China but is far from perfect. The growth of productive forces is still confronted with many institutional obstacles. Adhering to the direction of socialist market economy in our reform, we intend to accelerate institutional innovation, mobilize all sectors of society and inject new vigor to socio-economic development. We will take the following actions: step up reforms in state-owned enterprises (SOEs) and readjust the distribution and structure of state-owned sector so as to boost its growth; improve laws, regulations and relevant policies to encourage, support and guide the development of non-public sectors; continue to deepen the reforms of fiscal, taxation, financial and investment systems and speed up the development of the market of such essential factors as capital, labor force and technology in order to optimize resource allocation; accelerate the reform of administrative system, further transform the functions of the government, reduce the government's intervention in micro economic activities, and enable the government to fully perform its functions of economic regulation, market oversight, administration and public services; and focus on improving the macro regulatory system and adopt more economic and legal means to make our regulations more forward-looking, better focused and more effective.

Third, open up wider and set up a more open economic system. Adapting to economic globalization, we will take part in international cooperation and competition on a wider scope and to a greater extent. China will, as always, honor its commitments on its accession to the World Trade Organization, further improve its economic laws and regulations and open up more areas. We will continue to improve investment environment, improve our legal system, enforce laws and regulations, and improve services and enhance efficiency with a view to creating favorable environment for foreign investment. The Chinese Government welcomes and encourages foreign investment in high-tech industries, modern agriculture, modern services, environment-friendly industries and infrastructure. We wish to see more foreign participation in the development of China's west, revitalization of old industrial bases in northeast China, and reform and reorganization of SOEs, as well as the establishment by multinationals of R&D centers, procurement centers, production and manufacturing bases and regional headquarters in China. All enterprises around the world can realize their great ambitions in China, thanks to its social stability, vast domestic market, abundant labor resources, and ever-improving investment environment.

Fourth, stick to human-centered development and endeavor to build a harmonious socialist society. The important experience in China's modernization drive is that the government should try to satisfy the need of the people in all its endeavors and maintain harmony and stability. We will spare no efforts to create more job opportunities and improve the social security network so that our people can live and work in tranquility and contentment. We will provide more financial and policy support to rural areas and western regions of China and gradually narrow the gap between the urban and rural areas and between different regions. We will further speed up the development of education, culture, health and other undertakings so as to better meet the demands of the people. We will continue to properly handle the relations between reform, development and stability in order to adapt the progress of reform and growth speed to the sustainability of the population and press ahead with reform and development in stability.

In the 21st century, China faces more opportunities than challenges in its economic development on the whole. The international environment is rather favorable to China's development, and the domestic market is playing a stronger role in boosting economic growth. The mechanism for enterprises' self-development is taking shape and we have already built some material and technological foundation. All these constitute important forces propelling the sustained and rapid growth of China's economy. In the course of building a moderately prosperous society in an all-round way and accelerating our modernization drive, we will still encounter various difficulties and challenges. However, we have the resolve and capability to overcome difficulties and realize our set goals. We have every confidence in the future of China.

Mr. President,

Ladies and Gentlemen,

In the circumstances of faster economic globalization and greater interdependence of all economies, China cannot develop itself in seclusion, and the world cannot develop without China's development. A more open and prosperous China will not only benefit its 1.3 billion people, but also provide considerable investment opportunities and vast market for other countries, serving as a powerful engine for world economic growth. In 2003 China became the world's third largest importer. In 2004 China's imports totaled US$ 560 billion. China's imports will continue to grow with our sustained and rapid development and constantly rising economic aggregates. The Chinese people love peace and need peace. China adheres to a road of peace, cooperation and development, determined to develop itself through maintaining world peace and promote world peace through its own development. China's development will by no means pose a threat to other countries. This is our set policy.

The World Economic Forum, a non-governmental, high-level, multi-sector and influential organization, has played a positive role in promoting exchanges and cooperation between the Chinese Government and enterprises and their foreign counterparts. Over the past 25 years since the World Economic Forum and China forged cooperative relations, our cooperation has kept expanding and deepening. In recent years, the World Economic Forum has paid increasing attention to China's reform and development and enhanced its cooperation with China, which the Chinese Government highly appreciates. We support the World Economic Forum's continuing role and stand ready to expand our cooperation with the Forum.

Mr. President,

Ladies and Gentlemen,

The Earth is a common home of us all. We are all interdependent, with our interests linked. Let's join hands to work for a more prosperous world, for lasting peace and a better future for mankind.

Thank you.