Speech by Premier Wen Jiabao of China at the Opening Ceremony of the Sixth ASEM Finance Ministers' Meeting

26 June 2005

Distinguished Guests,
Ladies and Gentlemen,

I would like to begin by expressing, on behalf of the Chinese Government, our warm congratulations on the opening of the Sixth ASEM Finance Ministers' Meeting (FMM) in Tianjin and our most sincere welcome to all the participants. This first finance ministers' meeting of an enlarged ASEM will be a good opportunity for you to explore strategies for ASEM economic and financial cooperation under the new situation and to discuss the major issues in the world economy. The meeting is anticipated to be fruitful and to produce two documents: a Chairman's Statement of the Sixth ASEM FMM and a Tianjin Initiative on Closer ASEM Economic and Financial Cooperation with a significant influence on advancing closer ASEM economic partnership.

The founding of ASEM is a strategic choice of Asia and Europe to step up exchanges and cooperation under the new international situation. Since the first ASEM meeting in 1996, Asia and Europe have been keen to conduct political dialogue, economic cooperation and scientific, technological and cultural exchanges, which has helped the growth of the new ASEM comprehensive partnership and contributed significantly to world peace and common development. Asia is by far the most dynamic economy in the world while the EU the world's largest developed economy. Their cooperation to mutual benefit has truly broad prospects. The enlarged ASEM, whose member countries have two fifths of the world's population and over half of the world's total GDP, will play an even greater role in world affairs. Since Asia and Europe both face important opportunities and new challenges under the new world situation, we need to strengthen cooperation in all areas to bring into play our respective advantages in a joint effort to surmount difficulties and risks and lift ASEM cooperation to a new high.

Ladies and Gentlemen,

Economic cooperation is the basis of the new ASEM comprehensive partnership. Fiscal and financial cooperation, as an important part of this cooperation, plays a crucial role. Asia and Europe must deepen their financial cooperation in this sector if they are to foster closer economic partnership, achieve win-win results and promote common development. To that end, I would like to make the following five recommendations:

First, strengthen dialogue and coordination on macro-economic policies. It is of great importance for Asian and European countries to regularly exchange economic and policy information through increased dialogue, communication and equal-footed consultation to jointly deal with risks and challenges facing the world economy. To promote sustainable and steady development of the world economy, we need to pool our efforts and adopt responsible macro-economic policies to maintain the stability of the major reserve currencies, curb big fluctuations in oil prices and prevent the rise of trade protectionism in all forms. The Chinese Government proposes to establish an ASEM Contingency Dialogue Mechanism for Emergent Economic and Financial Events within the framework of the ASEM FMM for the purpose of safeguarding economic and financial security.

Second, increase exchanges on development experience. We should have in-depth discussions on development paths and strategies and increase exchanges to share experience in regional integration and success stories in macro-economic regulations and restructuring under open conditions. Later this year, China and the United Kingdom will co-sponsor a "Fiscal Policy and Public Debts Forum" within the framework of the ASEM FMM. All the finance ministers of Asian and European countries and members of their financial communities are most welcome to take part in this Forum.

Third, deepen substantive cooperation in the fiscal and financial sector. We should actively explore and advance fiscal and financial cooperation between Asia and Europe to develop the Asian regional bond market and support the role of the euro in maintaining international financial stability and promoting development so as to enhance the international standing of our two continents in the monetary and financial field. We should also give full scope to the positive role of the ASEM Trust Fund in assisting the underdeveloped members of ASEM in their financial reforms.

Fourth, strengthen technical assistance and financial capacity building. Given the uneven development between Asian and European countries, we should render greater support to the poor countries in the region through vigorous technical assistance so as to promote the realization of the UN Millennium Development Goals. China, the European Commission and Austria will jointly launch an ASEM financial capacity-building project and entrust the Shanghai National Accounting Institute with its implementation.

Fifth, foster an environment for win-win international economic cooperation. We should, through our coordination and cooperation, promote the international community to pay more attention to the interests of the vast number of developing countries by way of substantially writing off their debts, increasing development aid and speeding up technology transfer. We should also facilitate the reform of the international financial and trade systems, promote an early conclusion of the WTO Doha round negotiations and call for innovative thinking in international development so as to establish a sound new international economic order.

Ladies and Gentlemen,

China has achieved sustained and rapid economic growth, markedly enhanced overall national strength and constantly improved people's life since its adoption of the reform and opening-up policy. During the past two years, we took some effective macro-economic measures to address the prominent problems in the economy and the Chinese economy has been in good shape. We will continue to take measures to further tackle the existing problems, with a view to achieving long-term, steady and fast growth of the Chinese economy. China's development largely depends on our own efforts, our own vast domestic market, abundant labor resources and the implementation of the reform and opening-up policy. We are fully confident, capable and resourceful. We can overcome any difficulty and risk on the road ahead and reach our determined magnificent goal of social-economic development. China's development is conducive to the stability and prosperity of our region and peace and development of the whole world, and will not threaten or exert an adverse impact on any country.

Now, I would like to spend several minutes on the issue of RMB exchange rate which has been a focus of attention both at home and abroad. I have three points to make. First, it is the common understanding in the world that every country is entitled to choose the exchange rate mechanism and policy suitable to its own national conditions. Back in the early 1990s, China set its targets and tasks for the reform of RMB exchange rate mechanism. That is, to gradually establish a market-based and well-managed floating exchange rate system so as to keep RMB exchange rate basically stable at a reasonable and balanced level. Over the past decade and more, we have done a lot on the reform of RMB exchange rate mechanism and made important progress. Second, keeping RMB exchange rate basically stable at a reasonable and balanced level is in the interests of economic development not only in China but also in neighboring countries and regions as a whole, and contributes to world financial stability and expansion of trade. This point was well illustrated during the Asian financial crisis in 1997, when the stable RMB helped alleviate the pain on our neighboring countries and regions and contributed to economic and financial stability and development in Asia and the whole world. Third, we must uphold the principles of independent initiative, controllability and gradual progress in pursuing RMB exchange rate reform. By "independent initiative", we mean to independently determine the modality, content and timing of the reform in accordance with China's needs for reform and development. In the exchange rate reform, we should take account of its possible impact on the country's macro-economic stability, economic growth and job market, give consideration to the state of the financial system, the level of financial regulations, resilience of the enterprises and effect on foreign trade and keep an eye on the economic and financial performance of the neighboring countries and regions, and of the world as a whole. By "controllability", we mean to properly manage the changes in RMB exchange rate at the level of macro-regulations. We must push forward the reform but always stay on top of the changes, so as to prevent fluctuations in the financial market and economic instability. By "gradual progress", we mean to push forward the reform in a step-by-step manner. We must take into consideration both the present needs and the future development and guard against undue haste. In short, we need to continue improving the RMB exchange rate forming mechanism and develop an exchange rate system that is more market-oriented and more flexible. However, since this reform involves a wide range of areas and will have a far-reaching impact, it still requires a great deal of preparation to help create an enabling environment for all sides to sustain the possible impacts. Such a responsible attitude and practice of China will contribute to the stability and development of not only Chinese macro-economy but also the economy of the surrounding countries and the larger world.

Ladies and Gentlemen,

There is an old saying in China: "Distance cannot separate true friends who feel so close even when they are thousands of miles apart." China and the other Asian countries are linked by common mountains and rivers and together they created the splendid Asian civilizations. The ancient and beautiful Silk Road is a witness to the Sino-European exchanges over thousands of years. Now, the mutually beneficial cooperation between China and other countries in Asia and Europe is entering a brand new stage. China has become a positive force for the economic development of Asia, Europe and the world as a whole. We will adhere to the road of peaceful development and remain committed to developing vigorous all-round cooperation featuring long-term stability with other countries in Asia and Europe. It is our hope that China and other countries in Asia and Europe will support each other and join hands to move forward.

May I conclude by wishing this ASEM FMM a complete success.

Thank you.