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Remarks by Ambassador Xu Bu at the Opening Ceremony of the High Level Forum on ASEAN Economic Community and China-ASEAN Cooperation in Production Capacity

(From Chinese Mission to ASEAN)

2015/09/25

H.E. Dr. Lim Hong Hin, DSG of ASEAN for ASEAN Economic Community
Mr. Jia Zhibang, Vice Chairman of China Economic and Social Council
Mr. Achmad Sigit Dwiwahjono, Director General of the Resilience and Development of International Industry Access, Ministry of Industry, Indonesia
Mr. Bachrul Chairi, Director General of International Trade Cooperation, Ministry of Trade, Indonesia
Dato' Sri Prof. Dr. Tahir, Chairman of China Committee, Indonesian Chamber of Commerce and Industry
Ms. Elaine Tan, Executive Director of ASEAN Foundation
Mr. Liu Haosheng, President of Chinese Chamber of Commerce in Indonesia
Excellencies and Distinguished guests,
Ladies and Gentlemen:

Good morning!

Welcome to the High-level Forum on ASEAN Economic Community and China-ASEAN Cooperation in Production Capacity. This forum is jointly held by Mission of China to ASEAN, China Economic and Social Council, ASEAN Foundation as well as Indonesian Chamber of Commerce and Industry. My warm welcome also goes to the participants including ASEAN Secretariat officials, Permanent Representatives of ASEAN countries to ASEAN, Indonesian government officials, businessmen and scholars, as well as government officials, entrepreneurs and scholars from China.

We hope to achieve three goals with this forum: first, to help stakeholders from China better learn about the vision and prospect of ASEAN Economic Community; second, to introduce China's proposals on international cooperation in production capacity; third, to serve as a bridge for China-ASEAN cooperation in production capacity.

Dear friends,

2015 is a very special year for ASEAN. By the end of this year, ASEAN will announce the establishment of ASEAN Communities, namely Political and Security Community, Economic Community and Social and Cultural Community. The target of Economic Community is to forge a single market and production base featuring competitiveness, balanced development and integration with global economy.

This is a grand goal. ASEAN has already made great efforts and achieved positive results, mission accomplished at the rate of 91.5% so far. But it takes a long journey to achieve all the targets. The end of 2015 is definitely not the destination, but a fresh start. Looking ahead, the ASEAN Economic Community will have profound impact on the economic cooperation among the countries in this region and beyond, China included.

China is the largest neighboring country of ASEAN, the first to set up FTA with ASEAN, and the largest trading partner of ASEAN in the past four consecutive years. In 2014, China-ASEAN trading volume exceeded 480 billion USD, with the accumulated mutual investment standing at 120 billion USD. China and ASEAN are working to conclude the negotiation on the upgraded version of China-ASEAN FTA by the end of this year. The targeted trading volume is expected to reach 500 billion USD in 2015 and 1 trillion USD in 2020. The ASEAN Economic Community, with a promising vista, will surly bring enormous opportunities to deeper economic cooperation and trade, especially cooperation in production capacity, between China and ASEAN.

Why should I say so? I would like to share with you the following points.

From the perspective of international industrial development, international cooperation in production capacity and equipment meets the rule of division of labor among industries. All the countries in the world are at different stages of development, while most countries are still in the primary and medium stage of industrialization. The international collaboration in production capacity effectively bridges the supply and demand of different countries, thus expanding global demand accordingly. It also helps to supplement each other with advantages, break the bottleneck of industrial development, upgrade industries, and achieve in-depth integration among low-end, medium level and high-end industrial chains around the globe. In this case, the international cooperation in production capacity could bring about multiple gains with single stroke and achieve mutually beneficial and win-win results.

From the perspective of promoting economic growth, the world economy is still haunted by negative impact of financial crisis and undergoing in-depth readjustment. In order to deal with the economic downward pressure, all countries shall work together toward common development. While developing countries are promoting industrialization and urbanization, developed countries are underlining re-industrialization, which not only generates challenges, but also creates opportunities for win-win collaboration based on complementary advantages. Against this background, international cooperation in production capacity is an ideal solution to boosting economic growth and stemming economic slow-down.

From the perspective of China's development, during the past three decades, China has been learning high and new technologies from developed countries and making its own innovations. China's production capacity has grown immensely, with the output of more than 220 main industrial products such as steel, construction material, non-ferrous metal, automobile, cell phone and PC ranking No. 1 in the world. Now China also owns its special leading production capacities, such as high-speed railway and nuclear energy which are cost-effective, green and environment-friendly. China has so far signed cooperation agreements on production capacity with 15 countries from Asia, Africa, Latin America and Europe. China is also collaborating with developed countries with rich experience and advanced technologies to jointly set up third-party markets.

From the perspective of ASEAN's demand for development, just as China cannot always keep exporting cheap products to the rest of the world, ASEAN will not be satisfied with only exporting primary products. With geographical significance and rich natural resources, ASEAN countries are at various stages of development. Some have a growing middle class population. Others are promoting industrialization and urbanization. The goal of the ASEAN Economic Community is not only to build a huge market with over 600 million people, but also to establish a single production base and new world factory. Production capacity cooperation will provide necessary financing and technologies to reach this goal, help upgrade infrastructure and industrial equipment, and turn the late-mover advantages of ASEAN into drivers for economic growth.

From the perspective of China-ASEAN production capacity cooperation, both sides enjoy geographically promising and frequent economic and trade exchanges, securing a sound basis for production capacity cooperation. Moreover, the two sides share similar but different development stage, and complementary economic structure, which provide valuable conditions for production capacity cooperation. As a matter of fact, such cooperation already started many years ago. For example, China and Singapore jointly established Suzhou Industrial Park in China in 1994, which has become a role model of China-ASEAN production capacity cooperation. In 2006, Thai-China Industrial Park in Rayong of Thailand was built, attracting over 60 Chinese enterprises to make investment there. The Industrial Park now has a production value of 3.75 billion USD and has contributed 70 million USD in tax to the local government. The "Two Countries, Twin Parks" initiatives between China and Malaysia are going on well. Some companies have already started their businesses there.

In the new situation, China-ASEAN production capacity cooperation serves each other' s demand for development, goes along with each other's development strategies and integrates the interests of both sides. China has come up with the initiative to build the Silk Road Economic Belt and the 21st Century Maritime Silk Road, and to promote global cooperation on production capacity. We believe these initiatives could help further open up our country and forge a more balanced and inclusive global industrial chains. This in turn could pool the comparative strengths of all countries and foster a global community of common interests and development for win-win inclusive and common progress. China will uphold the following principles in its cooperation with ASEAN countries in production capacity.

First, cooperation shall comply with market rules. Such a cooperation model should be formulated on the basis of favorable interaction among business, society and government sectors, featuring centrality of enterprises, business operation, social participation, government support and expanded financing channels such as funds, credit loans and insurance. The Asian Infrastructure Investment Bank jointly promoted and established by China and ASEAN countries and the Silk Road Fund proposed by China will provide strong financing support to China-ASEAN cooperation in production capacity.

Second, cooperation shall be demand-oriented. The cooperation shall be conducted to meet the demands of ASEAN countries and align with their economic development plans and regional development blueprints such as the ASEAN Economic Community Vision 2025 and the Master Plan on ASEAN Connectivity. On the basis of cooperation in the fields of logistics, power generation, information infrastructure, multiple models of cooperation such as joint venture, partnership, PPP and franchise operation could be applied to the specific conditions of each case.

Third, cooperation shall be green. Social responsibility, environmental protection and capacity building shall be integral parts of the cooperation. Cooperation projects shall attach importance to energy saving, emission reduction, technology transfer and training to help build better local communities. Chinese enterprises shall take local employment and procurement shall into full consideration during construction of projects.

Fourth, cooperation shall be open and inclusive. China-ASEAN cooperation in production capacity is not exclusive. We welcome developed countries such as the United States, Japan and the European Union to join us to promote international production capacity cooperation on high-end and new technologies, mobilize global resources at a larger scale to revitalize the world economy.

Dear friends,

On the occasion of the 17th ASEAN Summit in Hanoi, Vietnam on 28 October 2010, the Master Plan on ASEAN Connectivity was adopted, and two flagship projects of land transport infrastructure projects were especially recommended. One of them was the Singapore-Kunming Rail Link. Actually, China, the Laos and Thailand are having discussions about building a rail link among them. Just imagine, if China's tourists can go directly to Singapore from Kunming via Vientiane, Bangkok and Kuala Lumpur, how convenient it would be and what a blessing it would be not only for the tourism but for the people-to-people exchanges and the related industrial cooperation among the countries along this rail link. Let's work for the day to come sooner, rather than later.

Thank you!

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