(6th December, 2012, Jakarta)

Excellency Ambassador Yuri Thamrin,
Excellency Ambassador Soemadi Brotodiningrat,
Dear Colleagues, Ladies and Gentlemen,

Good morning! Selemat bagi!

I am delighted to be back in Indonesia, a beautiful country and the largest archipelago sat between the Pacific and the Indian Oceans, situated between North and South parts of the planet. Having served in the Chinese Embassy in Jakarta in the early 1990s -- my first foreign posting more than two decades ago, I am truly impressed to see the great changes taken place, thanks in no small part to the regional economic integration process. And that is exactly the course championed by APEC.

The theme of this session is "Reflecting for the future"; the topic of my presentation is about the Regional Economic Integration in the Asia Pacific. I am happy to share with you my views. My remarks are not an official statement, for one thing, I don't want to bore you all with my Chinglish.

I will first touch on the regional economic integration issue in the context of the world economic landscape. Then some words on APEC's future -- or near future, to be more precise.

Let me start with the economic situation.

It is not very good. And the prospect is uncertain.

Four years have passed since the outbreak of the financial crisis. Yet the recovery is slow and fragile. And the global economy is still at the risk of a double-dip. European sovereign debt crisis has become chronic; U.S. is struggling with fiscal cliff. What's more, global trade growth rate dropped significantly, and trade protectionism is on the rise.

Then how about Asia-Pacific – the region we all live in?

It is doing relatively well. Despite the serious challenges such as global financial turmoil and shrinking global demand, the Asia-Pacific region on the whole has managed to maintain the growth momentum. It is an important engine for the world economy; viewed as the most dynamic region in the world.

Regional economic cooperation is high on the agenda. One prominent feature is the expansion of free trade arrangements: ASEAN Economic Community, 10+1, 10+3, 10+6, and of course TPP. Most recently, the launching of China-Japan-ROK free trade talks and the Regional Comprehensive Economic Partnership (RCEP).

Here comes the question: Why so many and why such an enthusiasm?

I offer you four reasons.

One, while the world economic outlook is grim, Asia-Pacific continues to grow, though the pace has moderated somewhat. The momentum is still there. America's "rebalancing" and Australia's White Paper are cases in point.

Two, Asian economies rely on trade to grow their economy – so-called "export-led growth".

Three, Given that WTO Doha Round has been stalled for some time, FTAs seems to be an option and are more achievable for many economies.

Four, economies may benefit from the complementarity through FTAs, given the diversity among them.

China welcomes any cooperative initiatives conducive to economic integration and mutual prosperity in the Asia-Pacific region. We are also actively involved in many of the free trade talks.

On FTAs, we have the following observations:

First, what kind of FTAs we would like to have? We want open, inclusive and transparent FTAs. Economies should be allowed – and encouraged -- to choose their preferred FTAs in line with their specific conditions. We would like to see regional economic integration and Free Trade Area of the Asia-Pacific (FTAAP) be achieved in a step-by-step way. This is mainly because of the diversity of our region -- the most salient feature of that we should always bear in mind when promoting economic integration.

Second, do we need to harmonize the existing – and future -- regional FTAs. Some call it a "Spaghetti Bowl" phenomenon (please note that it is Italian "spaghetti" not Chinese "noodle"). It is an issue that we may need to take care of. RCEP is welcomed in this regard for it may help harmonize 10+1, 10+3 and 10+6. In 2010 in Yokohama, leaders decided that an Free Trade Area of the Asia-Pacific should be pursued as a comprehensive free trade agreement by developing and building on ongoing regional undertaking, such as ASEAN+3, ASEAN+6, and TPP, among others.

Third, APEC has an "incubator" role to play in promoting FTAAP. T&ILF (trade and economic liberalization and facilitation) and Ecotech (economic and technical cooperation) are useful vehicles to advance the course of regional economic integration. APEC is a valuable forum for economies to explore, deliberate and reach consensus. APEC's consideration on issues like regulatory coherence, supply chain, next generation trade issues, economic structure reform has helped to promote regional integration.

Fourth, we need to work harder to achieve the Bogor Goals. Bogor is a milestone for APEC. In 2010, the peer-reviews of thirteen economies concluded that significant progress had made while more work remained to be done. Bogor Goals are a mission unaccomplished. Let's renew and redouble our efforts before the expiration of the final deadline. It is about APEC's credibility. It is about APEC's relevance. It is gratifying to see "Attaining Bogor Goals" is placed on Indonesia year agenda.

Fifth, let's not forget WTO, not forget Doha. It is widely accepted that the Doha Round negotiations, if successfully concluded, will create more trade, investment, job, etc. It will contribute greatly to world peace and prosperity. As I mentioned earlier, the world economy is still in a difficult time. We know that during an economic crisis, it is tempting for economies to employ trade protectionist means. We also know that trade protectionism is not the cure. It may lead to trade wars and spiral out of control. Then disaster will strike. If history is anything to go by, then in the multilateral trade system needs to be strengthened, in time of crisis, more than ever before. Global issue needs global solution. We need WTO and DDA. Regional arrangements are supplements but no replacement. Progresses have been made over the past decade and we should cement what has been achieved. In short, we should not give up hope on Doha. Let's spare no efforts to reach a package deal.

It would be great if APEC can repeat what it did for the success of the Uruguay Round last time.

I note that next year, the 9th WTO Ministerial Conference will be held about two months after APEC Summit, in the same place called Bali. Is it by chance or by design? I wish the latter.

Dear colleagues,

For APEC 2013, Indonesia has made "Resilient Asia Pacific, Engine of Global Growth" the theme of the year and "Attaining the Bogor Goals, Achieving Sustainable Growth with Equity and Promoting Connectivity" three priority areas.

A good start.

We appreciate the efforts made by our Indonesian colleagues. As APEC's next host, we pledge to work closely with Indonesia and other economies, so that together we can advance the mission of TILF and Ecotech.

As the world economy is fragile, APEC can and should make its due contribution to the development of the region, and the world at large.

On the three priorities.

I've already offered my view on "Attaining the Bogor Goals".

Now on "Achieving Sustainable Growth with Equity".

In UN, sustainable development has three pillars -- economic development, social development and environmental protection.

In APEC, sustainable growth is one of the five areas in the "Leaders' Growth Strategy" formulated in Yokohama in 2010. Another one -- inclusive growth -- is about equity. I recall as early as 1996, "to attain sustainable growth and equitable development in the Asia-Pacific region" was set as one of the goals in the Manila Framework for Strengthening Economic Cooperation and Development.

In China, the leadership is for efficient, equitable and sustainable economic development and has committed to leaving to our future generation a beautiful homeland with green fields, clean water and a blue sky.

So we are for it. As this is a very broad concept, we will be interested to learn more details -- and the focus.

On "Promoting Connectivity". Thanks to the economic growth and technology advance, the infrastructure and supply chain have been improved greatly. However, huge imbalance exists among economies and between urban and rural areas. We hope that cooperation on connectivity will provide us with an opportunity to address this imbalance.

In general, China supports the theme and priorities set by Indonesia for 2013, and is ready to work with the host and other members to achieve concrete results.

Dear Colleagues,

We are here to discuss APEC's future. I am not very clear about the definition of "Future" in terms of calendar years. But definitely, 2014 is the near future of APEC. You may ask what China has on mind in organizing APEC 2014.

Honestly speaking, I don't have much to share at this point. For one thing, the world and regional economic situation are volatile. We still have some time -- though not much -- to think about what to achieve in 2014.

Right now we are in a listening mood and are all ears. Your views and ideas are most welcomed. We plan to hold seminars or symposiums to brainstorm on what to do in 2014. Let me thank the Indonesian host for organizing this symposium from which we can also benefit. Please rest assured that we will work closely with you. Win-win is our goal and our success should be your success. In the recently concluded CPC Congress, the key word on foreign affairs is "peace, development, cooperation and mutual benefit".

APEC has achieved a lot and can do more in the coming years. It is developing into a full-fledged mechanism of cooperation, starting from the WGs and committees, up to SOM and Ministers, with the Economic Leaders at the top. Looking forward, I wish to suggest the following:

● Sticking to the principles of non-binding nature and voluntarism. Given the diversity and different level of development among its members, APEC need to continue its consensus-based approach and open, inclusive cooperation.

● Implementation is the key. Over the years, after so many meetings at different levels, we are not short of agreements, strategies and goals, like the Growth Strategy, structure reform, energy, food, forestry, just to name a few. Words should be matched by actions and we need more actions.

● Some reform? Given the rapidly changing external situation, and after 24 years of APEC's development, we may need to take stock and act on enhancing the effectiveness and efficiency of APEC.

● Enhancing capacity building. Ecotech and capacity building are needed for APEC to balance its agenda. Otherwise, APEC may not go very far. We need to get each and every economy on board. Developing economies need capacity building to reform its economic structure, change its development model and narrow the gap. East Asia is not North America or West Europe, though similar in economic weight. Asia-Pacific is more diversified.

Dear Colleagues,

2012 is drawing to a close. I want to thank our Russian colleagues for the great success. We expect a lot in the Indonesian year.

And at the same time, we feel the pressure -- as well as the excitement -- to work jointly with you to make further progress in 2014.

Regional integration is easier said than done. What we are going to do is to turn the world's largest ocean into a lake, for the good of our people, for the good of the environment, and for the good of the world,

Thank you very much. Terima kasih banyak.