Speech by Premier Wen Jiabao of the State Council of　
The People's Republic of China
At the Opening Plenary of
The Boao Forum for Asia Annual Conference 2009

18 April 2009

Distinguished Guests,
Ladies and Gentlemen,
Dear Friends,

I am delighted to be here at the Boao Forum for Asia Annual Conference 2009. Let me begin by extending, on behalf of the Chinese Government, warm congratulations on the opening of the conference and a hearty welcome to all the guests present. This conference, with "Asia: Managing Beyond Crisis" as its theme, is a highly important one. It will contribute to our efforts to build consensus, strengthen confidence, deepen cooperation and overcome the crisis. I wish the conference a great success.

Since last September, the world economy has run into the most serious challenges ever since the Great Depression of the last century. Countries around the world have taken steps to cope with the severe impact of the global financial crisis. In the face of the crisis, the Chinese Government made swift and decisive adjustments to its macroeconomic policies. We adopted a proactive fiscal policy and a moderately easy monetary policy, and put in place a package plan to ensure steady and relatively fast economic growth. These measures have proved essential for easing major problems in the economy, shoring up confidence and stabilizing expectations. The most immediate and important goal of our package plan is to reverse the economic downturn and maintain steady and relatively fast growth. It is also designed to address structural problems constraining China's economic development, speed up the transformation of growth pattern and raise the quality and performance of factors of production in order to lay a more solid foundation for China's economic growth in the long run.

First, boost domestic demand in a comprehensive way and strengthen the role of consumer demand in driving economic growth to promote balanced economic development. The major impact of this once-in-a-century financial crisis on China is the sharp drop in external demand, which in turn has led to economic slowdown, difficulties for businesses and rising unemployment. Structural problems have also become more evident. Our policies are primarily aimed at boosting domestic demand. We have been working hard to maintain relatively fast growth in investment, stimulate consumption, and readjust the structure of domestic and external demand. We will mainly rely on domestic demand and at the same time make full use of external demand so that together, they will drive our economic growth. This will lead to the transformation towards a more balanced growth pattern of the Chinese economy.

Second, improve infrastructure across the country and promote coordinated economic development. Uneven development between urban and rural areas and among regions is an acute problem in China's economic and social development, but it also means tremendous potential for further economic growth. We seek to address this problem in the course of tackling the global financial crisis. In our new investment program, priority will be given to rural development and infrastructure projects in central and western China. We will consolidate the position of agriculture as the foundation of the economy and speed up the construction of key projects for farmland improvement and water conservancy in order to create more enabling conditions for steady increase in agricultural production and farmers' income. We will pick up pace in building roads, upgrading power grids, promoting standardization in the construction of primary and secondary schools in rural areas, and improving farmers' living conditions. We will promote cross-region mobility of factors of production, speed up the development of major transportation infrastructure, and improve the integrated transportation system. It is particularly important to build coal transport routes, trunk railway lines and airports in western China so that the advantages of central and western China can be fully brought out. We will support less developed regions and help people in difficulties. We will vigorously support government-subsidized housing projects, with priorities on addressing housing difficulties of low-income urban families and families living in shantytowns in forests, on reclaimed land and around coal mines, expanding the pilot program for renovating dilapidated houses in rural areas and building permanent housing for the nomadic population in ethnic minority areas. The implementation of these measures will, over time, help strengthen weak links in development, improve the development environment for central and western regions and the rural areas, and give a strong boost to coordinated economic development of the country.

Third, enhance industries' competitiveness and capacity for independent innovation and promote sustainable economic development. To upgrade industrial structure is a pressing strategic task crucial to the overall economy. We have adopted plans for the restructuring and rejuvenation of ten key industries. They include measures to facilitate merger and reorganization of enterprises, support accelerated technological innovation by businesses, phase out backward production facilities, promote advanced productive forces, raise the level of industrial concentration and improve the efficiency of resources allocation. We are speeding up the implementation of the Outline of the National Program for Medium- and Long-Term Scientific and Technological Development with a special focus on those projects that will give a strong boost to scientific and technological advancement, have a widespread impact and yield quick results. We are endeavoring to make breakthroughs in a number of core technologies and key generic technologies in order to provide scientific and technological support for economic growth and make the Chinese economy an innovation-driven one. Energy conservation, environmental protection and ecological enhancement are the priority areas of our investment. We will increase input in the development of key forest shelterbelts and the protection of natural forests, urban sewage and garbage treatment facilities and major energy-conservation and pollution-reduction projects to promote sustainable development of the economy.

Fourth, work for all-round development of the people and promote intensive economic development. Human resources are an advantage and source of vitality in China's economic growth. It is a strategic priority in China's long-term development to achieve the all-round development of the people. In the course of boosting domestic demand, we have prioritized education, health care and social security in allocating public resources. We are in the process of formulating a National Medium- and Long-Term Program for Education. We will substantially increase input in education, strengthen basic education and develop vocational education, improve higher education and raise the cultural and educational level of the whole society. We are pressing ahead with medical and health care reform. We will put in place a basic medical care system and a basic drugs system, improve the community-level medical and health service system, push forward the pilot reforms in public hospitals, and promote equal access for all to basic public health services. We are improving the social safety net at a faster pace by expanding coverage of social security programs and increasing social security benefits. We are doing everything in our power to create jobs, especially for college graduates and rural migrant workers. All the aforementioned measures will help expand immediate domestic demand and bolster consumer confidence. They will also give a big push to the shift from extensive economic growth driven by high consumption of material resources to intensive growth driven by scientific and technological advancement, improved quality of the workforce and institutional innovation.

In a nutshell, the package plan we have introduced is aimed at addressing both symptoms and root causes and serving both current needs and long-term goals. It is an emergency-response plan to ensure economic growth, improve people's livelihood and maintain social stability. It also represents a long-term policy to promote scientific and harmonious development of the Chinese economy. China is experiencing accelerated industrialization and urbanization, a period with tremendous demand and growth potential. Thanks to 30 years of reform and opening-up, we have laid a sound material, scientific, technological and institutional foundation for development. We have sufficient capital and rich labor resources. We have institutional advantages that enable us to mobilize resources for big undertakings. And we enjoy a harmonious and stable social environment. I am convinced that so long as we persevere in our efforts, we will overcome the crisis and at the same time ease structural and institutional problems in the economic development, and enhance the overall efficiency and competitiveness of the economy. We will further unleash our economic potential to improve the well-being of the Chinese people and create more trade and investment opportunities for other countries.

Ladies and Gentlemen,

Dear Friends,

China's package plan is already paying off, and positive changes have taken place in the economy. The situation is better than expected. First, investment growth is gaining speed, consumption is growing fairly fast, and domestic demand has been on the rise. The country's GDP grew by 6.1% in the first quarter of this year. Total fixed assets investment rose by 28.8%, up by 4.2 percentage points and 6.4 percentage points over the first and fourth quarters of last year respectively. Total planned investment in new urban construction projects jumped by 87.7%. Retail sales of consumer goods increased by 15.9% in real terms, registering a year-on-year growth of 3.6 percentage points. Thanks to the "Home Appliance to the Countryside Program" and lower taxes for small-engine cars, production and sales of household appliances and agro-machinery grew by a large margin and auto sales reached a record high. The total floor space of commercial housing sold expanded by 8.2%, a preliminary reversal of the year-long downward trend. Second, industrial output has gradually stabilized, and agricultural production is on the whole stable. In March, the added value of industries above a designated scale increased by 8.3% year-on-year, 4.5 percentage points higher than the previous two months. Consumer goods industry looked up, while equipment manufacturing and some raw material industries turned for the better. We have speeded up the implementation of the policies to strengthen agriculture and benefit farmers with good results. Grain acreage has increased and summer crops are growing well. With ample supply of agricultural means of production, preparations for spring plowing are well underway. Third, economic restructuring has made encouraging progress, regional development has become more coordinated and industrial upgrading is picking up speed. The fixed assets investment, industrial added value and total retail sales of consumer goods in central and western China are growing at a markedly higher pace than the national average. Though the overall growth rate of industries in the coastal areas remains low, these industries are nevertheless recovering at a faster speed. High-tech industries have registered robust growth. Manufacturing industries in biological and biochemical products, communication switch equipment, medical equipment and machinery are growing faster than the overall industrial growth of the country. Fourth, urban employment and people's income have risen. Figures of the first quarter show that 2.68 million jobs were created in urban areas, and per capita urban disposable income and per capita rural cash income grew by 11.2% and 8.6% year-on-year in real terms. Fifth, there is sufficient liquidity in the banking system and financial markets have been performing smoothly. Public confidence has become stronger and market expectations have improved.

We should not, however, lose sight of the fact that the international financial crisis is still spreading, the basic trend of world economic recession is not reversed, problems in the financial system remain unresolved and the worsening of the real economy has been more serious than expected. The global economic recovery may be a long and tortuous process. The international financial crisis has presented China with great challenges in economic and social development, including a sharp decline in exports due to continuous contraction of external demand, greater difficulties in stabilizing agricultural production and increasing farmers' income, overcapacity in some industries, slow recovery in industrial growth, continued drop of economic returns, reduction in fiscal revenue and severe pressure of employment.

Confronted with the complicated domestic and international situation, we should recognize the favorable conditions and positive factors in economic and social development, and strengthen our resolve and confidence in overcoming difficulties. On the other hand, we should be fully mindful of the uncertainties and instabilities of the situation, remain level-headed and be more vigilant against possible adversity in the future. It is advisable to have a more sober assessment of the situation and take into consideration all possible difficulties that we may encounter. This way, we can better prepare ourselves for greater and protracted challenges. We will resolutely enforce the proactive fiscal policy and the moderately easy monetary policy, spare no effort to implement our package plan, strive to minimize the impact of the financial crisis and promote steady and relatively fast growth of the Chinese economy.

Ladies and Gentlemen,

Dear Friends,

Economic globalization has linked us closely together. No country can stay immune from the international financial crisis or overcome its impact on one's own. Asia is one of the most dynamic and promising regions in the world economy. Together, we take up 60% of the world's population, a quarter of the global economy and a third of global trade. Countries in this region have different national conditions, but we share the common goal of safeguarding sovereignty, accelerating economic growth, upholding equity and justice, and improving people's livelihood. We face similar challenges in tackling the international financial crisis, fighting terrorism and transnational crimes and curbing the spread of diseases and environmental degradation. And we have the same commitment to bilateral and multilateral cooperation for mutual benefit and win-win progress. We have put in place a variety of regional cooperation mechanisms, which have carried out effective work. Exchanges and cooperation among us in economy, science and technology, culture and other fields are deepening and the foundation of our cooperation is getting stronger. To counter the financial crisis, Asian countries should not only each run their own affairs well, but also step up cooperation and pull together like passengers in the same boat to promote win-win development and make Asia a key engine in reigniting world economic growth.

China has taken an active part in building Asian cooperation. We follow a policy of making friends and partners in the surrounding areas and fostering an amicable, stable and prosperous neighborhood. In recent years in particular, we have concluded several bilateral and multilateral free trade agreements with other countries and regions in Asia, which have served to promote trade and investment. We have signed six bilateral currency swap agreements totaling US$23.5 billion and six bilateral currency swap agreements in local currencies worth RMB650 billion. These arrangements have enriched the content and form of regional financial cooperation and strengthened the role of regional liquidity assistance mechanisms. A China-ASEAN free trade area with a combined population of 1.9 billion and an aggregate GDP of nearly US$6 trillion will be fully established by 2010. In October 2003, I made a proposal at the 7th ASEAN plus China, Japan and the ROK Summit to advance the Chiang Mai Initiative Multilateralization. I am very pleased to see that this is now becoming a priority in regional financial cooperation and substantive steps have been taken in this regard.

In the face of the spreading financial crisis, China will continue to work with other Asian countries to actively tackle challenges and advance all-round cooperation with a view to enriching and energizing our cooperation and promoting peace and prosperity in the region. To achieve this, I wish to propose the following:

First, engage in closer economic cooperation and trade, and firmly oppose trade protectionism. We should make greater efforts to promote free trade and expand intra-regional trade. We should adopt effective measures concerning customs, quarantine, logistics and interflow of business people, take concrete steps to lower trade barriers and refrain from setting up new obstacles to trade. We should vigorously advance the building of free trade areas, make full use of multilateral and bilateral free trade arrangements and bring into play our economic complementarities. The Chinese Government has decided to introduce a pilot program of using RMB in the settlement of cross-border trade in Shanghai and four cities in Guangdong province. This will boost our economic cooperation and trade with neighboring countries and regions.

Second, strengthen financial cooperation and maintain regional financial stability. We should take full advantage of the bilateral currency swap agreements and study the possibility of expanding the swap size and number of participating countries. The 10+3 countries decided to set up a US$80 billion foreign exchange reserve pool last year and recently agreed to expand it to US$120 billion. This underlines the urgent need and our strong desire to strengthen regional financial cooperation. We hope the multilateralization process of the Chiang Mai Initiative will speed up. We should accommodate each other's concerns to the greatest extent possible, build consensus and establish a regional reserve pool as early as possible so as to better protect our region from financial risks. We should promote development of the Asian Bond Market and better utilize available regional funds to promote economic growth in Asia.

Third, deepen investment cooperation to drive regional economic growth. We should accelerate the development of regional and sub-regional transportation, power and communication infrastructure to gradually achieve interconnectivity and form a network. China has decided to set up a US$10 billion "China-ASEAN Fund on Investment Cooperation" to support infrastructural development in the region. All countries should follow an open approach when expanding investment and allow equal participation of enterprises from other countries. We should encourage mutual investment among businesses within the region, strengthen labor services cooperation and avoid large-scale repatriation of foreign workers.

Fourth, advance "green" cooperation and promote sustainable economic growth in Asia. We should actively and effectively coordinate policies and actions to enhance cooperation in energy conservation, environmental protection and development and utilization of new and renewable energies, and foster new growth areas in the Asian economy. We should adhere to the principles of "common but differentiated responsibilities" and equity, intensify dialogue and exchanges and pursue practical cooperation in the context of the United Nations Framework Convention on Climate Change so as to contribute our share to the global endeavor to fight climate change.

Fifth, enhance collaboration and coordination in international affairs and promote world peace, stability and prosperity. We in Asia should strengthen cooperation with other regions through such platforms as Asia Pacific Economic Cooperation (APEC), Asia-Europe Meeting (ASEM), Forum for East Asia-Latin America Cooperation (FEALAC) and Asia-Middle East Dialogue (AMED), and improve the efficiency and effectiveness of such cooperation. We should implement the consensus reached at the G20 Financial Summit in London and strengthen macroeconomic policy coordination. We should advance reform of the international financial system, increase the representation and voice of emerging markets and developing countries, strengthen surveillance of the macroeconomic policies of major reserve currency issuing economies, and develop a more diversified international monetary system. We should work for comprehensive and balanced outcomes in the Doha Round negotiations and give, in particular, more trade support to developing countries. We should work earnestly to meet the UN Millennium Development Goals, push forward the global poverty reduction process, and prevent a cutback in the assistance to developing countries as a result of the financial crisis.

I wish to stress here that the business community should play an active part in tackling the international financial crisis and promoting Asia's development. Entrepreneurs need to bear in mind their social responsibilities and properly manage risks and potential problems. They should seize the opportunities offered by world economic readjustments, take bold and pioneering steps, and explore new development opportunities. Asia is a region with enormous development potential. As long as enterprises in the region, particularly multinational corporations, remain committed to their business in Asia, minimize factory closures and employee layoffs, and enhance cooperation with their partners in other countries in production, management as well as research and development, they will emerge from the crisis stronger than before.

Ladies and Gentlemen,

As I said before, confidence is more important than gold and currency. Today, I want to add one more thing, that is, hope is an ever-lasting beacon that will light up the way forward for countries, businesses and people around the world. Let us strengthen confidence, join hands and work together with strong hope for an even brighter future for Asia.

Thank you.