China and Asia

China and Australia

Speech at the International Forum on Australia in the Asia Pacific Region Fu Ying, Sydney University, 2006-9-7

Thank you Professor John Hearn,

Your Excellency Secretary Michael L' Estrange,

Professor Gavin Brown,

Ladies and Gentlemen,

First of all, let me thank the Sydney University for inviting me to speak to this occasion.

I agree with many of the points Mr. Secretary has made.

China and Australia share a lot of interest in the region and should work together closely.

Let me start by talking about how China views its relations with Asia.

For China, Asia is at the core of its relations with the world. The ups and downs of Asia have always influenced the destiny of China.

Silk rout was China's first access to India, Afghanistan, Iran and through them to Rome and other parts of Europe. It brought prosperity and knowledge, which affected the history of Asia.

One other important linkage between China and the rest of Asia is historical records. China's earliest writings of Southeast Asian countries goes back centuries. Many of the Kingdoms could find their family stories in the Ancient Chinese books.

In addition to the officially noted records, there are also folk literatures about our neighbors.

There is one simple book I like very much. It is the diary of Zhou Daguan, a traveler of the 13th century who spent 2-3 years in Angkor Wart and noted down everything he saw, including the everyday life and customs of the local people. He printed the diary upon return as an exotic story.

Now his dairy is the only record of that Kingdom which mysteriously disappeared and left no written record. The French archeologists depended on his book for understanding the ruins of Angkor War which they discovered in the jungles.

When I was peacekeeping in Cambodia, I spent a week in Simprip visiting temples after temples with Zhou's book as the guide and I was amazed by the details of his descriptions and the fact that many of the buildings and structures he wrote about were still standing there.

Throughout history, China was prosperous when Asia was strong and China suffered from outside aggression when Asia was weak.

Now Asia has growth with time. According to the Asia Economic Integration Report issued by the Boao Asia Forum last year, between 1980-2005, Asia gained an average growth rate of 6.6%. Its share of the global economy increased from 16.8 to 22%, and is now an important pillar of the world economy.

Asia's share of the global trade is 28%. It has the largest foreign currency reserves. China, Japan and ROC together take up half of the world's total.

China's population is 32% of the whole of Asia. It takes up 22.8% of the GDP. China's trade within Asia amounts to 808 billion US$, more than half of its global trade and almost 4 times of China US trade.

China is the key trading partner to many of the Asian countries. For example, it is the number one export market for ROK, number two for Japan and number three for India, Thailand, and the Philippines.

China and US are in constant disputes on trade deficit. However, China is not the final beneficiary of the entire trade surplus. Part of it is originated from China's Asia trading.

Between 2000-05, China's trade deficit with Asia was 235 billion US$. China's contribution to Asia economic growth is recorded at 60%.

Take ASEAN for example, it has been running continuous surplus with China over the past 7 years. The statistic of the first half of year shows that 8 of the 10 main origins of China's trade deficit are in Asia. Australia also runs surplus with China. It ranks the 10th.

According to Visa International, China has become the NO. 3 destination of visits for Visa customers in Asia Pacific, after Australia and Thailand.

Last year 140,000 international students were studying in China, among which, 75% were from Asia. In the past, most of them came to study language and history, but now many are doing economics, finance, law, media and other humanitarian and applied science programs.

China's out-bound tourists grew by 10% last year, reaching 31.7 million, turning into the number one source of tourism in the region.

In the past decades, foreign investors built over 300 000 factories in China most of which import parts from other Asian economies for processing in China. 40% of Asian export to China is of such nature. This linkage has added to the momentum of growth in the region.

Though China is named the factory of the world. But we see ourselves as "the money Buddha on the road side", which means, the profits does not stay with China, it only get through its hands.

Let me explain. About 90% of the high-tech products China exports are made by foreign invested industries, and most of the profit is taken by those foreign enterprises.

Take for example the popular Barbie dolls on the US market, which is sold at 10 US$, its material is from the Middle East, which came to China as semi-processed products. The hair is made in Japan and the packaging is from US. China is making 35 US cents per each for putting these things together.

For DVD sets made in China, after paying for the cost of patent and parts, we make one dollar per piece for processing.

China import about a hundred of aircrafts from US and Europe every year. For one airbus A-380 cost equals to the profit we make from selling 800 million shirts.

But I am not complaining. This huge process has made it possible for over a hundred million people finding employment and lifting tens of millions of people out of poverty.

However, to sustain the development, we cannot stay at the bottom of the manufacturing chain forever. We have formulated the medium and long-term program for science and technology development. We intend to raise the production level with more science and technology input.

For China, Asia is and will continue to be a priority in our foreign policy. Our guideline for relations with Asian neighbors is to focus on common interest and shelve or solve differences through dialogues. The objective is to share prosperity, to share security, and to share a harmonious environment with countries in the region.

Generally speaking, this policy is proved effective and well received. There is now a high comfort level among China's neighbors regarding the growth of China.

Last year, BBC carried out a poll in 22 countries. The result shows that 38% of the people agree that US will bring positive impact on the world, and 36% think Russia will do so. The figure for China is 48%.

Now let me turn to our relations with Australia.

Whenever I was back in China, I was often invited to speak about Australia to university students, media or business people. I found many of them are interest in Australia, but did not realize how close Australia is to China.

I often use the following examples.

Flying from Darwin to Haikou, the capital of Hainan Province, is only 4.5 hours. It takes about 5 hours flying from Haikou to Wulumuqi, the capital of Xinjiang, the western province of China.

Indonesia is regarded as a close neighbor to China. Darwin is only two hours of flight from Bali Island.

So, geographically speaking, Australia is very close to Asia and it therefore has a high stake in the security and economic well-being of the region.

Australia identified itself with Asia decades ago. Your Foreign Minister Evatt in 1940s said in his policy report: Australia is in Asia both geographically and politically.

The past decade saw closer inter-actions between Australia and its Asian neighbors both in the political, security and economic arena.

I want to complement Australia's recent progress in making more friends in Asia. Its timely and generous assistance during tsunami touched the heart of Asia. In the East Timor crisis, it was again Australian forces, which arrived at the critical moment and prevented a possible humanitarian disaster. We are also greatful to the help by the Australian forces when evacuating the Chinese nationals out of Dili.

In economic terms, about 60% of Australia's trade is conducted with Asian countries. 7 of Australia's 10 major partners are in Asia. A quarter of Australia's in-bound tourists come from Asia.

Among the Asian countries, China is one of the fastest growing partners to Australia. Next year marks the 35th anniversary of our diplomatic relations. It would be a good opportunity for the two sides to review the progress and identify our objectives for the coming years.

In June Prime Minister John Howard went to Shenzhen to inaugurate the opening ceremony of the LNG terminal together with the Chinese Premier Wen Jiabao.

A Chinese press asked me about the significance of the mountainside event.

I said: the Guangdong LNG project is a demonstration of Australia's reliability as a supplier; it abides by words and honors the commitment. By attending the event, the two leaders are sending a strong message to the world: China and Australia are committed to long-term partnership.

Apart from resources trading, our relations in all fields are growing with momentum.

Last month we had Tourism Forum, which was attended by Ministers and industry people from both sides. I am sure there will be active measures to improve services in preparation for bigger flow of tourists. The current flow of two-way tourists is more than 70,0000.

Last week, a new round of FTA negotiations was held in Beijing. The two sides are fully committed to work out a deal which would take into full consideration the interest and concerns of all the sectors in both countries and produce a win-win result.

Australia has also become a model for learning as China is moving deeper in reform and is trying to build a stronger legal system and sounder financial structure.

I am one of the busiest Chinese Ambassadors overseas. Every month, a big number of delegations with all kinds of study objectives are coming this way. I know it has also become a headache for our host.

Last week, my staff told me they could not arrange a briefing for a training delegation, because the Ministry concerned said it was the 11th request from China in a month and they couldn't handle anymore.

Some Premiers and Mayors are also wondering why there are so many Chinese delegations bombing Australia.

One of my explanations is that, we have 60 times larger population. For the exchanges you have with China, you need to be prepared for stronger reaction on the Chinese side.

I hope the growing interest in China for Australia is regarded as good news as it brings more opportunities for Australia.

The excellent bilateral relations serve as good foundation for our cooperation in the regional affairs.

Asia has witnessed the most active regional integration and cooperation in its history, including regional security dialogues and economic cooperation to which both China and Australia are active participants.

To compare with where we were over a decade ago, we have gone a long way. I still remember at the beginning of ARF, countries including China had difficulties even to putting such words as "security cooperation" into common document. Because until then security was very much a domestic concept for them.

Now we are carrying out extensive security and economic cooperation. China has even invited observers to its own internal military exercises.

However, compared with other parts of the world, Asia integration falls far behind. There are many challenges confronting regional institutions.

We have to admit that Asia does not have historical experience in regional cooperation.

Though Asia has gained considerable development, it is a very diversified continent. For example, you may find in Asia every brand of political system that exists in the world. Almost all the major religions in the world have big followers in Asia.

The biggest disparity in Asia is the uneven economic development.

We have the number II world economy in Asia. That is Japan, with per GDP of over 35000 US$. We also have under-developed countries whose per capita GDP is less than 1% of those of the wealthier countries. According to the Asian Bank statistics, about 1.9 billion people in Asia live under 2 US$ a day. Of every 10 persons in the world who do not have access to clean water, 6 are in Asia.

In addition to the tough development burden, many Asian countries are half way in reforming their political system and economic structures. Some are confronted with threat of social instability.

Therefore, for any regional setup to succeed, we have to take into consideration the unique character in Asia and progress in an incremental manner.

China will have its first 10+1 summit in Guangxi Province of China next month, which will mark its 10th anniversary. We are determined to consolidate the 10+1 process by encouraging tangible cooperation, which we hope could bring real benefit to people.

At the same time, China is ready to promote wider East Asian cooperation under the umbrella of East Asian Summit, which will have its second meeting in November. There are not yet a clear road map for the East Asian Summit, but the fact that 14 years after the it was suggested, we finally brought it to reality in itself is a big step forward.

There is a Chinese saying, crossing the river by touching every stone on the way. I am sure the regional cooperation will be able to find its way across the river.

Before concluding, I want to brief you on some latest development in China

Last month, I went back to Beijing for a major conference on China's foreign policy and international relations.

It was an unprecedented conference at which all the top leaders both at the central level and at the provincial level were present.

It was probably the first time in 50 years, this government has organized such a national wide conference on foreign policy.

To put in simple terms, there are two major messages coming out of this conference.

One is the keen realization by China of the close connection between China's domestic affairs and the world affairs.

This sounds simple, but for China, which has long been an inward looking country, it represents a major turn in its worldview and a big step forward in its relations with the world.

When we started the reform, the slogan was: reform and open to the outside world. Now we are not only open to the world, but also become integral part of the world.

We have realized what happens in the world can affect the development in China. What happens in China also draws attention in the world. Gone are the days when we could handle our problems by ourselves alone. Nor could we turn a deaf ear to what's going on in the world.

The significance of the Conference is that, there will be strong political emphasis on taking into consideration of the development and concerns outside China when formulating domestic policies and handling domestic issues. There will also be more proactive approach regarding international and regional issues.The second message is about China's policy objective for the world. It was stated by President Hu, we would like to work with other countries to build a harmonious world.

Harmony is part of China's ancient philosophy. By harmonious world, we mean to build our relations with the world by seeking cooperation and by solving differences through dialogues and peaceful means. This policy is proved effective in the region and it will continue to be the guidelines for our relations with the world.

Thank you.