Developing a Green Economy and Promoting Sustained Growth

--Speech by Wen Jiabao, Premier of the State Council of the People's Republic of China, at the Fifth China-EU Business Summit (November 30, 2009, Nanjing, China)

It gives me great pleasure to attend the Fifth China-EU Business Summit. I wish to take this opportunity to express deep respect and heartfelt thanks to people from all sectors who have over the years made significant contributions to the growth of China-EU economic and trade relations and friendship between the people of China and Europe. At this crucial moment in tackling the international financial crisis, it is important to further enhance economic and trade cooperation between China and Europe. This will contribute not only to the growth of our own economies but also to the steady recovery and enduring prosperity of the world's economy. I sincerely wish this Business Summit complete success.

The theme of the Summit, "The Green Economy: Sustaining Growth beyond the Recovery," addresses an important area where we can enhance China-EU cooperation. A review of world industrialization during the past 200 years or more shows the modernization of developed countries--with a population less than a billion--was achieved at great cost to the whole world's resources and ecology. A famous line from the World Conservation Strategy says, "We have not inherited the earth from our parents; we have borrowed it from our children." To leave to future generations a planet where succeeding generations can survive and thrive, we need to put in place a circular and sustainable national economic system that generates high output with low input, low consumption and low emissions. We need to transform existing patterns of development and consumption and move the world to a development path characterized by high productivity, prosperous lives and sound ecology.

In an effort to create a better home for the human race, the 1992 United Nations Conference on Environment and Development adopted two guiding documents, the Rio Declaration and Agenda 21, as well as a statement of principles on forests. It also opened for signature the United Nations Framework Convention on Climate Change and the Convention on Biological Diversity. Since then, the concept of a "green culture" has attracted a great deal of attention from around the world, and sustainable development has become the consensus of the international community. The Kyoto Protocol adopted in 1997 and the Bali Road Map established in 2007 defined the responsibilities of countries at different stages of development in addressing climate change, giving rise to a global "green wave" emphasizing harmony between economic development and the environment. The upcoming Copenhagen Conference represents another important moment in international action on climate change. The willingness and commitments expressed by countries at Copenhagen will promote a historic shift towards green economy and sustainable development. The Chinese Government will take an active and constructive part in the Conference and looks forward to a positive outcome at Copenhagen.

This year is the most challenging for China's economic and social development since the start of the new century. We have worked hard to come through this difficult period and meet various challenges with calm and composure. The international financial crisis has caused a sharp drop in external demand for our goods and exacerbated the problem of overcapacity. As a result, more businesses experienced difficulties, more jobs were lost and the economy slowed down appreciably. In response, the Chinese Government promptly adopted 10 measures to boost domestic demand and promote steady and fairly fast economic growth. We resolutely implemented a proactive fiscal policy and moderately relaxed monetary policy, adopted a comprehensive stimulus package to counter the impact of the international financial crisis and, in the course of implementation, improved it. Thanks to these efforts, China succeeded in reversing the effects on it of the economic slowdown in a short time. In the first 10 months of this year, total retail sales increased by 15.3 percent year on year and urban fixed asset investment was up 33.1 percent. China's GDP grew by 7.7 percent in the first three quarters. While putting our own house in order, we have reached out to the world and actively pursued international economic cooperation and exchanges. We have increased importing, outbound investment and foreign assistance, stepped up coordination on macroeconomic polices with other countries, and advanced reform of the international trade and financial systems. These are active efforts on our part to promote world economic recovery.

In the face of the severe and complex economic environment at home and abroad, the Chinese Government has remained committed to the basic state policy of resource conservation and environmental protection. We have made all-round progress in implementing the National Climate Change Program. About 14.6 percent of this year's additional investment has gone to economic restructuring, scientific and technological innovation, energy conservation, environmental protection and ecological enhancement, contributing to green, circular and sustained development. Notable progress has been made in energy conservation and pollution reduction. Energy consumption per unit of GDP is expected to drop considerably compared with last year, and sulfur dioxide emissions and chemical oxygen demand are expected to decline by 2.1 percent and 2.7 percent respectively. Positive results have been achieved in shutting down backward production capacities. More than 21 million kilowatts of small coal-fired power generating capacity, and more than 1,000 small coalmines, will have been closed by the end of the year. Forest carbon sink has increased. Forest coverage in China rose to 20.36 percent in 2008, meeting the target we announced to the world two years ahead of schedule. Construction of environmental facilities has been accelerated. Daily urban sewage treatment capacity has increased by 11.25 million cubic meters in 2009, and exhaust gas desulphurization facilities have been installed in coal-fired power plants with a capacity of 70 million kilowatts. Green industries are mushrooming. In 2008, the share of renewable and clean energy in primary energy consumption grew to 9 percent. China ranked No. 1 in the world in terms of installed hydropower capacity, nuclear power capacity under construction, the coverage of solar panel of water heater and cumulative installed photovoltaic power capacity, and fourth in the world for installed wind power capacity. These are major achievements in China's efforts to adjust economic structure and transform development pattern. They also contributed positively to the global endeavor to develop green economy and tackle climate change.

A couple of days ago, the Chinese Government announced that by 2020, China抯 carbon dioxide emissions per unit of GDP will be reduced by 40-45 percent from the 2005 level, the share of non-fossil fuels in primary energy consumption will be increased to around 15 percent, forest coverage will be raised by 40 million hectares, and forest stock volume by 1.3 billion cubic meters. These are voluntary actions China will take in light of its national conditions. They represent China's great contribution to a strong global response to the climate challenge and fully demonstrate China's sense of responsibility to the Chinese nation and the entire human race. Extraordinary efforts will be required to meet these targets, and we are determined to adopt even stronger actions and more effective policies to fulfill this commitment.

The Chinese Government sees great value in its relations with the European Union and regards it as one of its important strategic partners. In the past 34 years since the establishment of diplomatic relations, economic ties and trade between China and the EU have, thanks to the strong commitment and strenuous efforts of both sides, grown and matured steadily. They have become an important part of the China-EU comprehensive strategic partnership. The EU is currently China's largest trading partner; export market and technology supplier as well as the fourth largest source of foreign capital. China is the EU's second largest trading partner and largest source of imports, and has recently become the EU's third largest export market. Since the beginning of this year, despite the serious impact of the international financial crisis, economic cooperation and trade between China and the EU have enjoyed steady growth. Trade in the first 10 months stood at US$292.4 billion, 16.7 percent of China's total foreign trade. The EU's accumulated paid-in FDI in China involved 31,000 projects and reached US$66.5 billion by the end of last September. China has introduced 31,600 technologies from the EU with a total contract value of over US$125 billion. What has happened proves that our business ties serve as an important driving force of the China-EU comprehensive strategic partnership and they help promote balanced and orderly development of the world economy.

This morning, I met with Prime Minister Reinfeldt, President Barroso and other EU leaders and we discussed the future of the China-EU relationship. We agreed that if the China-EU Comprehensive Strategic Partnership is to move forward, it should be anchored on a foundation of economic cooperation, be hi-tech driven, and make green economy a priority. Our two sides need to work to enhance mutual trust, take a long-term perspective and promote mutual benefit. To this end, I wish to make the following suggestions.

First, we should deepen cooperation in energy conservation and environmental protection to address climate change. Since 2005, when we forged a partnership on climate change, we have conducted seven productive consultations and carried out a number of cooperation projects on energy and environmental protection. We should continue our consultations on institutional guarantees, funding arrangements, technological cooperation and other issues and put in place a mechanism whereby the government guides and enterprises participate and play by market rules. This is what we have to do in order to comprehensively strengthen our capacity to tackle climate change. The EU is at the cutting edge of energy-efficient and environment-friendly technologies and managerial expertise. It has rolled out effective policies to ensure energy efficiency and environmental protection in industry, transport, construction and other areas. We are ready to learn from you. I hope businesses from both sides will explore and make full use of the trade and investment opportunities that come along in the course of tackling climate change and conduct technological cooperation and exchanges across a wide range of areas.

Second, we should further open markets and oppose all forms of protectionism. The size of our trade in goods cannot reflect the depth and scope of our economic ties. We should look at our current trade and its prospects from a strategic and overall perspective. We should make the most of our complementarities, promote trade and investment liberalization and facilitation, and commit ourselves to not taking new protectionist measures against each other. We should increase coordination and consultation in the WTO Doha Round negotiations, and press for a comprehensive and balanced outcome at an early date. China strictly abides by its commitments upon WTO accession. It has taken active steps to open its market and adopted foreign trade and financial policies consistent with WTO rules. China does not seek a trade surplus beyond a reasonable level. To address our trade imbalance, China has sent several missions to European countries to promote trade and investment and will continue to take active measures to increase imports from Europe.

Third, we should promote trade in services and hi-tech products. As China accelerates its economic restructuring, hi-tech and tertiary industries are strategic priorities. The EU has a great advantage in trade in services and leads the world in many hi-tech fields. There are broad prospects for closer China-EU trade cooperation in services and hi-tech products. We have already set up a hi-tech trade working group. We want to see it up and running at an early date so that we can draw up principles and find ways for developing and promoting bilateral services and hi-tech trade, identify priority areas, and bring about substantive progress in our cooperation. I hope the EU will relax export controls over hi-tech products to China, let enterprises on both sides do business in an unfettered way, and fully unleash the EU's industrial advantages. China is ready to expand IPR cooperation with the EU and will step up IPR protection and law enforcement to safeguard the lawful rights and interests of foreign businesses, EU companies included.

Fourth, we should further expand SME cooperation. SMEs are the backbone of the Chinese economy and the European economy and a major growth area for future China-EU economic and trade cooperation. SMEs from the EU are well funded. They have diverse sources of financing and engage in a wide array of businesses. They have a competitive edge in capital and technology-intensive industries as well as the services sector. The bulk of Chinese SMEs are labor-intensive manufacturers and processors. They lack technical support for R&D, cultural creativity, industrial design and brand creation. There is great scope for cooperation between Chinese and EU SMEs. We should increase SME policy dialogue and provide SMEs with greater support in terms of financing, access to trade fairs and exhibitions, and investment and trade facilitation. The Chinese Government will provide necessary facilities to promote cooperation between Chinese and EU SMEs.

The EU is the world's largest economy while China is the world's largest developing country. Closer China-EU cooperation serves the fundamental interests of both sides. All of you present today are champions of our business communities. It is for you to tap the huge potential of China-EU business cooperation. I am fully convinced that as long as we seize the opportunities with an open mind and look to the future in a cooperative spirit, we will make steady and further progress in our business cooperation.