Speech by Khun Thanakorn Seriburi

	Speech by CEO Dhanin Chearavanont
		Speech by Khun Thanakorn Seriburi, Vice Chairman of C.P. Group
		Key Factors Accounting for China’s Sustaining and Rapid Economic Growth in the Future August 1, 2003
		As an entrepreneur, I set foot in China since 1979, the early days of China’s reform and opening-up. From then on, 24 years flying, Chia Tai Group (Thailand) that I serve in has achieved a total investment of US$ 4.4 billion in China, which consequently drives us to pay continued and close attention to the economic development strategy and upcoming tendencies of this country. During the past 24 years, I’ve been honored to witness China’s historic flyover from pure poverty to overall well-off accompanying a sustaining and rapid momentum in economic development. The annual increase rate of gross domestic product (GDP) from 1978 to 1998 kept on average 9.7% high; China’s economy in 1997, despite the severe impact from Asian Financial Crisis, still marched forward on a fairly faster speed. And the growth rate from 1998 to 2002 scored 7.8%, 7.1%, 8%, 7.3% year-on-year, and reached 8% in 2002. Gross national product (GNP) broke through 10 trillion. The aggregate economic volume ranked the 6th place in the world with foreign investment and foreign exchange reserves also in the lead. In the context of global economic stagnation, China’s economy uprises and becomes the highlight of the era. The progressing China has no doubt played an important role for the Asian economic stability and development, particularly for Southeast Asia. Then, could China’s economy maintain the sustaining and rapid development for the coming one or two decades in the new century? This is posted as a momentous theme among the economic and business circles. As an entrepreneur and a foreign investor, I would, based on my observation in China accumulated for some 20 years, take the liberty to exchange views with your good self about the impetus and reasons for China’s sustaining and rapid economic growth in the future.
		In my view, China’s economy can outrival the global downturn and keep so long a continuous and rapid development, yet maintain the momentum, which should ascribe to many factors, such as the reform on economic systems, rational macro-adjustment, introduction of the marketing mechanism, regulation of industrial structure, expansion of opening-up, actions on promoting internal demand and etc. However, out of all the miscellaneous factors, I regard the following four points as the core.
		First, the primary reason for China’s sustaining and rapid economic development is that China has a vigorous leading group.
		The 24 years for my stay in China happened to witness the transition among 3 leading groups of the Chinese government. The three groups have been implementing the plans, policies, laws and regulations for economic restructuring with continuity and upgrade, yet focusing on a common target – “Boost China’s Economy, and Endeavor to Handle Internal Affairs Best”. All of them boasted of rich experience of leadership from the grass-root to upper levels together with adequate understanding about China’s conditions. They advocated reform and opening-up, and frequently went abroad to study and exchange views. Still, they were quite familiar with the international situation. As a result, the two aspects were integrated to map out a series of economic restructuring policies conforming to China’s reality.
		They all made great achievements in their causes. They were practical and going forward step by step. They were well educated, thus could upgrade practice to theories, and further refined them into policies, laws and decrees which had been implemented from upper to lower levels, and generated desirable results. More importantly, they were unified and unswerving to forge ahead toward the set direction regardless of the changing international situation. They took “stability” as the primary foundation for economic development and national prosperity, and created miracles by unifying various forces of the country.
		The 3 leading groups succeeded, leaders changed, but the working target, policies, regulations, and working style continued, which constituted the key factor for China’s economy to win success after success. China’s economy resembles a big ship, requiring a vigorous engine to brave wind and waves; China’s leaders, just like this robust engine, form the prime locomotive for China’s economy to advance by leaps and bounds.
		Secondly, the continued and rapid economic growth in China also owes much to its development strategy that is persistent, distinct and compatible with China’s national conditions.
		I heard of the “Three-step Development Strategy” pioneered by Mr. Deng Xiaoping upon the inception of our investment to China in 1979. It requires that:
		I. By the year 1990, the country’s GNP doubles that of 1980 and the people enjoy adequate food and clothing.
		II. By the year 2000, the GNP quadruples compared to 1980 and people enjoy a relatively comfortable living.
		III. Till the middle of the next century, the per capita GNP reaches the level of medium developed countries. People enjoy an affluent living, and fundamentally realizing modernization.
		In 1991, the Chinese government, on the basis of Mr. Deng Xiaoping’s “Three-step Development Strategy”, formulated “Ten-year Planning”, “the Eighth Five-year Plan” and “the Ninth Five-year Plan”. These definite goals became forceful cohesion guiding the 1.3-billion Chinese people to strive for one after another aims. The promulgation and solid implementation of these strategies fully represented the great efficiency of the government. As a result, the GNP in 1987 doubled, 3 years earlier than the plan (RMB 451.8 billion in 1980, RMB 1,195.6 billion in 1987). The previous goal for GNP of year 2000 to quadruple that of 1980 was fulfilled five years ahead of schedule in 1995 (RMB 1,854.5 billion in 1990, RMB 5,749.5 billion in 1995). By the year 2000, China’s GNP amounted to RMB 8,819 billion, standing comparison with a well-off life of per capita GNP 800 US dollars. Accordingly, the Chinese government laid down concrete planning for the execution of the 3rd strategy, namely, by year 2010, the GNP was to double that of 2000; People could lead a more comfortable life; China embarked an overall development stage toward the well-off society. Since China’s economy proceeded with clear goals and mild increase aims year by year, the local governments and departments could refer to the goals of the central government and worked out their owns, thus all the sectors were interlinked and obliged to the benefit of the masses with full efforts, which led to the solid and ultimate implementation of all the aims. This was another magic power for promoting China’s economy advancing fast and continuously.
		Thirdly, “System Formulation” took good effects on China’s sustaining and fast economic growth.
		In the process of expanding reform and open-up and accelerating economic development, the Chinese government strongly pushed forward the market-orientation when persisting to study and perfect the basic economic system corresponding to its economic development. I noticed that Chinese leaders specifically revised and compiled the comments relating to economic system reform into law in their important conferences and documents. As for the non-public sector economy, particularly the private businesses, many steps had been taken from encouragement to legislation, from “Partial Fulfillment of Well-off Life” to system confirmation. In 1999 “Constitution”, China amended its definition for the state ownership: “Under the governance of law, the non-public ownership such as individually-owned sectors, privately-owned sectors and etc. constitutes a vital part in the socialist market economy”. The report of the 16th National Congress of the Communist Party of China (CPC) also required, “All the classes emerged from the social transformation including the initiators and technicians of the private scientific and technological companies, the management and technicians employed by the foreign-invested enterprises, self-employed laborers, privately-owned businessman, personages of intermediary organizations and professionals should be reckoned as the builders of socialism with Chinese characteristics. All the social classes contributing to the national prosperity shall be unified, their initiative spirit encouraged, their legal rights and benefits protected, and their elitists awarded, so as to shape out a favorable complexion in which each person can exert ability in his proper place.” Therefore, every positive factor could be largely mobilized for the common construction and prosperity of the nation.
		China’s economy, evolved from single public ownership structure into a new mechanism of common development of various ownerships with public ownership in domination, was no doubt the foremost change since its reform and opening-up. The system change spurred the competition among various economic sectors, which was further reflected by a higher rate of capital utilization. Non-governmental investment became an outstanding part for economic growth, and endowed China’s economy with novel and lasting vitality.
		According to the statistics: in the decade 1980-1990, China’s privately owned enterprises increased by 11 times. The registered capital roared 45 times and output value 36 times. By the end of 2001, China possessed 1,323,000 privately owned enterprises, covering 43.7 percent of the total enterprises in the country, registered capital over 2 trillion, and output value also reached 2 trillion, a contribution of nearly 20 percent to GDP. Chinese output value of private enterprises in 2002 had surmounted 3 times compared to the GDP in 1978. The flourishing private enterprises had acted as an indispensable force for the continued and fast economic development. So “system formulation”, similar to “Development Strategy”, became another key factor for the economic boost.
		Fourthly, stimulating domestic demand by proactive fiscal policy and supporting on the investment of local and infrastructure construction became the firm guarantee for the sustaining and rapid economic growth.
		China has a large population and vast market. It is deemed to be one of the few countries in the world with little dependence to the outside and full endeavor to economic development. The statistics showed, up to September, 2002, the aggregate number of foreign-invested enterprises established under approval had overpassed 414,796 with the contract value US$ 813.667 billion foreign investment of which US$ 434.78 billion had been put into actual use, accounting for over 40% of the global direct investment to the developing countries, equivalent to 10% of Chinese fixed asset investment. The import/export trade climbed up to the 6th place in the world, whereas the dependence rate remained less than 20%. Therefore, no matter whether the global economy slided down or weakened, China’s economy could still keep fast developing paces. The root cause stemmed from the fact that Chinese government “Dispose internal affairs with their own money”, which had been illustrated in the Premier’s report as: driving demand by proactive fiscal policy. From my point of view, demand is a significant element to trigger China’s economy. In light of the statistics released by relevant Chinese departments, the economy could be added up 3 to 4 percentage according to the current population growth rate and rising living demand of the masses. For the years ahead, the increase rate of China’s fixed asset investment will not be lower than 15%, which can also draw up economic growth by 2 to 3 percentage. In addition, China’s entry into the World Trade Organization allows a sustained decrease in tariff, and the non-trade barriers will be completely removed in a step-by-step way. Accordingly, the oversea demand for Chinese produce is estimated to raise not less than 15% as per the speed in the past decade, which will again buoy up 1.5 to 2 percentage. In aspect of local and infrastructure construction, except for “the Central and Western Regions Development” project, the Chinese government launched many projects with remarkable investment in recent years which I called as “Development Opportunities Created by Self-motivation”, for example, “South-North Water Transfer Project” (total investment exceeding RMB 500 billion), “West-East Power Transmission Project” (total investment over RMB 130 billion), “West-East Gas Pipeline Project” (total investment over RMB 120 billion), and “Qingzang Railway” (total investment over RMB 26.2 billion) and etc. Good effects accumulated from these tremendous investments will gradually be reflected in the coming decade or a much longer period, which is regarded as a dramatic power for economic development, also an effective driver to propel GDP growth and China’s progress. Another point worthwhile to mention is that, China, taking advantage of its fast growing national strength, won complete success in the bids for hosting the 2008 Olympic Games and 2010 World Exposition. The “two events” planned with a total direct and indirect investment over RMB 250 billion will considerably bring forth extensive development in the industries like tourism, conventions and exhibitions, foreign trade, service, communication, logistics, construction, advertisement and etc., which make great contributions to the sustaining and fast economic development for a medium and long term. The research report on 2008 Beijing Olympic Games conveyed by Goldman Sachs, the world-famous investment banking firm, indicated, “Hosting Olympic Games will bring long-term returns to China along with years of successive investment in the fundamental construction, and further boosting the tourist industry. It is predicated that the Olympic Games will help add another 0.3 percentage annually to China’s GDP from 2002 to 2008, and the stimulus is going to last for years after 2008.” The World Exposition is considered as the ”Economic Olympic”. The Chinese government forecast, “There will be 70 million visitors to 2010 World Exposition. The oversea guests will surpass 10 million with a direct profit around US$ 12.9 billion”. Shanghai, the hosting city of 2010 World Exposition, stands at the faucet of the Yangtze Delta. Obviously, this area, sharing a coverage of some 20% in China’s GDP, can primarily benefit from the radiation of the World Exposition. During the years of 2003 to 2010, it is estimated that the provinces surrounding Yangtze Delta will enjoy over 10% GDP growth rate. In the coming one or two decades, China plans to make every effort in building up an overall well-off society, whereas 2008 Olympic Games and 2010 World Exposition will act as the most important “midway propellers” in the progress of the strategy.
		The implementation of proactive fiscal policy infused China’s economy with much vitality, so did the effective utilization of domestic capital and resources. China currently topped with RMB 8.4 trillion residential deposit and US$ 0.3 trillion foreign exchange reserve, which sponsored solid capital guarantee required by the investment projects.
		The new-term Chinese government has rendered particular inclination to the investment on “the three aspects of agriculture” (agriculture, countryside, peasants) in “the Tenth Five-Year Plan” with an aim to improve the revenue of peasants soonest. The 0.9 billion peasants in China offer gigantic market and internal demand. This is a wise decision for stabilizing policies and matching the aspiration of the masses. It will also play an unmeasurable role for the continued and fast economic development in China.
		To sum up, despite many problems and difficulties pressing in the 5 years ahead or even longer as well as fluctuant elements in the world economy, I have every reason to believe, as long as the aforesaid factors remained unchanged and no unforeseen accident ensued, China’s economy will continue to develop with great speed and highlight the century. Author: Mr. Thanakorn Seriburi,