Speech by Mr. Mao Siwei Consul General of China in Kolkata At a Meeting Organized by Bengal National Chamber of Commerce & Industry
18th December 2007, Kolkata

Respected Mr. K. K. Navada, President of BNCCI,

Respected members of BNCCI,

Distinguished guests,

Friends from the media,

Ladies and Gentlemen,

It's a great pleasure for me to be here today to share my understanding about Chinese economic development and China-India economic relations with you. I have been in Kolkata for three months now. Our task is to establish a Chinese consular office in the city. To reopen the Consulate General in Kolkata after 45 years is an important development which shows encouraging progress being made in China-India relations. We have met quite a lot of Indian people in the last three months and we have had a strong feeling that Indians in general want a even better China-India ties and business people in Kolkata in particular wish to push further ahead in promoting trade and economic cooperation between the two countries.

My talk today will be in three parts: in part one I will try to give a general picture of today's Chinese economy, part two will be on seven important factors behind the success of Chinese development, and part three will focus on China-India economic relations.

Part one: some indicators of the current situation of Chinese economy and its status in the world.

I'm not an economist and the only thing I can do is to cite a few statistics and I hope these figures are not boring.

1) China's GDP reached 2.68 trillion US dollars in 2006, the fourth place in the world.

2) Foreign trade volume totaled 1.76 trillion US dollars in 2006, the third place in the world.

3) Foreign Exchange Reserves surpassed 1.3 trillion US dollars by June of 2007, the first in the world.

4) The output of steel, coal, cement, textile, TV set, shoes and so on, all rank the first place in the world.

5) China has now over 40 thousand kilometer express highway network, the second, only after USA, in the world.

6) The total electricity generating capacity reached 622 million kilowatts by the end of 2006, ranking the second in the world.

7) The total users of fixed telephones and mobile phones are 850 million, ranking the first in the world.

8) The total users of internet are 123 million, the second in the world.

All of these are important achievement and nowadays more and more economists in the world see China as the engine of the world economy.

But this is only one side of the coin. When you travel to big cities like Beijing, Shanghai and Shenzhen in eastern China, you might feel that they look like those well-known cities in some developed countries. However, if you visit some parts of central and western China or some remote villages in mountain areas, you will easily understand that there are more than 20 million Chinese people still living below the poverty line. China is and will be a developing country for a very long time.

Part two: seven important factors behind China's economic success.

Recently, Dr. Chen Ning Yang, an American citizen of Chinese origin, delivered a lecture at an overseas Chinese businessmen's gathering held in Kobe City, Japan. Dr. Yang is a well-known scientist in the world who was a Nobel Prize winner in physics 50 years ago. Now although at the age of 85, he is still very active in promoting understanding between the Chinese and American peoples. He said he is neither an economist, nor a political scientist, nor a sociologist. He is a person who loves thinking. He considers he is amateur as far as economics is considered and his understanding of Chinese economic development is a layman's point of view. But I do appreciate his thought. As an outstanding figure winning a Nobel Prize, having long-time American academic background and deep Chinese cultural root, his idea deserves a special attention for anyone who wants to understand today's China. Now I have the honor to introduce the main points he made in his lecture in Japan. Certainly some explanations are mine.

He cited seven cultural, historical and administrative factors which have played important role in the Chinese economic achievement in the last twenty plus years.

First, the Chinese are hard-working people and the Chinese culture encourages saving.

He took two examples of the Chinese in America. In the 19th Century when the Cross Continental Railroad was built up in the United States, more than 12,000 Chinese immigrants were employed for the hard work. The Railroad was largely constructed by the Chinese laborers. Historically, hard working Chinese people made a contribution to American economic development. And nowadays many Chinese students are studying abroad and especially in the States. Generally speaking, most of them are studying hard and achieving good academic performance.

Traditional Chinese culture places a high value on thrift, seeing thrift could determine the fate of a person, a family or even a nation. Still now Chinese people like to live in a thrifty manner and do not show off wealth with conspicuous consumption. So that as a nation, China's saving rate has been as high as over 40 percent of China's GDP in last twenty years. A high saving rate naturally is transformed into a high investment rate.

Second, the Chinese are patient people and have a strong willpower.

The traditional Chinese culture is Human Centric, while the traditional Western culture is God Centric. In the Chinese society people attach importance to collective relations, relations between parents and children, between individuals and their families, between families and the community and between different groups of people. So that Chinese culture is also Society Centric. In the Western culture, the importance has been attached to the relations between an individual and the God, and individualism became the core value of the Western culture.

Dr Yang has been living in the United States for decades and he likes to make comparison between the Chinese culture and the American culture. He said American children don't care much of what their parents and teachers' thinking about them. If they don't like do something they just stop doing o. In contrast, Chinese children are more sensitive to their parents and teachers' idea, they would do things as their parents and teacher expect. So in comparison, the Chinese people can do a hard work in a patient manner and for a longer time. This might be a cultural factor to explain why China can maintain a high GDP growth for more than two decades.

Third, the Chinese society does not have complex conflicts between different races, religions and castes.

Confucius, a great Chinese philosopher said 2500 years ago: "to provide education for all people without discrimination". It means no matter where they came from and what class they belonged to, all the students were treated in the same way. This has been a tradition of the Chinese culture. Educational equality has been playing an important role in making a dynamic society, in which knowledge, wealth and power are not permanently controlled by a certain class or a certain group of people.

Fourth, national unity has been the mainstream of the Chinese history.

Since China was united by the first emperor of the Qin Dynasty, China has successfully kept it as a united nation for more than two thousand years. Although China was broken up for several times due to internal chaos or external occupation, reunification has always prevailed. As a big nation, China's national unity lasting for two thousand years is unique in the world history. The unity of the Chinese language and its wring system has been both the cause and result of the national unity. This tradition makes Chinese people have a strong sense of national coherence.

Fifth, wiping out illiteracy.

Since the establishment of the New China in 1949, the authorities at various levels have done a great job on primary education. Dr Yang said that when he first visited China in 1971 after living abroad for decades, he was surprised to see that the New China had successfully wiped out illiteracy in just its first 22 years. Now illiterates account for only five percent of the age group between 10 and 50 years old. Considering that China has such a huge population and covers such a large territory, this is really a great achievement. And because of this when the Shenzhen Special Economic Zone was established in the late 1970s, it could immediately have several hundred thousand literate young workers mainly from the countryside. The efforts of anti-illiteracy campaign 50 years ago have got the fruits now in the campaign for modernization.

Sixth, rapid development of infrastructure.

Since China's reform and open up to the outside world, especially in the last ten years, the world has been shocked at the speed of China's development of infrastructures, including express highways, bridges, power network and hydro projects and so on. In 1977, there were only two bridges across the Yangzi River, the third largest river in the world. Now there are more than 60. Many foreigners who visited China and saw these facilities had a common feeling that the Chinese speed of infrastructure construction was hardly imaginable. A strong network of infrastructure is one of the important factors behind China's success in attracting huge FDI.

Seventh, stability of the society.

According to Dr Yang's observation, pragmatic approach, open minded attitude and flexibility in policy making have been three important features of the Chinese Government since the late 1970s. The policy achievement has been in creating a peaceful and stable social environment. Such an environment has made China an attractive destination of FDI, be able to lift 200 million people out of poverty, and becoming a consumption power in the world.

All these changes have been taking place in just twenty plus years. China, as a big country with a population of 1.3 billion, has maintained its annual growth rate at 10 percent for more than twenty years. This is a great achievement unprecedented in the history of human beings, which the Chinese people should be proud of.

In his lecture, Dr Yang also pointed out that today's China is facing many difficulties and problems. What China is doing is to materialize, in a period of 50 years, the economic and social development for which the Western world has spent three centuries since the Industrial Revolution. Therefore, all the unavoidable problems have been concentrated in a short period of time. Currently the biggest problem in China is the widening gap between the rich and the poor and various different problems, such as frequent incidents in coal mines and problems in rural areas, are related to it.

Part Three: growing China-India economic relations.

Nowadays when people in the world say China is rising, they would also say at the same time that India is rising too. India's economic reform began in the early 1990s and from the same time China-India relations have improved in a big way. The world has witnessed, especially in the economic front, China and India have been going together and closer.

In the early 90s, the bilateral trade between India and China was only around 200 million USD. In 1999 it reached 2 billion USD, an increase of ten times after less than ten years. And in 2006, the figure further reached 25 billion USD, an increase of more than 100 times after less than 20 years. This is a story of success made by China and India jointly. Now China has become the second largest trade partner of India, just after the US.

According detailed statistics available, in 2006, India's exports to China recorded a total value of 10.46 billion USD, increasing by 7% over 2005. The top 5 items of Indian exports to China that year were: Iron Ore and related materials (50%), Raw Cotton (9%), Organic Chemicals (6%), Plastic (5%) and Machinery (4%).

In the same year India's imports from China reached 14.58 billion USD, increasing by 63% over the year before. The top 5 items of Indian imports from China in 2006 were: Electrical Machinery (25%), Machinery (19%), Organic Chemicals (12%), Iron and Steel Products (5%), and Iron and Steel (4%).

This year, 2007, in the nine month period between January and September, the bilateral trade between China and India was 27 billion USD. It is expected that the figure will touch 30 billion USD by the end of this year. If the trend continues, the target of 40 billion USD of trade by 2010 will be achieved much ahead of the targeted date.

Besides trade, in the investment front and other fields of cooperation, momentum is emerging. More than 150 Indian enterprises, including most of the important Indian IT and pharmaceutical companies, such as TCS, Infosys, Ranbaxy etc, have set up their sub-companies or representative offices in China. About 45 Chinese companies have also entered into Indian market, involving construction projects such as telecommunication networks, power plants, roads, airports, pipelines and so on.

Finally, I would like to say that all of these are historical development in the China-India relations. This encouraging trend clearly shows that the economies of the two countries are mutually complemented, and we share strong common interests in the development of our two countries. We can foresee for sure that the economic factor will further play a significant role in the overall relations our two countries in the coming years.

Thank you.

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