President Emeritus Dr. Emmanuel Santos
President Emeritus Dr. Nerza Rebustes
President Bernardino Paco
Congress Chairman Dr. Rey Carpio
Dr. Benjamin Santos (Awardee of Philcoman man of the year for 2009)
Board of Governors
Philcoman members
Distinguished Guests,
Ladies and Gentlemen,
Good afternoon.
As most of you may not know, I'm appearing here today for two very good reasons. The first reason is PHILCOMAN was looking for a speaker who's intelligent, entertaining and well-versed in economics. Fortunately, they did. The second reason is that, unfortunately, the speaker was trapped in traffic so they called me. Anyway, I will do my utmost trying not to let you down.
Throughout the past 55 years, PHILCOMAN has been encouraging and developing widespread understanding, appreciation and application of the principles and methods of effective management all across the Philippines. What you've contributed are great thoughts and inspiring ideas, rendering catalyst for the national strive towards a robust and dynamic economy. At the same time, PHILCOMAN also represents the Philippine management internationally and provides the channel for interaction, coordination and cooperation among business institutions in the region and all over the world. In this sense, it is more than pertinent for the 37th National Management Congress to proceed in the spirit of "Responding to the Challenges of Managing the Global Economic Crisis". Today, though only being a novice in understanding economics, may I share with you some humble views on this best chosen theme from a Chinese perspective.
Still fresh on our minds are dire memories of the situation we faced just half a year ago: a contracting economy, skyrocketing unemployment, stagnant trade and an international financial system that was nearly frozen. Some were warning of a much more severe impact than that resulted from the Great Depression. This unprecedented global financial crisis has taken a heavy toll on the Chinese economy. Yet, we have risen up to challenges and dealt with the difficulties with determination and prompt action. The Chinese Government has adopted a host of policy measures to boost domestic demand, adjust economic structure, promote growth and improve people's well-being.
We have arrested the downturn in economic growth. Despite the drastic contraction in overseas demand, in the first half of 2009, China's GDP grew by 7.1%, investment expanded at a faster pace, and consumption maintained fast and steady growth. Domestic demand played a stronger role in driving the economy forward. From January to July, more than 6 million new urban jobs were created, income of urban and rural residents increased. We effectively managed fiscal and financial risks and kept budget deficit and government debt at around 3 percent and 20 percent of the GDP respectively. These are the results of the proactive fiscal policy and moderately easy monetary policy and the stimulus package that the Chinese Government and people have pursued in line with our national conditions.
Ladies and Gentlemen,
China's stimulus package focuses on expanding domestic demand and is aimed at driving economic growth through both consumption and investment. Of the total USD 570 billion in the two-year investment program, more than USD 170 billion comes from the central government, and it will mainly be used to generate greater investment by local governments and the non-public sector. Vigorous efforts have been made to stimulate consumption and make domestic demand, particularly consumer spending the primary driver of economic growth. In the first seven months, total retail sales of consumer goods rose by 15 percent.
China's stimulus package aims to address both immediate problems and long-term needs, and to achieve economic growth in the course of restructuring. The central government has a clear vision in expanding investment. The money should focus on shoring up the weak links in economic and social development, help remove the bottlenecks in the national economy, and contribute to structural readjustment and transformation in the development model. In particular, we want to strengthen technical upgrading and innovation, rein in excess capacity and support the development of new industries of strategic significance so that the Chinese economy will be put on a more sustainable path.
China's stimulus package is also designed to both sustain economic growth and improve people's livelihood. We give priority to projects affecting people's well-being in allocating public resources. We are pressing ahead with comprehensive reform in the health care system. Within a period of three years, governments at all levels in China will invest an additional USD 124 billion to make medical services more accessible and affordable for both urban and rural residents. For the year of 2009, the central budget for education, healthcare, social security, employment, subsidized housing and other programs related to people's well-being will be nearly 30% higher than that in 2008.
These significant steps have been taken to bring China's economy back from the brink, secure the gradual rebound and further lay groundwork for long-term prosperity. However, the stabilization and recovery of the Chinese economy is not yet steady, solid and balanced. With many uncertainties remaining in the prospects of the world economy, we still face tremendous pressure of the decline in external demand. We are under various constraints in expanding domestic demand in the short term. Some industries and businesses remain in a difficult situation, and the task of economic restructuring is still a daunting one. Some of the stimulus measures will see their effect wane, and it will take time before those long-term policies show effect. A full economic recovery takes a slow and tortuous process.
Therefore, China will continue to take maintaining steady and relatively fast economic growth as the primary task. China will unswervingly follow the proactive fiscal policy and moderately easy monetary policy, and fully implement and continuously enrich and improve the stimulus package. China will promptly identify and address new developments and new problems in the economy, make the policies more targeted and effective, and fend off various potential risks, including inflation, so that the economy achieves steady and fast growth and the country enjoys social stability and harmony.
Ladies and Gentlemen,
As I've often said in my previous speeches, the world economy has been incredibly integrated and the people throughout the world are tightly inter-connected. We are living in a world that has grown smaller than at any other time in history. Therefore, to tackle with a global recession really needs the international community, China and the Philippines included, uniting and acting as one to make sure that the global recovery sustains and grows, while preventing the mistakes and imbalances that led us into this crisis.
Following the two summits in Washington and London, the international community gains confidence, financial markets are moving towards stability and the world economy sees light at the end of the tunnel. Now, we've heard some more good news from Pittsburgh G-20 Summit. The world's major economies agreed to continue efforts to spur global demand and committed to sustained and balanced economic growth, so that the world avoids booms and busts of the past. An historic consensus was reached to reform the global financial system and the international economic structure should be adjusted to better accommodate coordinated efforts among countries to meet the challenges in the 21st century.
China agrees to sustain our stimulus package until growth is restored and a new framework for prosperity is in place. Other countries should do so too because it was these stimulus plans that played an indispensable role in averting catastrophe. All countries should keep up the intensity of their economic stimulus plans. Both developed countries and developing countries should take more solid and effective measures and make greater effort to boost consumption and expand domestic demand. Major reserve currency issuing countries should take into account and balance the implications of their monetary policies for both their own economies and the world economy with a view to upholding stability of international financial markets.
China stands firm in advancing the reform of the international financial system. The representation and voice of developing countries should be increased. The existing decision-making process and mechanism in international financial institutions should be improved. The reform of the international financial supervisory and regulatory regime should be advanced to the most fundamental principles and objectives of supervision and regulation. The future financial supervision and regulation standards should be widely acceptable. And a fair and transparent international tax environment should be fostered.
China is committed to promoting balanced growth of the global economy. The root cause of global economic imbalances lies in the yawning development gap between the North and the South. Only with real development of the vast developing world can there be solid global economic recovery and sustainable world economic growth. To make the existing institutions reflect the reality of the times, more responsibility should be shifted and a greater voice should be given to emerging economies and developing countries in such mechanisms as the International Monetary Fund. Countries at different stages of development should be allowed to choose their own approach and pace suited to their national conditions, and the space for development that the developing countries well deserve must not be compromised.
China resolutely opposes and rejects protectionism in all forms. Protectionism will only delay world economic recovery and ultimately hurt the interests of the businesses and people of all countries. With the shadow of the global financial crisis still lingering, the international community must not waver in its resolve or slacken its efforts against protectionism. It is all the more inadmissible to say one thing while doing just the opposite. We must guard against and redress covert protectionist activities. As an active participant in economic globalization, China will uphold a fair, free and open global trading and investment system, and impose no new restrictions on goods, investment and services as we have committed. We mean what we say and we honor our word with real action. For example, we sent several trade and investment promotion missions to Europe and the United States in the raging times of the financial crisis to purchase goods and boost investment cooperation. We have kept our commitment and we look forward to joint actions from other countries. All of us should work for the success of the Doha Round negotiations on the basis of locking up the existing achievements.
Ladies and Gentlemen,
China and ASEAN countries are members of the Asian family. We share a strong aspiration to strengthen cooperation to buffer the global crisis impact and tide over the difficulties. We should renew our fruitful cooperation in fight against 1997 East-Asia financial crisis and support each other to overcome the on-going difficulties. Back to early May this year, in Bali, Indonesia, China committed USD 38.4 billion at the ASEAN plus China, Japan and the ROK (10+3) Finance Ministers' Meeting to the regional reserve pool, core to Chiang Mai Initiative Multi-lateralization. In 2008, China's total import volume topped USD 1.1 trillion. With stimulus package in place and domestic demand expanded, China would be a huge market of more than USD 10 trillion for the whole world in the next decade. ASEAN, the 2nd largest exporter to China, is surely to benefit more in the years to come.
China will see to it that the cooperation with our ASEAN neighbors yield more progress. The China-ASEAN Free Trade Agreement has been hailed as a milestone in pushing forward a stronger relationship between China and the ASEAN countries. In 2010, a China-ASEAN free trade zone with a combined population of 1.9 billion and an aggregate GDP as much as nearly US$ 6 trillion would be up and running. Starting from 1 January next year, about 93% of trade goods between China and the ASEAN countries will be exempted from tariff. The consumers on both sides will have wide-ranging choices of more than 7,000 zero-tariff items in the market.
As one of China's close neighbors and good friends, the Philippines is a country of rich resources and talented people. With full implementation of Economic Resiliency Plan (ERP) in 2009 and expected global recovery, the Philippines is well poised to register positive growth this year. China's efforts in stimulating domestic demand and investment expansion create tremendous market potential. Our two countries are enjoying great potential for win-win cooperation.
According to earlier NEDA reports, the bulk of stimulus spending next year would focus on larger infrastructure projects including transportation and water networks, where our two countries have had solid cooperation and see bright prospects for more successes. China is ready to strengthen cooperation with the Philippines in even broader areas of mining, farming, telecommunication and education. While continuing the effective and fruitful cooperation with the Philippine Government, China is also very much looking forward to tapping into cooperation possibilities with the Philippine private sectors which some of you very well represent.
Ladies and Gentlemen,
Returning to the theme of this Congress, I would like to conclude my speech by sharing with you what Chinese Premier Wen Jiabao said at the World Economic Forum Annual Meeting on 10 September, "At the early stage of the global financial crisis, I called for confidence, as confidence is more important than gold and currency. At the most difficult stage of fighting the financial crisis, I called for hope, as hope is the source of strength. At this critical juncture of countering the financial crisis, I call for perseverance, as perseverance will lead us to final victory."
Thank you.
