Following is the speech by the Financial Secretary, Mr Henry Tang, at the Conference on "China, Northeast Asia and the Next American Administration" jointly presented by the Asia Society Hong Kong Centre, the Brookings Institution and the Hong Kong University this morning (December 2):(English only)
Distinguished guests, ladies and gentlemen,
Good morning. It's my pleasure to join you all today to address such a key issue as the US-China relationship. The US has long been and will continue to be an important, if not the most important, player on the global stage. China, with its enormous population and fast-growing economy, is gaining ground not only in economic prosperity, but also in political influence well deserved on the world landscape.
The term "globalisation" has been brewing for decades; and with advances in telecommunications and information technology, and the ensuing reduction in transaction costs, we are now able to talk about true division of labour in the global sense. In 1993, the global trade figure was US$7,439 billion. A decade later, the figure had doubled to US$14,863 billion. Similarly, the average daily turnover in the foreign exchange market reached US$1.9 trillion in April 2004, more than double the figure in 1992.
Globalisation means that we are not alone anymore. We are interdependent upon each other. National borders fade as we facilitate trade and investment and minimise cross-boundary impediments. Globalisation maximises the utilisation of resources and growth potential. Yet, it also means that should one of us fail, others might be dragged along. The Asian financial crisis served as a reminder of the impact of global capitalism; when Asia got a flu, the world coughed as well.
The implications of globalisation are huge. In the economic arena, it means that there will no longer be a strictly "domestic" policy. Whatever you do in your country is bound to affect others through trade or financial markets. This is especially true for big countries like the US and China. This requires political leaders to think outside the box; to think about not only the policy impact on their own citizens, but also how it will affect the global equilibrium. Such considerations might at times be conflicting, but in an increasingly interdependent world, they are, more often than not, one and the same.
Sustainable prosperity in a globalised economy is guaranteed not by unilateralism, but by open dialogue, positive engagement and mutual understanding. I am among those who regard the current state of US-China relations to be at their best. While the US Administration continues to have concerns with China over a number of issues, including the trade balance, currency valuation and intellectual property rights, the US and China have more in common than they have disagreements. The US can count China as a partner in its efforts on counter-terrorism; and China, of course, plays an irreplaceable role in promoting regional stability. The Bush Administration's relatively open position on free trade also serves both the US and the world well.
The US and China have worked hard to develop a relationship that enables them to communicate with each other and address common challenges. I am confident that during the second Bush Administration, this relationship will continue to flourish under the leadership of our two presidents.
Nevertheless, some people perceive that the real flash point of US-China relations is the Taiwan issue. We, of course, welcome the clear articulation of America's continuing adherence to the One China policy, particularly that the assurance came from the highest level this time at the margin of the APEC Economic Leaders meeting. The importance of the One China policy to regional stability cannot be over-emphasised.
Hong Kong offers a unique perspective on US-China relations. On the one hand, we are part of China. Our motherland's national interest is our own interest. On the other hand, we are a Special Administrative Region of China. Except for foreign affairs and national defence, we enjoy a high degree of autonomy. Our special status allows us to make economic policies without much interference from global politics and foreign affairs. Indeed, we have long been recognised as the world's freest economy. We are a showcase of genuine free trade, a clear example of the benefits of globalisation and free markets.
In the global trade arena, Hong Kong has long played a constructive role. Our credibility comes from practising what we preach. Particularly in the WTO, of which Hong Kong is a founding member, we have from time to time played a bridging role between the developed and the developing camps. With a relatively longer history of involvement in multilateral trade negotiations and non-partisan views on free trade, we can be the ideal honest broker. As you might know, the 6th WTO Ministerial Conference will be held in Hong Kong next December. This is again a testimony to the contributions we have made and will continue to make in global trade.
With the rise of regionalism, some people might regard multilateralism as failing, or losing its lustre. Some might also perceive China's increasing influence in the region as a threat to US interests.
I beg to disagree. Regionalism grows out of the need for strategic alliances. In an age of interdependence, we prosper not on our own, but in a mutually beneficial network. Co-operation and co-ordination with one's neighbours are just as, if not more, important than one's own competitive advantages. It is through forming strategic alliances that we can maximise our potential and bring prosperity to all.
In the bigger picture, regionalism is a building block for multilateralism. Just 3 days ago in Laos, ASEAN and China signed an agreement on trade in goods which will lead to an ASEAN+1 free trade area by the year 2010. ASEAN's initiative to form a stronger alliance with China is a natural recognition of China's growing economic power and political influence in the region. Such an initiative is not at the expense of the US or anyone else. Rather, a prosperous Asia is not only conducive to regional stability, but also a positive factor in sustaining global economic growth. Both of these outcomes should be welcomed by all, including the US.
This brings me back to the message that global prosperity is achieved by open dialogue, positive engagement and mutual understanding. We compete not at the expense of others, but to the benefit of all. Economic growth is not a zero-sum game. It is entirely possible that everybody wins. Political leaders should have the wisdom to see through the myth of conflicts and the courage to take a firm stance on global interests. We might not see eye to eye on every issue, but as Colin Powell said recently, "when we disagree, we do so candidly, openly, and in the spirit of trying to find a solution to the disagreement."
On this note, I would like to thank the Asia Society Hong Kong Centre, the Brookings Institution and the University of Hong Kong for organising this important conference. This is exactly the kind of open dialogue that we need to build common ground and forge consensus towards a peaceful prosperous world.
Thank you very much.
Ends/Thursday, December 2, 2004