Regional Integration and Development of Yunnan Province

H.E. Mr. Li Xinhua
Vice Governor of Yunnan Province

Mr. Chairman, Ladies and Gentlemen,

First of all, please allow me to extend my heartfelt appreciation to the Asia Society to invite my collegues and me to attend the 13th Asian Corporate Conference held in Vietnam and also my gratitude to the Government of Vietnam for the excellent arrangements and the warm hospitality accorded to us. Yesterday, H.E. Vu Khoan, Deputy Prime Minister and many distinguished guests exchanged views on Vietnam’s continuing reform and made penetrating analysis, which benefited us a great deal. Now I would like to give you a briefing to the social and economic status of Yunnan Province and the participation to the GMS Program, as well as my personal views on the establishment of China-ASEAN Free Trade Area and its impact on the Mekong Region.

As you all know, Yunnan Province of China is located to the north of Vietnam with a borderline of 1347 km. We are so pleased to see that the communication infrastructure has been improved with increasing flows of people and goods in recent years. Nowadays, the closer economic and trade ties have been locomotives to the economic growth of the northern Vietnam and Yunnan Province. It is not only in keeping with the general trend of peace and development in this region, but also the aspirations of achieving rapid growth and poverty alleviation of the people in this region. Like our good neighbor, Vietnam and other neighboring province in China, Yunnan Province has obtained rapid economic growth in recent 5 years with an average GDP increase of 7.4%. The GDP in 2002 was 223.2 billion RMB Yuan, 8.1% higher than the year 2001. Thanks to the construction and implementation of a large quantity of key projects, such as airport, railway, expressway, power plant, fiber cable and reservoir, the restrictions caused by bottleneck of the infrastructure and basic industries have remarkably be alleviated and reserved continuing power for economic development. On the recently closed the 10th People’s Congress of Yunnan Province, we set the social and economic development target for Yunnan Province as that the GDP should be doubled than 2000 through the year 2010, the living standard of the people should be well improved and the poverty will be basically eliminated. Through the year 2020, the GDP will be 800 billion RMB Yuan, four times than the year 2000. In order to achieve the target, we worked out three strategies to build up Yunnan into a strong province of green economy for sustainable development, a big province of multi-nationalities and multi-culture for social progress, an international passageway connecting China with Southeast Asia and South Asia for regional economic integration and world economic integration. It is quite clear that the strategy of building up Yunnan into an international passageway linking China, Southeast Asia and South Asia together, has a very close relationship with today’s topic in this session. I believe, the construction of China-ASEAN FTA and the facilitation of GMS Program, which coincide with the development thought of Yunnan Province, are tremendous opportunities for the social and economic development of Yunnan Province and will have profound significance in various aspects as follows:

First, regional economic cooperation will help strengthen the peace and stability in this region. As is known to all, economy has been one of the main ties in international relations today. Trade exchanges on the basis of mutual benefit will play an important role in the establishment of the friendly relations between countries. Yunnan Province of China shares the borderline with three ASEAN member countries with the total length of 4060 km. Meanwhile along the Lancang–Mekong River, there are 6 countries and the China-ASEAN FTA will cover 12 countries with a big population of 1.7 billion. Different countries with different historical experience, sharing similarities and diversities, have established very close links during the process of common development. Therefore, to expand the economic exchanges will help China, especially help Yunnan Province and the neighboring countries to know each other better and reach the common understanding to maintain the peace and stability and create a harmonious environment for common prosperity. In this connection, to maintain a harmonious environment is most important when we are making joint efforts to face to the safety challenge in the non-traditional fields, such as international terrorism, drug traffic, illegal immigration and cross-border crimes.

Second, regional economic cooperation will help promote the common prosperity in this region. Economic development is the priority task for each country in this region. Through economic cooperation, we could make best use of our advantages and bypass the disadvantages, we could meet each other’s needs and strengthen our economic strength and finally improve the living standard of our people. Nowadays, the GMS economic cooperation and the construction of the China-ASEAN FTA have been the symbol of economic integration for this region. The ongoing and the on-coming cooperation in various fields, like communication, energy, telecommunication, environment protection, human resources development, trade and investment facilitation, tourism, private sector’s participation and agriculture, has provided us a strategic framework and a clear target to join hands together so as to explore the rich human and natural resources and thoroughly eliminate poverty in the region.

Third, reinforced regional cooperation will help us to withstand the risk in the process of globalization. With the rapid development of the international economic globalization, various kinds of risks are much easier to spread in the world in a short time. Most transitional economies in the countries of this region are very difficult to face to the challenge of globalization by their own capability. Through economic integration, countries will carry out closer coordination and cooperation in taking measures to avoid risks and making joint efforts to build up a protecting embankment for the affect from outside of the region. The practices in recent years have not only fully proved the necessities, but also asked us for speeding up the process of regional cooperation.

Mr. Chairman, Ladies and gentlemen, Yunnan Province, as one of province of China with the longest borderline between China and ASEAN countries, has taken an active role in promoting the GMS programs in the past ten year under the guidance of the central government. While the GMS programs will be the carrier for Yunnan to participate in building up the China-ASEAN Free Trade Area. Last year, the first GMS summit participated by leaders from six riparian counties held in Phnom Penh, Cambodia, is an important milestone in the cooperation history of the GMS cooperation. The meeting signed the Ten-Year Strategic Framework for the GMS program with 11 Flagship Programs. Among which the South-North Economic Corridor Project has covered many key programs proposed by Chinese government. According to the principles of centering on key projects and proceeding in a step-by-step manner with equal consultation and mutual benefit, Yunnan Province is now pushing forward the implementation of these key programs. Since the commercial navigation among 4 countries on the upper reaches of the Mekong River was opened in 2000, the navigation management and environment protection agencies from China, Laos, Myanmar and Thailand have cooperated very closely with sound operation. Besides, the agreement on financing the section in Laos of the Kunming-Bangkok Road Project signed by China, Laos, Thailand and ADB, will lay a solid foundation for the road to be joined up by the year 2006, which is the long-cherished desire for the people in this three countries. On the other hand, the main highway upgrading projects connecting to the border of Myanmar, Laos PDR and Vietnam related to the North-South Corridor Project are now underway. Under the Framework Agreement For the Facilitation of Cross-border Movement of Goods and People and the Intergovernmental Agreement on Regional Power Trade accepted by the 1st GMS Summit, Yunnan Provincial Government is now working hard to arrange the related contacts of the electrical networking, sharing power supply, and the pilot-testing of single-stop customs inspection. As the sub-projects of North-South Corridor, Vietnam and China jointly proposed the Red River Navigation project, Yunnan-Vietnam Railway Improvement project, the new cross-border bridge project and the concept of building up the Kunming-Hanoi Economic Corridor with measures to facilitate the cross-border trade investment, environment protection and human resources development. We hope these proposals will also obtain concerns and support from you present here. Today, the economic corridor from Kunming to Hanoi has become a crowded and mutual- moved corridor. For example, the face-to-face ports like Hekou and Laocai, the total flows of the People, vehicles and goods reached 1 million person-time, 10,000 vehicle-time and 600,000 tons respectively in recent 3 years with a total trade volume of over 150 million USD. We have every reason to believe that this development tendency will keep going on fast. The profound and positive influences caused by the mutual trade exchanges are fostering the readjustment of the industrial structure and productive forces distribution and will make due contribution for the China-Vietnam border area and the GMS Subregion to upgrade its overall competitiveness in the world market.

Although the establishment of the China-ASEAN FTA is newly proposed on the agenda, it has revealed itself vigorous vitality. In my point of view, it is not only the inevitable outcome of the close economic cooperation among the countries in this region, but also a rational choice to counter with the economic globalization.

Mr. Chairman, Ladies and Gentlemen, at least during a short period of time, the process of regional integration symbolized by GMS program and the establishment of the China-ASEAN FTA, will provide us tremendous opportunity for our economic development, but meanwhile, it will be a huge challenge for us.

Most of the Southeast Asian countries are developing countries, especially those neighbored or near to Yunnan Province are all transitional economy. The industrial structures are identical and most of the commodities exported to the world markets are mainly agricultural products and industrial raw materials. The main resources of the direct foreign investment, which are important for all these countries, are quite similar that cause the theoretical competition on the investment among these countries. This kind of competition again impacts the development of the infantile industries and the growth of the small and medium-sized enterprises. Furthermore, the construction of the China-ASEAN FTA is guided by early harvest. To meet the related tariff reducing policy on agricultural products, Yunnan, an agricultural province, has o make adjustment at the right moment. Of course you know, adjustment means paying costs to a certain extent. Fortunately, this requirement is keeping with the long-term strategy of our province, especially the agricultural development strategy, namely returning cultivated land back to grass and forest, resuming ecological environment, developing high efficient agriculture and speeding up the urbanization. Generally speaking, the process of the economic integration will not only reveals the weakness of the infrastructure in this region, but also the weakness of software environment to face to the challenge raised from the globalization. When we are facilitating the cross-border transport for people and goods, trade and investment, the drug traffic, illegal immigration, cross-border crime and HIV-Aids are showing a tendency of growth that will increase our cost for economic integration.

However, exactly as the successful experience from the ten-year GMS economic cooperation shows that we need closer cooperation and make objective analysis and judgments to the real situation of this region to meet with the challenge. So in this sense, I appreciate the Asia Society, Dao Jones and the Ministry of Planning and Investment of Vietnam very much to organize this Session to discuss the impact of the multilateral trade on the Mekong region and give me this opportunity to address on this session. I am looking forward to your comments and exchanging views with distinguished guests.

Thank you.