Speech by Gao Hucheng, Vice Minister of Commerce

Ladies and gentlemen,

Good afternoon,

This year marks the 5th anniversary of inauguration of the China-ASEAN Free Trade Area (CAFTA). And the China-ASEAN Expo (CAEXPO), will see its 4th session on October 28 – 31, 2007. Now, it is my honor to brief you, friends from the press, on the economic and trading cooperation between China and ASEAN as well as the preparations for the 4th CAEXPO. And I would like to divide my briefing in three parts as follows:

• Construction of the CAFTA makes breakthroughs and the win-win cooperation between China and ASEAN is enhanced.

In recent years, cooperation between China and ASEAN in fields like trade and investment maintains rapid growth. Construction of the CAFTA is progressing as scheduled, and the regional and sub-regional cooperation is enhanced. A new chapter is open for the bilateral economic and trading cooperation.

• Economic and trading cooperation between China and ASEAN develops rapidly, and the bilateral trading volume will top USD200 billion two years earlier than the set schedule.

In 2006, the bilateral trading volume between China and ASEAN recorded US$160.84 billion, up 23.4 percent over last year, among which, the import volume of China from the ASEAN was US$89.53 billion, increasing by 19.4 percent, and the export volume of China to the ASEAN, US$71.31 billion, an increase of 28.8 percent. And from January to July this year, the bilateral trading volume was increased to US$109.77 billion, up 27.5 percent over the same period of last year, among which, the import volume of China from the ASEAN amounted to US$58.77 billion, increasing by 22.4 percent, and the export volume of China to the ASEAN, US$51 billion, growing by 34 percent. China mainly exports ships, textile & garments, china wares and vegetables to the ASEAN countries, and imports from them copper products, rubber products and cocoa products.

Now, China and ASEAN have become the 4th largest trading partners for each other. In light of the current situation, the total bilateral trading volume is projected to top US$190 billion this year and US$200 billion in 2008, which means that the goal of US$200 billion set for 2010 would be achieved two years ahead of the schedule.

The investment cooperation between China and ASEAN also grows steadily. By the end of 2006, ASEAN countries have totally invested US$41.9 billion in China . The investment from Chinese enterprises to ASEAN also enjoys fast growth momentum, and ASEAN has become a major market for overseas project contracting and human resource cooperation of China-based enterprises.

Agreements on Trade in Goods and Trade in Services between the two sides are launched, thus increased the openness of markets of both sides.

Since the Agreement on Trade in Goods of the China-ASEAN Free Trade Area was implemented in July 2005, the average duty rate of China for ASEAN has been reduced from 9.9 percent to the current 5.8 percent, decreasing by 41 percent. Meanwhile, the ASEAN countries have reduced their average duty rates for China to different extent, which greatly promoted liberalized trade and brought about benefits to enterprises of both sides.

In this January, the Agreement on Trade in Services was jointly signed by China and ASEAN and took into effect in July. This Agreement includes the first Schedule of Specific Commitments on Services for the 10 ASEAN countries. China has committed, in line with the rules and regulations of WTO, to open for ASEAN countries its 26 sub-sectors of 5 service sectors like construction, environmental protection, transport, sports and commerce. And the 10 ASEAN countries will open for China the sectors like finance, telecommunication, education, tourism, construction, and medical aid, etc. And in accordance with the unique features of service industries of China and the ASEAN countries, this Agreement includes further liberalization measures, such as allowing enterprises of the other side to set up sole-funded companies or joint ventures, and lowering the thresholds for setting up such companies caused by restrictions upon shareholding ratio of fund. The market access is more open than WTO.

The Agreement on Trade in Goods and the Agreement on Trade in Services have been implemented, and the bilateral negotiations on investment cooperation are expediting, All these mark that construction of the China-ASEAN Free Trade Area has obtained positive results and has formed a stable multi-layer cooperation framework, which has leaped forward towards more liberalized and systematical trade & investment.

• Sub-regional cooperation is deepened, and the Pan Beibu Gulf Economic Cooperation becomes a new highlight of bilateral cooperation.

In July 2005, the Greater Mekong Sub-region (GMS) countries held the 2nd GMS Leaders' Summit in Kunming , China , where the Strategic Framework for Action on Trade Facilitation and Investment in the Greater Mekong Sub-Region was approved. In December 2005, China officially became development partner of Brunei-Indonesia-Malaysia-Philippines East ASEAN Growth Area (BIMP-EAGA); In November 2006, China and Viet Nam jointly signed the Memorandum of Understanding on Two Corridors & One Rim Cooperation. In July 2006, the Forum on Economic Cooperation of Beibu Gulf Rim was held in Nanning , Guangxi. At this forum, the proposal of One Axis & Two Wings Regional Cooperation Mechanism was put forward, which constitutes of the Pan Beibu Gulf Economic Cooperation Scheme, construction of the Nanning-Singapore Economic Corridor and the Greater Mekong Sub-regional Cooperation. In the previous year, the Pan Beibu Gulf Economic Cooperation Scheme gained positive comments and support from heads of state/government of China and the 10 ASEAN countries, including H.E. Hu Jintao, President of China, H.E. Wen Jiabao, Premier of China, H.E. Lee Hsien Loong, Prime Minister of Singapore, H.E. Madame Gloria Macapagal-Arroyo, President of the Philippines, H.E. Dr. H. Susilo Bambang Yudhoyono, President of Indonesia, H.E. Nguyen Tan Dung, Prime Minister of Viet Nam, His Majesty Sultan Haji Hassanal Bolkiah Mu'izzaddin Waddaulah, the Sultan and Yang Di-Pertuan of Brunei Darussalam, as well as officials of the ASEAN Secretariat and senior management of the Asian Development Bank (ADB). Preliminary progress has been made in relevant cooperation projects. A new cooperation framework for China and ASEAN has been shaped, within which the regional cooperation, sub-regional cooperation, bilateral cooperation and multi-lateral cooperation are well interwoven and complement with each other.

• The China-ASEAN Expo, concluding with great success for 3 sessions, has emerged as an important platform for 10+1 cooperation.

In accordance to the diplomatic guideline of the Chinese Central Government on persisting in building good-neighborly relationships and partnership with the neighboring countries, the CAEXPO has been successfully staged for 3 consecutive years. It enhances the economic & trade ties between our two sides, and also promotes the bilateral cooperation and exchanges in various fields.

• The CAEXPO has become a new stage for the development of bilateral strategic partner relations.

As a grand event for economic and trading cooperation as well as international multi-lateral program, the previous 3 CAEXPOs totally attracted attendance of 18 heads of state/government and 500 distinguished guests at or above ministerial level.

At each CAEXPO, meetings were arranged for state leaders, ministers and officials of local governments, thus to enhance mutual understanding. In particular, at the 3rd CAEXPO held last year concurrently with the 3rd China-ASEAN Business & Investment Summit and the Commemorative Summit Marking the 15th Anniversary of ASEAN-China Dialogue Relations, heads of state/government of China and the 10 ASEAN countries all made their presence at the Opening Ceremony and inspected the exhibition pavilions, which was a true picture of the win-win cooperation and harmonious development of the 11 countries.

• The CAEXPO becomes a channel for multi-layer exchanges between China and ASEAN.

The CAEXPO promotes the multi-layer exchanges among enterprises, chambers of commerce and governments. The previous 3 CAEXPOs drew 82,000 exhibitors and trade visitors as well as 100 chambers of commerce/associations, 37 ones among which are Supporting Chambers of Commerce of the CAEXPO. 25 cities of China and ASEAN were chosen as Cities of Charm, which extended the cooperation between China and ASEAN from country-to-country level to that among cities.

Focusing on themes including trade, investment, tourism and science & technology, 94 professional forums/seminars were held during the previous 3 CAEXPOs, which have not only promoted the economic & trade cooperation, but also have facilitated the exchanges and cooperation in and among inspection & quarantine, legal affairs, women, youth, sports and culture, etc.

• The CAEXPO has become an efficient pipeline to convey business opportunities brought by the CAFTA to enterprises.

The previous 3 CAEXPOs set up 9,468 booths, attracted 5,505 exhibiting enterprises, concluded total trading volume of US$3.5 billion and contracted international cooperation projects with investment volume of US$16.11 billion. Via the CAEXPO, enterprises of China and the 10 ASEAN countries are able to share the business opportunities and profits brought about by construction of the CAFTA. Over the past 3 years, ASEAN enterprises use more and more booths at the CAEXPO, and the trade matching services are further optimized. At the 4th CAEXPO, the ASEAN enterprises will use over 1,000 booths, mainly for showcasing electrical appliances & electronics, machinery & equipment, building materials, agricultural materials, furniture, jewelry & jades, works of arts, palm oil & its products, mineral products, etc. Large number of Chinese purchasing enterprises will be attracted, which greatly enhances the recognition and influences of ASEAN enterprises in China . Up till now, the CAEXPO Secretariat has established the China-ASEAN Business Database that includes over 3,000,000 entries of enterprise information of China and ASEAN. Via this information platform, enterprises may enjoy more business opportunities and more satisfactory business matching services.

State leaders of China and the ASEAN countries all grant highly credits and expectations upon the CAEXPO. In this March, H.E. Hu Jintao, President of China gave remarks on organizing work of the CAEXPO. He said that the CAEXPO should be a long-term program with unique features and more pragmatic outcomes. And H.E. Madame Gloria Macapagal-Arroyo, President of the Philippines , when addressing the Opening Ceremony of the 3rd CAEXPO on behalf of the ASEAN side, said that the CAEXPO set up a good example for the future bilateral cooperation between ASEAN and China . The participants think that the CAEXPO keeps optimizing its services and gains richer economic yields year on year. According to the questionnaires on feedbacks of participants done after the 3rd CAEXPO, among the 1,065 interviewees, 89 percent of them express satisfaction with the CAEXPO, up 2.75 percentage point over last year.

• The China-ASEAN Expo will play a more important role in the future 10+1 cooperation.

With the speeding up of construction of the China-ASEAN Free Trade Area and the enhanced economic and trading cooperation between China and ASEAN, the CAEXPO plays a more and more important role as platform for communication and cooperation. We will perfect related mechanisms to ensure it as a long-term successful program, enrich its themes, and increase the economic and trading outcomes, thus to allow the enterprises to share more pragmatic profits via the CAEXPO.

• To further optimize the co-sponsorship mechanism of the CAEXPO, so as to make it a grandeur for friendly cooperation between China and ASEAN.

We will strengthen cooperation with the CAEXPO Co-organizers in the 10 ASEAN countries, to ensure that the CAEXPO could better serve the interests of all parties concerned, and to ensure that detailed arrangements, including the setting up of exhibition pavilions, business matching services and events arrangement, could meet the demands and expectations of enterprises of both sides.

To better convey the signal of friendly cooperation between China and ASEAN via the CAEXPO and to effectively showcase business opportunities of major industrial sectors of the ASEAN countries, from the 4th CAEXPO onwards, a new mechanism called Countries of Honor is introduced. 1 or 2 ASEAN countries are invited to be the CAEXPO Countries of Honor each year, for which special promotion/publicizing activities will be staged.

By promoting the CAEXPO Countries of Honor, a mechanism can be formed that 2 or 3 heads of state/government and ministers of China and the 10 ASEAN countries will make presence at each CAEXPO.

Meanwhile, state leaders from other ASEAN countries other than the Countries of Honor are also welcome to the CAEXPO. By adopting these measures, we aim to embody the unique features of the CAEXPO that is co-sponsored by China and ASEAN, to make this grandeur a mirror of the friendly cooperation between China and ASEAN, and thus to promote win-win cooperation and common development.

• To further promote pragmatic cooperation in the priority fields, so as to make the CAEXPO a more important player in the 10+1 cooperation.

In line with the progress of tariff reduction program within CAFTA, the CAEXPO deliberately selects exhibits from the industrial sectors of China and ASEAN that are strongly complementary with each other and enjoy market potentials, and particularly highlights those CAFTA tariff-reduced commodities. To meet the demands of ASEAN countries for agricultural applicable technologies, the CAEXPO sets up the Pavilion of Agricultural Applicable Technology; To maximize the strengths of ASEAN countries in tourism resources, the CAEXPO also includes the promotion on tourism among its key focuses and sets up the Pavilion of Cities of Charm. The 4th CAEXPO, focusing on transportation, one of the 10 priority fields confirmed by both sides, will highlight the cooperation of ports and harbors. The China-ASEAN Port Development & Cooperation Forum, sponsored by the Ministry of Communications of China , aims to propel cooperation among ports/harbors of China and the 10 ASEAN countries. And at this Forum, the Nanning Consensus on China-ASEAN Harbor Development & Cooperation will be signed and released.

Concurrent events during the 4th CAEXPO include the China-ASEAN Ministers' Conference on Quality Control, the China-ASEAN Forestry Cooperation Forum, the China-ASEAN Forum on Social Development & Poverty Alleviation, and the Mekong Development Forum sponsored by the Asian Development Bank (ADB), etc. By staging these events, the CAEXPO will be more professional and will include diversified elements, and will yield more positive outcomes. In the future, each CAEXPO will zoom at one field among the 10 priority fields confirmed by China and ASEAN, thus to enhance its position as the pioneer of regional cooperation and thus play a positive role in a larger scope of cooperation.

• To yield more economic returns and create more business opportunities for enterprises.

Since its very first session, the CAEXPO, adhering to the pro-business principle, keeps optimizing its professional services and strives to yield richer economic outcomes for participants. In the years to come, the CAEXPO will continue to focus on improving the economic and trading results and be more market-oriented, thus to create more business opportunities for enterprises. For the 4th CAEXPO, we will further optimize services, invite more trade visitors to do their procurement at the event, and provide an effective business matching services. We will also invite to the CAEXPO business leaders in the economic sectors, including CEOs of the World Top 500 Enterprises, CEOs of leading enterprises in the priority fields between China and ASEAN, high-ranking officials from international economic organizations and renowned experts and scholars specialized in regional economic research. For this CAEXPO, we will further improve the supporting services. We will provide standard services that comply with the ISO9000 accreditation system. In this way, we will upgrade service capacity of the CAEXPO and lay down a solid foundation for its long-term development, and thus enable enterprises to share more business opportunities brought about by freer trade and liberalized investment via this platform.

Thank you all.