Mr. Chris Marlow, President of the PNG-China Business Council,
Distinguished Members of the Council,
Ladies and Gentlemen,

Thank you very much for inviting me to be the guest speaker at today's luncheon.

You have made a very good choice to have this luncheon here in the Great Wall Restaurant within the Sir John Guise Sports Complex. As you know, the Great Wall is the only structure on the globe the astronaut can see from the space, and it has become a symbol of China. The sports complex also carries the special meaning in the Sino-PNG relations as it is the first large-scale assistance project of the Chinese Government in PNG. Both China and PNG regard this sports complex as a token of friendship between our two countries and two peoples. So there is no place more suitable for me to touch upon the subject about China right here.

Just now, Mr. Chris Marlow gave us a very good briefing on his recent trip to China. Let me, first of all, express my warm congratulations to him for his successful visit to China in May. During his visit, a memorandum of understanding was signed between the China Council for the Promotion of International Trade and the PNG-China Business Council. This document, I am sure, will give strong impetus to the expansion of bilateral trade and other business activities between China and PNG.
 
It's my pleasure to have this opportunity to meet PNG business people and talk about our bilateral trade because trade is so important a component in the overall relations of our two countries. I would also like to share with you some of my views on issues of your interest such as Sino-PNG relations in general, China's robust economic development, business opportunities in China following its accession to WTO as well as the Taiwan issue.

Trade between Chinese and Papua New Guineans dates back in the late 19th century. At that time when this land of yours was not quite known to the outside world, the Chinese businessmen already set foot on PNG soil by ships to purchase sandal wood, sea cucumber and other merchandise. About the same time, some early Chinese immigrants came to Rebaul of the East New Britain and introduced to local people, among other things, the pidgin--a kind of broken English they had picked up in China while doing business with or working as coolies for Europeans. That specific pidgin was said to have developed later into one of the PNG's main languages.

Official trade relations between China and PNG started in the 1960s. Now we have seen a comprehensive and diversified pattern of economic and trade cooperation between our two countries. Since late 1990s, the bilateral trade has gained strong momentum with the annual trade volume exceeding the US$ 200-million mark. The trade in the year 2000 reached US$ 225 million, hitting an all-time high.

PNG has become China's largest trading partner among the South Pacific Islands nations. PNG's main imports from China range from textiles, garments and light industrial products to machinery and electronic products. China is a very important importer of PNG's timber and crude oil. Every year PNG exports about K 300 million worth of timber abroad, 60 percent of which goes to the Chinese market. China now imports 775,000 cubic metres of timber every year from PNG. Those of you who have been to my country in recent years must have been impressed by the fact that the whole of China now looks like a gigantic building site with many construction projects going on everywhere. China needs more timber and therefore will continue to be a chief importer of PNG's timber in the years to come.

Following the Chinese Government's "going global" trade development strategy, 17 Chinese companies have established their business in PNG. They are engaged in the import and export trade, real estates, manufacturing, logging, fishing, timber processing and building projects contracting, etc. China's investment in PNG stands at US$ 74 million, one latest example being the salt refinery with an investment of US$ 10.75 million. The first of its kind in this country, the salt refinery will turn out 10,000 tons of refined salt annually, thus bringing to an end the history of PNG importing salt from abroad.

There lie great potentials for the further development of our bilateral trade.

First, there is very good match between the Chinese market and the PNG exports. Mother Nature has blessed PNG with rich natural resources such as minerals, forestry, liquid natural gas, crude oil, marine products etc. China is a resource-deficient country. PNG can supply China with various kinds of resources mentioned above.

Second, there is a great complementarity in our two economies. To a certain degree, PNG still remains an uncultivated virgin land. Its present and future development needs cutting-edge technology and advanced expertise from outside world. China, a country that has just been lifted out of poverty, knows exactly from its own experiences where the shoe pinches in PNG. China can provide PNG with easy-to-adopt technology and expertise as well as low-priced commodities.

Third, there is a possibility for PNG to boost its import from China. Over the years, the trade between the two countries has been on the steady increase, but with the balance of trade in favour of the PNG side. While trying to expand its export to China, PNG can definitely find ways to increase its import from China. At present, PNG's annual import from China only makes up less than 3 percent of its total import, leaving much room to be desired.  

Since the establishment of diplomatic ties between China and PNG 26 years ago, our relations have enjoyed steady growth also in other fields. We have maintained a frequent exchange of high-level visits. All the PNG Prime Ministers, Speakers and Foreign Ministers have visited China, and some of the Chinese top leaders have also visited PNG. Leaders of both countries have reached a consensus on the building of a cross-century partnership. Recent years have witnessed the blossoming of the comprehensive relations, ranging from foreign affairs ministerial-level consultation mechanism to increased contacts between political parties of both sides, from many popular aid projects to thrilling acrobatic performances, from the Chinese medical team to work in PNG to the military-to-military exchanges, and from various educational programs to the twinning of sister provinces and cities. A pattern of all-directional, multi-faceted and wide-ranging cooperation in our bilateral relations has taken shape.

China and PNG are two great countries along the Pacific Rim. We share common interest in maintaining peace and stability of the Asia Pacific region and the world at large and we also share the common task of developing our respective economies and improving people's living standard. To develop a mutually beneficial relationship serves the fundamental interest of our two countries and two peoples.  

Now, I would like to talk about the development in China.

A permanent member of the UN Security Council, China is one of the largest countries in the world. Its population of 1.3 billion accounts for one fifth of the world's total. The Chinese nation has created one of the greatest civilizations, and China led the world in social and economic development quite a few periods over its history of five thousand years. But the Chinese people experienced untold sufferings from foreign aggression and internal chaos for a hundred odd years before the founding of the People's Republic of China in October 1949.

Since then, the Chinese people have had a dream to modernize the country. But serious implementation of the modernization program started only from late 1978 when China adopted the policy of reform and opening-up. To reach this goal, it has been carrying out a three-step development strategy.

The first step is to double the GDP of 1980 by the year 1990 to meet the people's basic needs for food and clothing. This step was completed in time.

The second step is to double the GDP of 1990 by the end of the 20th century to ensure the people a comfortable life. This step was achieved in 1995, 4 years ahead of schedule.

The third step is to raise the per capita GDP up to the level of moderately developed countries to achieve modernization by and large and to build China into a strong, prosperous, democratic and culturally advanced socialist country by the middle of this century. Now with the beginning of the new century, China has just started the third step development strategy.

Thanks to the 23 years of relentless efforts, China's overall national strength has grown markedly, ranking the seventh in the world. In the 20 years from 1979 to 1998, China's GDP was up by 490 percent in real terms with an annual average growth rate of 9.7 percent. Chinese economy has maintained a sound momentum for growth in spite of adverse impacts of the slowdown in world economy. Its GDP increased by 7.3 percent in 2001, exceeding US$ 1 trillion.

During the first decade of this century, which is the crucial period for the above-mentioned third step, China will double its GDP figure of the year 2000 and achieve an annual average growth rate of 7 percent. Of course, China will not be able to develop in isolation of the world and the world also needs China for its prosperity. In this first decade, China will continue its large-scale modernization drive. It is expected that its fixed asset investment will grow by over 10 percent annually and its total import will exceed US$ 2,000 billion, making China the fastest growing "block" and one of the markets that have the greatest potential.  

Growing momentum of China's economy and its integration with the world have made China's investment environment more and more attractive. For nine years running, China has remained in the first place in terms of attracting foreign direct investment among developing countries. At present, more than 400 of the biggest 500 multi-national corporations in the world have set up their branches in China.

China's market potential will get a boost after China's accession to the WTO. According to an estimate, China's WTO membership will bring China's GDP up 2.94 percent. In the coming five years, China's total import is estimated to reach as high as US$ 1.4 trillion. China's accession to the WTO means more business opportunities to its trading partners including PNG. We hope the PNG business community will take advantage of China's entry into the WTO, explore and identify new areas for cooperation with China so as to build the strong bilateral trade relations from strength to strength.

Ladies and gentlemen,

Please allow me to say a few words about the Taiwan issue.

When talking about relations with China, more often than not, the question of Taiwan can not be avoided as it concerns the sovereignty and territorial integrity of China.

Taiwan was lost to Japan in the 1894-1895 Sino-Japanese War. After the defeat of Japan in the Second World War, Taiwan returned to the embrace of its motherland-China. Although it has been separate from the rest of China for the time-being, it is universally recognized that Taiwan is an inalienable part of Chinese territory and the Government of the People's Republic of China is the sole legal government representing the whole of China. This view is shared by the United Nations and 163 countries including PNG that have diplomatic relations with China.

In view of the complexity of the Taiwan question, China's late statesman Deng Xiaoping put forward the now well-known concept of "one country, two systems" as a practical and realistic way to solve the Taiwan issue. This unique formula has proved a great success in Hong Kong and Macao. To show our sincerity to solve the issue, Chinese President Jiang Zemin has made it very clear that "the one country, two systems" formula for Taiwan will go well beyond the version applied to Hong Kong. In addition to retaining its political, economic and social system, Taiwan can also keep its own armed forces.

The Taiwan authorities, however, are quite keen in moving towards the other direction. Instead of agreeing to the "one country, two systems", they have vigorously promoted "pragmatic diplomacy" or "dollar diplomacy" in an attempt to establish official ties with countries having diplomatic relations with China and create a situation of "two Chinas" or "one China, one Taiwan." Since the current leader of Taiwan came to office in May, 2000, the Taiwan authorities have spared no effort to further push for the "Taiwan independence" and the so-called "enlargement of their international space of survival". Their separatist scheme has naturally met with strong opposition by the Chinese people and the international community.

Recently the US Administration has reiterated its policy that it does not support Taiwan's independence, or "two Chinas", or "one China, one Taiwan". The European Union has also issued a declaration, claiming that " The EU supports the principle of One China." The PNG Government and many others have, on many occasions, reaffirmed their firm support for the one-China policy as well.

The one-China principle is the foundation stone for the Chinese Government's policy on Taiwan. China regards this principle as the basis and prerequisite for achieving peaceful reunification. It still proposes for peaceful solution to the Taiwan issue in the first place. However, China keeps all options open, including the use of force, to safeguard its sovereignty and territorial integrity, if Taiwan is ceded from China, if Taiwan is occupied by foreign powers and if the Taiwan authorities indefinitely refuse to negotiate for a peaceful solution. The ball is now in their court.

The one-China principle is also the political basis for China to develop a sound and stable relationship with foreign countries. I would like to emphasize that the separation of Taiwan from the rest of China is only temporary. The days will come when Taiwan is reunified with the motherland.  

Let me add one point to the above-elaborated one-China principle.  The Chinese Government has no objection to foreign countries' non-governmental economic and cultural contacts with Taiwan. In fact, on the premise of one China, the Chinese Government has adopted many flexible measures to make Taiwan's economic, trade and cultural contacts with foreign countries more convenient. For example, China has agreed to Taiwan's recent entry to the WTO as a separate customs territory. In other words, China has no objection to you people doing business with Taiwan.      

Ladies and gentlemen,

Reflecting on the 26 years of good relations enjoyed by China and PNG, we have summed up a very important experience: China and PNG can sustain a cordial and steady partnership as long as the PNG Government does not deviate from its pursuance of the one-China policy.

In about one week's time, the PNG new government will come into being. It is the Chinese Government's sincere hope and also firm belief that the PNG new government will work together with my government for a still better relationship on the basis of the one-China principle.  

Dear friends,

The PNG-China Business Council has been doing a valuable job in serving as a bridge between PNG and Chinese business communities. I wish you to make still greater contributions in the future for the promotion of trade and economic cooperation between China and PNG.

Thank you very much.