Global Economic Leaders Summit

Speech by Zheng Xiongwei, Prestigious economist and Global Executive Chairman of APCEO
at the Opening Ceremony of the 2nd Global Economic Leaders Summit September 5th, 2012

Honorable Mr. Zhu Yanfeng, Vice-Secretary of Jilin Provincial Committee of CPC and Mrs. Fang Li, Secretary-General of CPC Jilin Provincial Committee,
Honorable Chen Weigen, Vice Governor of Jilin Province and Cong Hongxia, Deputy Secretary-General of Jilin Province,
Honorable Mr. Aminu Waziri Tambuwal, Speaker of the House of Representatives in Nigeria,
Honorable Mr.Sephiri Enoch Motanyane, Speaker of National Assembly of Lesotho,
Honorable Mr. Korn Dabbaransi, Former Deputy Prime Minister of Thailand,
Honorable Christian Emile QUESNOT, Former French Presidential Chief Of Staff Of President Mitterrand & Jacques Chirac, Global Vice Chairman of Asia-Pacific CEO Association,
Honorable Mr. Samuel John Sitta, Minister Of Ministry for East African Cooperation of Tanzania,
Honorable Mr. Joseph John Bossano, Minister For Employment, Enterprise & Training Of Gibraltar (British).
Distinguished leaders and guests, ladies and gentlemen, good morning!
First of all, on behalf of Asia-Pacific CEO Association, the international sponsor of the 2nd Global Economic Leaders Summit, Mr. Dominique de Villepin, global chairman of APCEO and former French prime minister, and Mr. John Winston Howard, global co-chairman of APCEO and former prime minister of Australia, I would like to give my warmest welcome to heads of state, high-level executives from Fortune 500 companies and other quality listed companies, renowned economists, experts and scholars and all the respected guests who come from other international agencies to participate in the “2nd Global Economic Leaders Summit”.
Ladies and Gentlemen, it’s the 4th year since APCEO had strategic cooperation with the people’s government of Jilin province. I’d like to extend sincere gratitude for the support and care of Jilin Provincial Committee of CPC and Jilin government, I’d like to say “thank you” especially for the effort the foreign affairs office and other agencies of Jilin government have made.
Global Economic Leaders Summit connects international political, industrial leaders and academic authorities. The summit has been approved by international mainstream society, 30 state and region governments as Canada's Senate and House of Representatives, the USA and UK governments sent congratulations by telephone. What’s more, President Clinton sent a written speech for the summit and highly praised the summit and the APCEO. In this case, I want to express my gratitude and respect for them.
Ladies and Gentlemen, the theme of this summit is “To spur the further development and innovation of the global real economy”.
This is the first time to hold an international summit to discuss about the real economy at such a large scale and high level worldwide.
Therefore, I hope particularly the point of view and consensus made in the summit can perform a directive and stimulant role in global real economy development.
I’d like to make a basic explanation of the theme of the summit:
Firstly, what’s the real economy?
In the opinion of governor of the People's Bank of China, the real economy is the production of material goods above all, which includes the service industry as well. He said, finance is not simply the virtual economy, we should divide the financial instruments to make sure which of them are support the real economy and which of them may be divorced from the real economy.
U.S. Federal Reserve Board thinks that “the real economy” is all the economy content except the estate and financial market.
In my opinion, the real economy is the economy activity with low leverage, and the financial activity which supports production and service with low debt should also be included. What’s more, the reasonable portion of the real estate industry is kind of real economy. The other part of the financial activity and activity like estate speculation and durable goods collection speculation is virtual economy other than real economy.
Secondly, why is “To spur the further development and innovation of the global real economy” choosen to be the theme of the summit?
We take four reasons into account:
At first, we think the real economy is extremely important.
The real economy is the fundamental basis of everyday life, social wealth and comprehensive national strength. It’s also the foundation of global economy development, and indemnification of sustainable economic development, social stability and flation.
Secondly, we found that the primary cause of economy crisis, especially the recent financial crisis and European debt crisis, is the problem of real economy.
Premier Wen Jiabao pointed out that one of the substantial clauses of the international financial crisis is that virtual economy of some developed economies expanded too excessively and divorced from the real economy. And the reason why world economy can’t get out of the crisis haze is also related to the lack of a new growth point of the real economy.
In the last 20 years, the real estate market, banking sector, bond market, stock market, and financial derivatives market expanded rapidly while the real economy was shrinking.
Plenty of real economic operators get much more profit from virtual economy than real economy, and then the focus of operation shifted to the virtual economy. As a result the real economy was abandoned.
Many investors are not optimistic about the real economy, and have no confidence in the prospects of the real economy, getting reluctant to invest in the real economy where no hope and return can be seen.
America tried to develop the so-called "higher end" financial products over the manufacturing industry, and control the global financial and real economy by financial markets and dollar, which proved not to be a permanent solution.
Thirdly, the worldwide real economy, including real economy in China, is facing severe challenge.
In recent years, many developed countries have put forward the slogan of "return to the real economy", and have taken a lot of measures. President Obama brought forth that America should go back to the real economy, revitalize the U.S. manufacturing sector and achieve "re-industrialization". EU put forward that they should improve the level of innovation and become the world's most competitive economies. Japan has adjusted the "New Economic Growth Strategy", and tried to return to the real economy. South Korea proposed a "green growth" economic revitalization strategy for returning to the real economy.
However, so far, the development of global real economy is still in depression. Not only in Europe, America, Japan and other countries, but also in emerging economies liked China, the real economy is in severe downturn. This year, operating revenue of big 5 commercial banks accounted for 5.7% of the total revenue of China's top 500 enterprises, but the profit of them accounted for 32%. Total operating revenue of 272 manufacturing enterprises accounted for about 43% of China's top 500, but only 25% in profits. Not only the profit is low, the number of manufacturing enterprises among top 500 has been reduced in five years continuously. In 2012 the number of manufacturing enterprises among Chinese top 500 is 7 less than last year.
Introduction to foreign capital: The statistic data recently released by the Chinese Ministry of Commerce shows that China's actual use of foreign investment was $ 7.58 billion in July, with a decrease of 8.7% on year-on-year basis. The scale that attracts foreign capital in a single month has been the lowest since August 2010. Over the first seven months of this year, the number of newly-approved foreign-invested enterprises is 13,677, with a decrease of 12.3% on year-on-year basis. The actual use of foreign investment was $ 66.67 billion, with a decrease of 3.6% on year-on-year basis.
On the other hand, Chinese outbound investment: 2011 Chinese Outbound Direct Investment Statistics Bulletin issued by Chinese Ministry of Commerce, the National Bureau of Statistics and the State Administration of Foreign Exchange in Beijing showed that Chinese direct foreign net investment has been growing in 10 years and amounted to $ 74.65 billion, which is a new record of annual investment flows. In 2011, the total taxes paid by the foreign enterprises in China to the investment country has been more than 22 billion dollars and the employee in foreign enterprises at the end of year have been 1.22 million, there are 88.8 million foreign employees and 10 million employees from the developed countries. The enterprises made a significant contribution to the tax and employment of host countries and the win-win effect of foreign investment is notable.
In addition, the Bulletin shows that to the end of 2011, the cumulative net (stock) of foreign direct investment in China has exceeded 400 billion dollars, ranked 13 in the world.
Is this situation normal? Let’s discuss together. What’s the law of the development of the real economy?
Fourthly, it requires us to seek methods from the level of government, enterprise and society, and the key is innovation and development.
We believe that, to back to the real economy, we should speed up the financial markets reform, fight against violence and non-financial activities, and curb speculation. Meanwhile, we should reduce the tax burden of the real economy enterprises, intensified cut tax, and expand the profit margins of the cost of enterprises.
The return of real economy is a process of innovation and re-industrialization; it’s not simply the repetition of past but the development on the basis of technology, green and new energy. It’s also the grasp of the new trend of the world's scientific and technological development, upgrading industries and optimizing the structure, then commanding the dominant position of economy.
We need to support and ensure the fund demand of S&T innovational, environmental protective and strategic emerging entity, support the economy activity including technology research innovation, personnel training, equipment upgrades, energy saving and emission reduction of real economy enterprises. We should also insist on combining fostering strategic emerging industries, transforming and upgrading traditional real economy enterprises and developing productive service industry, while effectively pushing on the stock adjustment and increment optimization of the real economy.
It’s suggested that all the countries should strengthen international and regional cooperation, and should establish new labor division and balance of the global real economy. all the nations should also deepen the integration of transportation and modern logistics, improve the investment environment to attract international investment and actively guide and encourage more of the flow of human and capital resources worldwide, to stimulate the re-development of the real economy and achieve win-win results.
I hope our ladies and gentlemen will make positive and practical recommendations about re-innovation, further development, as well as international cooperation of the real economy.
Thank you!