Respected Chancellor L. Kaferapanjira,

Chief Executive of Malawi Confederation of Chambers of Commerce and Industry (MCCCI)

Distinguished members of MCCCI

All invited guests, Ladies and Gentlemen,

Good evening! Indeed，it’s my great honor tonight to have such an opportunity to share some ideas with friends from Malawian business circles on the current global financial crisis and economic meltdown, which has been sweeping the whole world. First of all, please allow me to express my sincere appreciations to Mr. Kaferapanjira, who has organized such a timely and foresighted rally for Malawian business circles to discuss how to cope with the global financial crisis and economic meltdown in Blantyre, Lilongwe and Mzuzu respectively, which indeed deserve him a warm and big applause.

According to the requirement of Mr. Kaferapanjira, tonight, I will brief you in the following aspects: First, the impact of the global financial crisis on China. Second, the measures taken by the Chinese government to cope with the global financial crisis. Third, how are the Chinese business circles coping with the global financial crisis. Fourth, how to strengthen the mutually beneficial economic and trade cooperation between China and Malawi so as to promote win-win cooperation and achieve common development. I wish this briefing could strengthen our mutual understanding and mutual trust, and boost our win-win cooperation .

I. The impact of the global financial crisis on China

Now, the world economic and financial situations are experiencing

profound and complicated changes. The global financial crisis, which started from the United States, has conducted a severe impact on the real economy of the whole world and seriously affected people’s livelihood, production and social stability worldwide, and has threatened the sustainable development of the world. The worse is that the financial crisis hasn’t reached its end, and the future is still unpredictable. The developed countries such as the USA, EU and Japan have fallen into the worst recession since last century’s Great Depression, with the close of banks, devaluation of the stock markets and the shrinks of markets on a large scale. The developing countries have paid very high price for the global financial crisis and economic meltdown by facing the problems of credit crunch, low price of raw materials, export and income reduction, slow economic growth and growing unemployment. Besides these, the least developed countries are facing sharp reduction of foreign aid and investment. According to the estimation of the World Bank, the developed countries will experience a 2-3% negative economic growth in 2009. The developing countries will experience a universal slow economic growth, more than 46 million people in the world will go back to poverty. Social turbulences, unstable political situations have emerged in some countries.

It is known to all that China is the largest developing country, which has been actively integrating itself into the world economy and international financial system. China has become the second largest trading country in the world, 40 % of its trade volume is from the United States, Japan, and European Union in 2008. EU is the largest trading partner of China, with a trade volume of 425.58 billion US dollars. The United States is the second largest trading partner of China, with a trade volume of 333.74 billion US dollars. Japan is the third largest trading partner, with a trade volume of 266.78 billion US dollars. Therefore, the deep economic recession of the USA, EU and Japan has caused a very serious impact on the real economy of China.

First, the foreign trade has been reduced and economic growth slowed down. Since 2002, China has been keeping two digits growth rate in GDP, the average annual growth rate in foreign trade is over 20% , the contribution of trade to GDP is over 30%. Because of the global financial crisis, since 2008, the import and export of China has been sharply reduced, last November even experienced a negative growth, the trade volume of the fourth quarter had reduce 18.8% compared to the third quarter. The import and export volume of the first quarter of this year has reduced 24.9% compared to the same period of last year. Thousands of export-oriented factories were forced to close down. In 2008, the economic growth rate of China came down to 9% from two digits. In 2009, we just expect 8% of economic growth rate.

Second, the labor markets have been seriously affected, a lot of workers lost their jobs. China is a large country with a population of over 1.32 billion. Every year, we have 5 million students graduated from the universities and colleges and another 5 million students graduated from various vocational and technical training schools, the Chinese government has to create not less than 10 million new jobs per year. The most important way for China to create new jobs is to attract foreign direct investment and to develop export-oriented and labor intensive industry. The reduction of foreign investment and export have caused a lot of workers lose their jobs and has brought difficulties for the new graduated students to find their jobs.

Third, the consumer confidence both in rural and urban areas has been seriously affected. Because of the income reduction of the residents both in rural and urban areas, and the unpredictability of the world economy, the growth rate of consumption in China has been sharply reduced, and further affected the demand and production of the domestic markets.

Fourth, the safety of foreign reserve and the oversea properties are under threaten. China holds a 2 trillion US dollars of foreign reserve, 60% of which is US dollars. Besides this, more and more Chinese companies and citizens are investing in oversea markets, the fluctuation of the exchange rate of US dollar will seriously threaten the safety and the value maintenance of China’s foreign reserve and oversea property.

II. The major measures taken by the Chinese government to cope with the global financial crisis

The world economic recession caused by the global financial crisis has brought a serious impact on China’s economy. But fortunately, the impact is within the controllable extent. Because: First, the whole financial system in China is in good and sound function, and circulating capital is sufficient. By the end of 2008, the balance of savings deposits of urban and rural residents is over 3.1trillion US dollars. Second, the operation of China’s economy remains healthy and the potential markets of over 1.32 billion population are huge. Third, since the reform and opening up in 1978, the Chinese economic and social development has achieved a tremendous success, which has laid a solid foundation to cope with the global financial crisis. In 2008, the GDP of China has reached 4.3 trillion US dollars, ranked the third in the world and its foreign reserve has reached 1.95 trillion US dollars, ranked the first in the world.

Since the global financial crisis happened in the west, the Chinese government has timely formulated the principle of “safeguarding economic growth, safeguarding people’s livelihood, and safeguarding social stability”, and adopted a proactive fiscal policy and moderately easy monetary policy, and implemented a stimulus package to expand domestic demand and boost economic growth.

Firstly, to take a fundamental way to safeguard economic growth by boosting domestic demand so as to promote economic growth, increase employment and improve people’s livelihood. The Chinese government has introduced a two-year economic stimulus plan to get a financial input of 4 trillion RMB Yuan (about 600 billion US dollars) for a large scale domestic infrastructure constructions.

Secondly, to create new economic growth points and safeguard economic development by taking acceleration of development mode transforming and economic restructuring as the main target. The Chinese government has taken measures to increase investments in science and technology, encourage the enterprises to conduct independent innovations, upgrade industrial technologies, especially to invest more in energy reduction, adoption of energy-saving technology, developing new energy, and accelerating the development of the service industry so as to create more economic growth points and new competition advantages in the process of economic transformation and restructuring.

Thirdly, to promote development and create new development motives by deepening reforms and opening up to the outside world. The key point is to reform and improve the resources tax systems so as to better develop and utilize natural resources and to support the development of medium and small enterprises.

Fourthly, to put the improvement of people’s livelihood as the starting point and the objective of safeguarding economic development. The governments at all levels are planning to invest 850 billion RMB Yuan (about 121.2 billion US dollars) between 2009-2010 in developing social causes such as education, health and medical services and culture, so as to improve the medical conditions of the grass root and the social security systems both in urban and rural areas, especially to safeguard and improve the livelihood of the low-income groups.

Fifthly, to make contributions to the early recovery of the world economy by strengthening international and regional cooperation. China is one of the main engines to drive the world economic growth. In 2008, the Chinese economy contributed more than 20% to the growth of world economy. The earlier China’s economy goes back to the track of smooth and rapid development, the sooner the recovery and development of the world economy will be realized. I am happy to tell you that, this March, the Chinese economy has shown the sign of recovery, both the consumer confidence on the local markets and the industrial production were increased remarkably.

As a responsible and important member of the international community, China has always been actively participating in international and regional cooperation on tackling the global financial crisis, working together with the international community to strengthen the coordination of macro economic policies, pushing forward the reforms on international financial systems, and working hard to reduce the damage caused by the financial crisis to all the countries, especially the developing countries, and making positive contributions to the recovery of the world economy.

III. How are the Chinese business circles coping with the global financial crisis

Facing the global financial crisis and world economic meltdown, the Chinese business circles have taken the following measures:

Firstly, to make good use of the macro economic policies of the government, actively apply for the policy and financial support from the government so as to ensure the sustainable development of the companies.

Secondly, to attract talented personnel from abroad and home to introduce and develop new technology to upgrade their productivities and innovate new products so as to improve the quality and competition ability of their products.

Thirdly, to develop both domestic and oversea markets simultaneously while maintaining the traditional markets of the USA ,EU, and Japan, pay more attention to exploit the markets of the developing countries, especially the domestic markets of China so as to achieve the diversification of the markets.

Fourthly, to manage business within their own capabilities, control their investment scales, and strengthen self management of the companies by increasing revenue and cutting cost so as to ensure the economic profits of the companies.

Fifthly, to try their best to seriously fulfill their social responsibilities by creating jobs through production and avoiding bankruptcy or large scale jobs cut so as to maintain the social stability.

IV. How to strengthen the mutually beneficial economic and trade cooperation between China and Malawi so as to promote win-win cooperation and achieve common prosperity.

China and Malawi established diplomatic relations only a year ago, we are new friends and partners, but the relations between our two countries have developed rapidly, with the fruitful practical cooperation in various fields. China always believes that state-to-state relations should be beneficial to the peoples and conducive to each other’s national development. The New Parliamentary Buildings Complex, Karonga-Chitipa Road to be built by the Chinese grants have achieved substantial progress and will be completed within two years. The design and fund for the construction of the International Conference Center and the Five-Star Hotel in Capital Hill are ready, the construction work will be started soon. The Chinese government also pledged to provide concessionary loan to build a stadium and a campus of university. Besides these, China has opened its markets to Malawian products. Last year, China purchased 2850 metric tons of tobacco from Malawi. This year, we will purchase not less than that amount of tobacco from Malawi. The investment of 25 million US dollars by the Chinese enterprises in Balaka for cotton plantation and processing has benefited 5000 local cotton farmers. The Chinese investors will invest a cotton ginnery plant, a cooking oil plant and a cotton seed breeding development center there, which will directly or indirectly create about 1000 jobs for local people. The Malawian cotton will be exported to China before the end of this year, and an annual yield of 3000 metric tons of cotton oil will meet the local demand.

Respected Chancellor Kaferapanjira, Ladies and Gentlemen,

The economic and trade cooperation between China and Malawi has strong complementarities and huge potentials. Malawi has abundant agricultural, mining and tourism resources. The most important is, the people are hard working and modest, and the society is stable, both the government and the people are eager to achieve self development. China, with its rapid economic development, has practical technologies, cheap and high quality goods and a vast market of over 1.32 billion population. The Chinese government always believes in the vision that it is better to teach a man how to fish rather than to give him fish in providing aid and carrying out cooperation. China has opened its huge markets to Malawi by providing zero-tariff treatments to over 460 kinds of Malawian products to China. On the other hands, the Chinese government will positively encourage and support Chinese enterprises to invest in Malawi and undertake mutually beneficial economic and trade cooperation to achieve our common prosperity.

I strongly believe that there are huge potentials for the Chinese and Malawian business circles to carry out win-win cooperation in the following fields: First, the commercial cooperation in agricultural fields, such as to develop commercial farms and the large-scale plantation of cotton, sugarcane, coffee and cash crops. Second, to establish economic and technical development zones or industrial parks so as to develop industry, increase the products added value, create jobs, promote exports and achieve sustainable self development of the companies and the nation as a whole. Third, to expand the trade between our two countries. The Malawian enterprises are welcome and encouraged to import what they need from China to increase the supply to the local markets, reduce the consuming price and meet the local demand of people’s livelihood, production and construction. You are also welcome to be the agents of Chinese companies or products in Malawi. On the other hand, the Chinese enterprises are encouraged to Malawi for their investment and trade.

Indeed, the potential for the cooperation between our two business circles is so huge, the key is that we should catch the opportunity to strengthen our mutual understanding, trust and cooperation. I and the Chinese Embassy will provide any necessary information support and service assistance for the enterprises of the two countries to carry out mutually beneficial economic and trade cooperation. You are welcome to contact me and my Embassy at any time.

Respected Chancellor Kaferapanjira, Ladies and Gentlemen,

This once in a century global financial crisis has brought us huge impact to people’s livelihood and production, but also has brought us historical opportunities. Let us seize the opportunities to strengthen our cooperation, and work hard together to build a bright future of Sino-Malawi relations.

Thank you all.