BOAO, China – Prime Minister Junichiro Koizumi said Friday that Japan and China need to strengthen their “mutually complementary” economic ties, denying that China is an economic threat to Japan.
“To advance reform and mutual interdependence between Japan and China, in a manner that is harmonious with reforms of other Asian nations — that is the way to develop a wider cooperation in Asia as a whole,” Koizumi said in a keynote speech at the first annual conference of the Boao Forum for Asia.
Speaking after Chinese Premier Zhu Rongji delivered the day’s first keynote speech, Koizumi brushed off concern over Beijing becoming a “threat” with its rapid economic growth.
“Some see the economic development of China as a threat. I do not,” Koizumi said. “I believe a rising economic tide and expansion of the market in China will stimulate competition and will prove to be a tremendous opportunity for the world economy as a whole.”
Koizumi highlighted three key challenges — “reform, cooperation and the importance of conveying Asia’s message to the world” — and pointed to the need to “create new momentum for cooperation” in the areas of energy, environment, currency and finances, trade and investment, and developmental assistance.
Emphasizing that “freedom, diversity and openness” are the basis for reform and cooperation, he said, “I believe Asia should set an example for the world by seeking a regional cooperation that surpasses national and ethnic distinctions.”
Koizumi vowed to promote free-trade agreements in Asia as well as regional economic integration amid similar moves in Europe and the Americas, and called for joint efforts to fight terrorism.
Expanding the sphere of Asian cooperation from a speech in January in Singapore, during which he focused on Southeast Asian nations, Koizumi called for ties with central and western Asia. He unveiled an initiative to dispatch a “Silk Road Energy Mission” representing governments, businesses and academic sectors to Kazakstan, Turkmenistan, Uzbekistan and Azerbaijan this year.
The forum attracted government officials, business leaders and scholars from around Asia to discuss the challenges facing the region in the new century.
Commenting on the Japanese economy, Koizumi said, “Movements toward bottoming are being observed,” before adding it is “most important that Japan, which alone accounts for 60 percent of Asian gross domestic product, be successful in its structural reform and economic revival.”
“I am firmly resolved to fulfill these reforms for the sake of both Japan and all of Asia” although dramatic changes “will undoubtedly be accompanied by a great deal of pain, as are all historic transitions,” he said, reiterating there will be “no growth without reform.”
Koizumi said his reform policies include the final disposal of bad loans over the next two to three years, the reform of government-affiliated corporations, privatization of postal services, abolition of regulations that obstruct free private-sector economic activities, and an overhaul of the rigid fiscal and social system.
Koizumi dismissed concerns about industrial hollowing-out amid growing moves by major Japanese companies to shift their production bases to China, due in part to its cheap labor supply.
“I see the advancement of Japan-China economic relations not as a hollowing-out of Japanese industry but as an opportunity to nurture new industries in Japan and to develop their activities in the Chinese market,” he said, underlining the need to enhance “mutually complementary” ties, given the different industrial structures of the two nations.
But Koizumi also urged China to behave in accordance with international rules by making a “smooth transition” into the World Trade Organization regime and to promote “harmonious” cooperation with the regional economies of Asia, including the Association of Southeast Asian Nations. China joined the WTO in December after 15 years of negotiations.
Referring to the recently concluded FTA with Singapore, ongoing work to improve economic ties with all 10 ASEAN countries and the study of FTAs with South Korea and Mexico, Koizumi said Japan will promote economic partnerships or FTAs with other countries and regions.
“Our strategic challenge is to bind together our individual efforts to create a more organic and expanded regional economic integration,” Koizumi said, pointing out that such efforts have been under way in what is now the European Union for half a century and also in the Americas.
“Why should we expect less for our region?” he asked.
On financial issues, Koizumi vowed to promote policy dialogue and cooperation to ensure currency and financial stability in Asia, and urged the forum to discuss how regional cooperation can develop in support of the international financial system centered on the International Monetary Fund.
Koizumi pointed to ongoing cooperation under the 2000 Chiang Mai Initiative, which is designed to link the international reserves of the 10 ASEAN member states, Japan, China and South Korea through a set of bilateral currency-swap pacts to prevent further currency crises. in Asia, such as those experienced in 1997 and 1998.
Japan has already signed similar arrangements with China, South Korea and three ASEAN countries.
Koizumi said Asian economies should step up cooperation to ensure a stable supply of energy, as well as to protect energy sources, to lessen their dependence on the Middle East, and offered to share Japan’s experience and technology for energy security.
Koizumi said Asia “cannot yet afford to be optimistic about” trade and investment because trade related to information technology has plunged and direct investment in the manufacturing industry has yet to recover from the setbacks of the 1997 crisis.
Koizumi pledged to continue to offer assistance to developing nations, including making all imports from the least developed countries free from quotas and tariffs, and to sustain reconstruction aid to Afghanistan to stop it from becoming “a country forgotten” again.
On the environment, Koizumi said he is hoping to attend the World Summit on Sustainable Development, scheduled for August in Johannesburg, in an attempt to convey Asia’s message to the world.
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