Kuala Lumpur, Malaysia

18 November 1998

Datuk Seri Dr. Mahathir bin Mohamad, Prime Minister of Malaysia,

Fellow Colleagues,

It is a real pleasure for me to meet you again, my colleagues, in this beautiful city of Kuala Lumpur. I wish to thank our host the Malaysian Government for its thoughtful arrangement. I would also like to take this opportunity to warmly welcome our three colleagues from Russia, Peru and Viet Nam, who have joined us at the meeting for the first time.

At the Vancouver meeting last year, the financial crisis in some Asian countries aroused wide concerns among APEC members. Now a year has passed but its ramification is still spreading out, not only bringing serious economic difficulties to some countries and regions in Asia, but also affecting the world economy as a whole.

This crisis has occurred against the international background of accelerated economic globalization, and it has given the world people important revelations.

Economic globalization has become a trend as a result of the economic, scientific and technological development in the present-day world. It has brought to countries in the world not only development opportunities, but also serious challenges and risks. It has also presented to countries, developing ones in particular, a new subject to tackle, that is how to ensure the economic security of a country.

The trend of economic globalization requires active participation by all countries in international economic cooperation. However, countries should expand their opening-up programme in the light of their national conditions and in a step by step manner while paying attention to increasing their capabilities of preventing and withstanding risks.

The trend of economic globalization has made the economies of countries more and more interdependent and interactive. Once a financial crisis breaks out in certain countries or regions, not only developing countries will suffer immensely from it, but developed ones will also find it hard to stay out of it. A globalized economy calls for global cooperation. All members of the international community should work together to maintain a steady development of the world economy in a spirit of sharing responsibilities and risks.

The trend of economic globalization is emerging and developing in a context where there is no fundamental change in the inequitable and irrational old international economic order, which will inevitably widen the gap between the poor and the rich countries. The ultimate solution to this problem is to work for the establishment of a fair and reasonable new international economic order in the interest of the common development of all countries.

At the moment, the international community has a common concern about how to curb the ramification of the financial crisis at an early date and prevent a worldwide economic recession. In order to promote steady development of the international financial sector and the establishment of a new international financial order, I would like to put forward three proposals:

I. To strengthen international cooperation, prevent the spread of the crisis and create a favourable external environment for the economic recovery and growth of the crisis-stricken countries and regions. The developed countries should adopt a responsible attitude to stimulate economic growth, boost domestic demand and expand import by means of fiscal and monetary policies, and refrain from resorting to trade protectionism. At the same time, they should increase financial assistance to the crisis-stricken countries and make proper arrangements to reduce their debt burdens in an effort to help them stabilize the finances and recover the economy. In this way, they will not only help these countries tide over the difficulties, but also serve their own interests.

II. To restructure and improve the international financial system and ensure a safe and orderly operation of the international financial market. Those big powers with influence in international finances are duty-bound to take effective measures to improve the supervision and regulation of the flow of the international financial capital, contain over speculation of the international hot money, and enhance the capability for the forecast and prevention of financial risks and for their relief. It is essential to deliberate the establishment of a new international financial order which conforms to the interests of all sides, through dialogue and consultation between developed and developing countries in compliance with the principle of equality and mutual benefit and on the basis of extensive participation by the international community. I agree that the APEC Finance Ministers' Meeting should study the questions related to the restructuring of the international financial system and put forward relevant proposals.

III. To respect the independent choices made by any countries or regions on overcoming the crisis. The crisis stricken and affected countries and regions differ in the level of economic development and historical tradition, and also in the cause and impact of the crisis. Therefore, there is no, and can not be, a fixed model or a single remedy for them all to tide over the crisis and revitalize the economy. Instead, they should be given support in taking measures in the light of their own situation. The international community and organizations should respect the right of a country to make decisions on its own, and help it lift itself out of the difficulties as soon as possible through consultation on an equal footing. Developing countries, the crisis stricken or affected countries and regions in particular, should make necessary readjustment of their economic structure and policies in the light of their own conditions, properly handle the prominent problems in their economic development, and increase economic dynamism by taking full advantage of the favourable conditions, both internal and external.

The financial crisis has also brought negative effect and great pressure on the economic development in China. The Chinese Government has assumed a highly responsible attitude. China has provided assistance to the relevant countries within the framework of the IMF arrangements and through bilateral channels. Proceeding from the overall interests of maintaining sustained economic growth and international economic development, China has made the decision of not devaluating the RMB, for which China has paid a high price. Having won a battle against the catastrophic floods this summer, we are now going ahead with more in-depth reforms, adopting active fiscal policies, increasing input for infrastructural construction, and boosting domestic demand in an effort to achieve this year's objective of economic and social development.

APEC, as the most important international economic organization in this region, must adapt to the new situation, persist in narrowing the gap and realizing the objective of common prosperity through economic cooperation and make timely readjustment of the priority areas for cooperation so as to better meet the needs of the developing members, who make up the majority of the membership. At present, it is more important than ever to stick to the APEC Approach characterized mainly by respect for diversity, voluntarism and consensus. APEC should make its own contribution to increased regional stability and prosperity by adhering to this approach.

Promoting economic and technical cooperation (Ecotech) among its members is a major task of APEC and a primary way to common development. In the world of today, science and technology are progressing with each passing day, and the knowledge economy is unfolding. To redouble the efforts to develop high and new technology and speed up the economic restructuring are the only way to promote a long-term and steady development of the economies of APEC members. We are glad to see the formulation by APEC of the APEC Agenda for Science and Technology Industry Cooperation into the 21st Century and Skills Development Action Plan this year under the chairmanship of Malaysia the host country. They represent a major step by APEC members towards enhanced Ecotech. China attaches importance to and supports the implementation of these two important documents. As an expression of this, the Chinese Government has set aside US$ 10 million to establish the China APEC Science and Technology Industry Cooperation Fund for the purpose of financing cooperation between China and other APEC members in the field of science and technology industry, and has put forward a series of proposals on cooperation projects. China has also set up a China APEC Enterprises Assembly to promote enterprise participation in APEC activities.

Promoting trade and investment liberalization is another important task of APEC. Thanks to the concerted efforts of all members, positive progress has been made and will continue to be made in this area. In the current circumstances, it is important to pursue an active and prudent policy, and its members should be allowed to make efforts towards the realization of the goal-trade and investment liberalization-at a pace and in a mode suitable to their own conditions and in accordance with the two timetables on the basis of voluntarism, flexibility and pragmatism.

The current difficulties facing some Asia-Pacific countries and regions are temporary ones. I believe that there is huge economic vitality and development potentiality in the Asia-Pacific region. So long as we work together to increase cooperation and surmount difficulties, the economic and social development in this region will have a broad and bright prospect.