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Xie Feng: Hand in Hand for Common Development
China's Maritime Silk Road Initiative and its Relation to RI's Global Maritime Fulcrum Concept
2015/09/22

Director Rene (Odo Rene Mathew Manuhutu),
Dear Colleagues and friends,

I am very happy to be invited to the Center for Education and Training (CET) of Indonesia's Ministry of Foreign Affairs to meet and communicate with all of you.

The topic we will touch upon today is hot among world audience, namely, China's 21 Century Maritime Silk Road Initiative (MSR) and Indonesia's Global Maritime Fulcrum (GMF) Concept. MSR was first proposed by Chinese President Xi Jinping when he visited Indonesia and gave a speech at the Indonesian Parliament in October, 2013, while GMF was first announced by President Jokowi during his inauguration speech last year.

The "21st-Century Maritime Silk Road" and the "Global Maritime Fulcrum" have respectively become national development strategies of China and Indonesia and attract worldwide attention. As significant neighboring countries to each other, how can we coordinate our strategies, and how to promote practical cooperation to achieve mutual benefits are the questions lying in front of both governments and all of us, the diplomats. Today, I wish to take this opportunity to share with you some of my thoughts.

I. MSR of China

What is MSR?

As you know, the maritime Silk Road has its historical legacy that can be traced back to more than 2000 years ago. The ancient maritime Silk Road explored and opened up by people of Asia, Europe and Africa together had connected the major ports along the West Pacific, the South China Sea and the Indian Ocean, and contributed greatly to the trade and cultural exchanges among the countries along the maritime Silk Road. The history of friendly exchanges between China and Indonesia is a perfect example of the benefits of the ancient maritime Silk Road. Over the centuries, vessels full of goods and passengers traveled across the sea, exchanging products and fostering friendship. A Dream of Red Mansions, a Chinese classic novel, gives vivid accounts of rare treasures from Java. The National Museum of Indonesia, on the other hand, displays a large number of ancient Chinese porcelains. In the early 15th century, Zheng He, the famous Chinese navigator of the Ming Dynasty, made seven voyages to the Western Seas. He stopped over the Indonesian archipelago in each of his voyages and toured Java, Sumatra and Kalimantan. His visits left nice stories of friendly exchanges between the Chinese and Indonesian peoples, many of which are still widely told today. For thousands of years, the Silk Road Spirit–– peace and cooperation, openness and inclusiveness, mutual learning and mutual benefit –– has been passed from generation to generation, and has become a historic and cultural heritage shared by all countries along the Silk Road.

At present, the globalization of world economy has entered into a new stage. The flow of capital, technology, information and human resources has reached an unprecedentedly high level. A new round of science and technology revolution, industrial revolution and energy revolution is gaining momentum. Various regional cooperation mechanisms are flourishing. At the same time, the underlying impact of the international financial crisis keeps emerging. The transmission effect and spillover effect of market fluctuations is more pronounced. The external environment faced by emerging economies is becoming more complicated. It is a new challenge for every country to improve the quality and efficiency of economic growth, realize transition from old grow points to new ones, and together prevent and withstand risks. It is in this context that China puts forward the initiative of MSR. The aim is to carry forward the Silk Road Spirit, encouraging countries along the Silk Road to coordinate their development plans, strengthen connectivity and build a community of common destiny, which will stimulate the vitality and potential of the whole region.

Why MSR?

The decision of China to propose the initiative of MSR is made based on the respective and common development needs of China and countries along the maritime Silk Roads.

First, MSR will provide new power for China's reform and opening up. At present, China's reform and opening up has entered into a new stage. For the economic policy of China, which has been focusing on promoting exports and attracting foreign investment, now begins to lay equal stress on exports and imports and promote two-way investment. Through the MSR cooperation, China is determined to expand its investment abroad, and welcome more foreign products to enter the Chinese market. These measures will enhance China's opening up process and further integrate China's economy into the global economic system.

Second, MSR will provide new opportunities for the common development of countries along the maritime Silk Road. Countries along the maritime Silk Road are diversified in terms of economic development level, endowment of resources and the focus of their respective development strategy, but all of them face the common task of realizing better development and better livelihood for their people. Through the MSR cooperation, countries along the maritime Silk Road could realize common development by cooperating and communicating with each other in a much wider scope and at a higher level.

Third, MSR will provide new energy for the upgrade of Asian Regional cooperation. Asia now is already the world's most dynamic region with great potential, but its development still faces some constraints. Regional countries are very much diversified with imbalanced development, outdated infrastructure and huge financing gap, which are hindering the regional integration process. MSR cooperation will strengthen the connectivity among Asia's sub-regions, improve the regional trade and business environment, and promote the orderly flow and optimal allocation of production factors, which will provide new impetus for the sustainable development of the region.

Here I would like to point out that, MSR has no geo-political consideration as reported by some media. The intention of MSR is very simple, that is, to focus on economic development and cultural and people to people exchanges for the common development of countries along the Silk Road, which at the same time is beneficial for China's development.

How to build MSR?

Jointly build MSR through consultation to meet the interest of all. MSR is proposed by China, but we see it as a symphony of team performance by all countries along the maritime Silk Road, instead of a solo or one-man show by China. MSR cooperation should be carried out through consultation by all parties to meet the interest of all. MSR cooperation will build on the comparative advantage and development needs of respective countries along the maritime Silk Road. Coordination of development strategies is very important. It does not mean that one country would have the power to decide for others or would let others to decide for oneself. Rather, MSR adheres to the principle of win-win solution, and encourage countries to find common ground and areas of cooperation on the basis of mutual respect. All countries together make bigger the economic cake and share it in a fair way.

Be open and inclusive for cooperation. MSR is not a closed mechanism, but an open and inclusive cooperation initiative. It covers, but is not limited to, the area of the ancient maritime Silk Road. It is open to all countries, and international and regional organizations for engagement, so that the results of the concerted efforts will benefit wider areas.

Five priorities for cooperation. (1) Policy coordination. To build a multi-level intergovernmental macro policy exchange and communication mechanism, coordinate development strategies and work out together the plans and measures for regional cooperation. (2) Facilities' connectivity. Countries along the maritime Silk Road should improve the connectivity of their infrastructure construction plans and technical standard systems, jointly push forward the construction of international trunk passageways, and form an infrastructure network connecting all sub-regions in Asia. (3) Unimpeded trade. To remove investment and trade barriers for the creation of a sound business environment within the region and in all related countries. We will discuss with countries and regions along the maritime Silk Road on opening free trade areas so as to unleash the potential for expanded cooperation. (4) Financial integration. To deepen financial cooperation, and make more efforts in building a currency stability system, investment and financing system and credit information system in Asia. Expand the scope and scale of bilateral currency swap and settlement with other countries along the maritime Silk Road. (5) People-to-people bond. To carry forward the spirit of friendly cooperation of the Silk Road by promoting extensive cultural and people exchanges, so as to win public support for deepening bilateral and multilateral cooperation.

Strong financial support. A large amount of capital investment will be needed to support MSR cooperation. China has made many active efforts in this regard. The first is to set up the Silk Road Fund with the amount of 40 billion US dollars, which has already been started. The second is the proposal to establish the Asian Infrastructure Investment Bank (AIIB) with a capital stock set at USD 100 billion. Until now 57 countries including China and Indonesia have confirmed to be founding members of the AIIB, which plans to be in operation by the end of 2015.

Two years after the MSR initiative was proposed, it has already won extensive support from countries along the Silk Road and make lots of positive progress. For the next step, China will work more closely with countries along the Silk Road to strengthen bilateral relations and sign the MOU of cooperation on the joint development of the MSR. We will take full advantage of the framework of existing bilateral, multilateral, regional and sub-regional cooperation mechanisms, to coordinate development strategies and regional cooperation plans. We will make an effort to push forward the MSR cooperation programs for which the conditions are right for early outcomes.

What's the connection between MSR and GMF?

The "Global Maritime Fulcrum" initiated by President Jokowi has five pillars: (1) Rebuilding Indonesia's maritime culture; (2) Maintaining and managing marine resources; (3) Prioritizing the development of maritime infrastructure and connectivity; (4) Practicing maritime diplomacy; and (5) Developing maritime defense and security. The strategy is to take full advantage of maritime resources, in the aim of building Indonesia a maritime power and benefiting the Indonesian people.

China and Indonesia are comprehensive strategic partners. So, what's the connection between China's MSR and Indonesian's GMF? What opportunities are the two countries facing with?

(1) MSR and GMF are highly complementary to each other, and can be promoted in a coordinated manner.

Both MSR and GMF aim at developing economy by utilizing maritime advantages, focusing on infrastructure and connectivity, and taking external cooperation as an important approach. That's to say, the two countries think alike on the development strategies. As the concept and objectives are highly complementary, we can coordinate and advance our strategies together to achieve common development.

For China, Indonesia is an indispensable partner in building MSR. Indonesia is the country where MSR was first proposed and an important hub of the ancient maritime Silk Road. With advantages in resources, market, labor and geography, Indonesia is a key partner in building the MSR. Our joint efforts in building the MSR will play a leading and demonstration role in Southeast Asia.

For Indonesia, cooperation with China in building the MSR will strongly support its GMF strategy. With maritime connectivity and maritime economy as the top priority, Indonesia has developed ambitious plans of infrastructure construction, such as ports, roads and railways, thus has great demand in capital and technology. In this respect, China has distinct advantages.

First, technological and experience advantage. Over the last 30 years of reform and opening up, China has launched large-scale infrastructure construction, starting from ground zero, and thus gained abundant experience and developed world-class technologies. China has built over 120,000 kilometers of expressways, ranking the world's No.1. And China is the world's No.2 in terms of railway mileage, with 112,000 kilometers of railway, including 17,000 kilometers of high-speed railway, which is 55 percent of the world's total. China is also leading the world in the number of newly-built ports. Among the top ten busiest ports in the world based on handling capacity, eight are in China.

Second, financial advantage. Financial resources like the China-ASEAN Investment Cooperation Fund, the Silk Road Fund, the Asian Infrastructure Investment Bank (AIIB) could provide strong financial support to Indonesia's GMF strategy. In the coming five years, China will import more than US$10 trillion of goods and Chinese investment abroad will exceed US$500 billion. This is a real "China Opportunity" for Indonesia to boost trade and attract investment.

Third, production capacity advantage. China has entered a more mature stage of industrialization and become the world's largest producer of over 220 categories of industrial products. China produces 38% of the world's machine tools, 41% of ships, and 60% of power generation equipment. (These are highly competitive industries and production capacity, not outdated or backward.) China is speeding up economic structural adjustment and promoting our advantageous production capacity to go global, which will meet Indonesia's development demand and boost Indonesia's infrastructure construction and create jobs. Our joint efforts of building the MSR will comprehensively and strongly support the GMF strategy.

(2) Both countries are faced with historical opportunities in coordinating maritime strategies and achieving common development.

First, China-Indonesia relations are now stronger than any time in history. We established comprehensive strategic partnership in 2013. We also work together to set up three dialogue mechanisms at deputy-prime-minister level, respectively in political security, economic cooperation and people-to-people exchanges, which has brought the bilateral relations to a new stage of comprehensive, multi-level and extensive development. The two leaders so far have already had three meetings and two phone conversations, which are unprecedentedly intensive engagements. In 2014, our bilateral trade volume totaled US$63.8 billion, with an increase of nearly 4 times in the past decade. China's direct investment in non-financial sectors in Indonesia reached US$1.05 billion, making Indonesia the largest investment destination for China among the ASEAN countries. China now is Indonesia's second largest export market and the largest source of import. In people-to-people exchanges, from January to July this year, Chinese tourist arrivals in Indonesia grew 19.99 percent. This is higher than any other country.

Second, the two countries are highly complementary and enjoy great potentials for cooperation. China and Indonesia are both developing countries and major emerging economies. We are shouldering the same historical responsibility of national revitalization, and sharing similar goals, common concepts and complementary strategies. In this regard, we are faced with precious opportunities of coordinating development strategies, comprehensively advancing win-win cooperation and achieving common prosperity. China welcomes Indonesia to play a positive role in the MSR development, while China will also take an active part in Indonesia's GMF plans and infrastructure construction, so as to achieve mutual benefits.

Third, the Chinese and Indonesian leaders have reached significant consensus on comprehensively coordinating development strategies and jointly developing maritime partnership. Both President Xi Jinping and President Jokowi have agreed that our two countries' strategies are highly complementary, and reached significant consensus on comprehensively coordinating the development strategies, comprehensively promoting pragmatic cooperation, and jointly developing maritime partnership. Today, how to coordinate strategies has become a major topic for the governments, think tanks and media of both countries. The two governments have reached a series of agreements in infrastructure and industrial cooperation. China will be actively involved in Indonesia's infrastructure projects, including railways, roads, ports, dams, airports, bridges, etc and connectivity enhancement.

(3) Some thoughts on bilateral cooperation

China-Indonesia cooperation enjoys favorable opportunities, geographic proximity and strong public support. What is pressing now is that we roll up the sleeves, and work, work, work, to translate the strategic consensus of our two presidents into an accelerator of comprehensive cooperation.

First, cooperation in maritime infrastructure and connectivity. Indonesia's Medium-Term Development Plan 2015-2019 and Blue Book 2015-2019 have listed shipbuilding, bridge, sea ports as major infrastructure projects. Our two sides could include them in the priority project list of the five-year economic cooperation between China and Indonesia, so that we can work together to support their implementation. China is one of the largest shipbuilding countries of the world. Our sea port construction capability is world-leading, and we are well-positioned to support Indonesia's shipbuilding industry and port development. Now, Chinese companies are actively involved in building and expanding over 30 sea ports in Eastern Indonesia, which will improve Indonesia's maritime connectivity. China is willing to be a partner in the redevelopment and expansion project of the Tanjung Priok Port in Jakarta, participate in the planning and design of highways, railways and other port supporting facilities, and help reduce the cargo dwelling time there. We are ready to cooperate with Indonesia in the building of Batam-Bintan cross-sea bridge to contribute our share to Indonesia's 'maritime toll road' strategy.

Second, cooperation in maritime economy. Indonesia's maritime economy has huge potential. Our two sides have potential to strengthen investment cooperation in ship repair and building, fishing and processing, offshore oil and gas development, island development, maritime science and research, maritime economy and environmental protection. Indonesia is blessed with rich fishery resources, and China's big population means huge demand for sea food import and enormous potential for fishery cooperation between our two countries. Therefore, our two sides should deal with differences appropriately and restore fishery cooperation as early as possible.

Third, strengthen cooperation in industry, investment and finance. In the joint communiqué, our two presidents welcome the responsible departments of the two countries to discuss ways to implement a priority list of industrial cooperation projects, in order to reap 'early harvest'. Our two sides agree to carry out in-depth cooperation in power generation, high-speed railway, non-ferrous metal, shipbuilding, construction materials and other industrial sectors and a priority project list will be signed soon. China will encourage more established and reputable companies to invest in Indonesia. They will make the best use of Indonesian resources and raw materials and produce and sell locally. This will meet Indonesia's needs for industrial upgrade.

In power generation, Chinese companies are very strong and China is the No.1 manufacturing country of power generation equipment. We are capable of building power plants of different scales and can carry out cooperation according to Indonesia's specific needs.

The Indonesian new government announced plans to build industrial parks to promote balanced economic development between the eastern and western parts of Indonesia. Now, Chinese companies have started to build several smelting industrial parks in Eastern Indonesia. In addition, Chinese companies can make more investment to build more manufacturing, processing and fishery industrial parks to contribute to Indonesia's industrial upgrade and translate Indonesia's growth potential into strengths of development.

In financial cooperation, China is ready to use the China-ASEAN Investment Cooperation Fund, the China-ASEAN special loan for infrastructure, the China-ASEAN Maritime Cooperation Fund, the China-Indonesia Maritime Cooperation Fund, the Silk Road Fund, the Asian Infrastructure Investment Bank and other bilateral and multilateral financing mechanisms to support Indonesia's effort to build a maritime power and China-Indonesia maritime cooperation.

Fourth, strengthen cooperation in maritime culture and tourism. In the next 5 years, the number of Chinese out-bound tourists will rise above 500 million. The Indonesian government has announced the goal of doubling the number of foreign tourists coming to Indonesia, China can make contribution to that goal. We will support the Zheng He tourism route promoted by the Indonesian Ministry of Tourism, work with Indonesia to create 'maritime silk road' tourism route, and encourage Chinese and Indonesian tourists to visit each other's countries, to deepen the mutual understanding in each other's history, traditional friendship and maritime cultures. In addition, Indonesia has many islands with good prospects of development. China is ready to discuss with Indonesia the possibility of island development, building island infrastructure and tourism facilities. We should focus on developing maritime tourism and build demonstration zones of bilateral maritime cooperation.

Fifth, strengthen maritime human resources and capacity building. Chinese and Indonesian competent authorities have signed the MOU on maritime cooperation and established the joint committee on maritime cooperation. The two sides have established the Indonesia-China maritime and climate center in Indonesia, set up several joint maritime observation stations, and conducted several joint maritime surveys. We have carried out close cooperation in maritime search and rescue, law enforcement and science and technology by holding seminars, joint exercises and personnel training. Going forward, we can focus on strengthening maritime professional training and technical exchanges and building a pool of maritime talents to lay a solid 'software' foundation for our maritime cooperation.

Dear Colleagues,

Since my arrival in Indonesia last year, I've witnessed the dramatic changes going on in Indonesia. I'm convinced that, under the leadership of President Jokowi, Indonesia will become a 'global maritime fulcrum' and fulfill the dream of restoring its status as a maritime power. As Indonesia's good neighbor, good partner and good friend, China is ready to participate and support to Indonesia's development. China will work to coordinate the '21st century maritime silk road' initiative with Indonesia's 'global maritime fulcrum' plan in light of the two sides' development strategies and actual needs. We are committed to working with Indonesia to write a new chapter of win-win cooperation and common development for our two countries.

Thank you!

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