KEYNOTE ADDRESS BY MR MARTTI AHTISAARI, PRESIDENT OF THE REPUBLIC OF FINLAND

SINO-FINNISH ECONOMIC FORUM, SHANGHAI, APRIL 18, 1996

It gives me great pleasure to welcome you all to the Sino-Finnish Economic Forum. I am grateful for the opportunity to address this distinguished audience of Chinese decision-makers and industrialists.

Sino-Finnish trade and economic cooperation have experienced phenomenal growth and diversification in the last few years. Various factors have contributed to this success. To begin with, I want to remind you of the long-standing friendship between our two countries and peoples, which is reflected in a growing number of high-level visits in both directions. The State Visit by President Jiang Zemin to our country in July 1995 is still fresh in our memory.

Another beneficial development has been China's remarkable economic growth, based on the policy of reform and opening-up to the outside world. For Finnish companies it has created a favourable business atmosphere, which we expect to continue to prevail.

This is particularly evident here in Shanghai. With annual real growth in GNP having exceeded 14% in each of the past three years, with foreign trade expected to double by the end of the millennium, and with contracted foreign investment having tripled since 1992, it is obvious even to the uninitiated that the ambitious goals set by Shanghai's political and economic leaders cannot be overlooked by anybody who seriously contemplates participating in China's economic development.

Finland has already taken the first steps. Fourteen Finnish companies have established themselves in Shanghai and its neighbouring provinces. Seven of them have started production at ten sites, either on a joint-venture basis or on their own. Negotiations on several new joint ventures have been going on for some time. The presence of more than 30 Finnish top executives here today is living proof of the determination of the Finnish industries to contribute, together with their Chinese partners, to the economic development of Shanghai.

The Finnish Government has also taken measures with a view to strengthening our representation in this most dynamic region. It is with particular pleasure that I look forward to officially inaugurating Finland's new Consulate General in Shanghai later today.

Membership of the European Union since the beginning of 1995 has given Finland new opportunities for further intensifying her bilateral trade and economic cooperation with China. As part of a dynamic and integrated European market, Finland should be an even more interesting partner for Chinese enterprises than she has been up to now.

Last year the European Union adopted a comprehensive long-term policy on China. Its main message was clear: relations with China form the cornerstone of Europe's external relations in Asia and globally.

A deepening of the EU's economic cooperation with China is a key element in this new approach. Its priorities include human resource development, support for China's economic and social reforms as well as increased contacts and cooperation between European and Chinese enterprises in the private sector.

Also with regard to Asia as a whole, the EU has recognised the growing importance of this dynamic continent in its foreign relations. In December 1994, the EU agreed on a new strategy towards Asia, making the development of this relationship a new priority for Europe.

The first high-level Asia-Europe Meeting (ASEM) in Bangkok last month emphasized the need for closer dialogue and economic cooperation between the two continents. This historic meeting laid a solid foundation for a new partnership between the governments, peoples and business communities of these dynamic regions. Finland intends to play a constructive role in the implementation of the various follow-up measures agreed upon in Bangkok.

Today's world is characterized by ever-greater interdependency of nations. Trade has an important role as a bridge-builder between continents. An open and fair global trading system is crucial for the balanced development of all nations. The European Union and Finland actively support China's membership in the World Trade Organization (WTO). It is our hope that China will soon be able to take her place as an important partner in the multilateral trading system.

The bilateral trade between Finland and China is a good example of how two mutually complementary economies can benefit from each other. China's fast economic growth and development has led to a strong demand for technologies and know-how in various priority sectors. Finnish expertise in the building up of industrial and communications infrastructures has proved to be as competitive here in China and elsewhere in the world.

Energy and telecommunications are two key sectors in China's modernization strategy. They are also areas where Finnish companies have a wealth of experience. In our exports to China, machinery for power generation and telecommunications systems and products are among the fastest growing items. There are good opportunities for mutually beneficial long-term cooperation in these fields.

The general composition of Finland's exports to China has changed, about 80% of them now consisting of technology products. It is a clear proof of their high quality and international competitiveness.

We also welcome the clear diversification of China's exports to Finland. In the last few years high-value products like computers, telecommunication and office equipment have increased their share among Chinese export items in the Finnish market.

I am very optimistic about the future development of our bilateral trade and economic cooperation. I expect it to be characterized by the following positive trends in the coming years:

First, the process taking advantage of the mutually beneficial complementarities of our economies will continue. Industrial technologies and know-how in various sectors, machinery and equipment for power generation and telecommunications products are likely to constitute the bulk of Finland's exports to China.

Second, direct investments and transfer of technology will grow in importance besides our traditional capital goods exports to China. Similarly, Chinese investors who are looking for new business opportunities abroad might find Finland an interesting partner.

Third, the share of high technology items in our trade will increase rapidly as relations deepen and partnerships are established between enterprises. Here I would like to stress the expanding role of technology-intensive small and medium-sized companies in both countries.

Fourth, the share of consultancy, banking and financial services is likely to increase in our economic relations as China gradually opens up her service sector.

Finally, I want to take up one specific area that shows great potential for fruitful cooperation between our two countries. It is the protection of the environment. We have all have learnt to understand the vital importance of a clean environment for the well-being of everybody. This becomes explicit in your Agenda 21, a comprehensive and ambitious programme, through which China intends to improve her own environment for the benefit of future generations here and in the whole world.

I see here great prospects, since this is a sector where Finland has particular expertise and experience. The fragile ecological balance of our country has forced us to develop new technical solutions, which can be useful also in other parts of the world. In particular, Finland may become a valuable partner for China in her efforts to tackle a major environmental problem caused by the pulp and paper industry using straw and other annual-plant fibres as raw material.

A high level Finnish industrial and business delegation is accompanying me during this state visit. It clearly shows the significance that our enterprises attach to the Chinese market. During the next hour, these entrepreneurs will present an overview of Finland's main industrial sectors.

For its part, the Finnish Government is firmly committed to contributing to the growth of commercial exchanges and economic cooperation with China. I am confident that Chinese enterprises will get similar encouragement from the Chinese authorities.