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Visiting Chinese Premier Li Keqiang on Tuesday delivered the 44th Singapore Lecture organized by ISEAS-Yusof Ishak Institute in collaboration with Business China.
The following is the full text of the speech:
Pursuing Open and Integrated Development
For Shared Prosperity
The 44th Singapore Lecture
By H.E. Li Keqiang
Premier of the State Council of the People’s Republic of China
Singapore, 13 November 2018
Prime Minister Lee Hsien Loong,
Deputy Prime Minister Teo Chee Hean,
Ladies and Gentlemen,
It gives me great pleasure to deliver the 44th Singapore Lecture organized by ISEAS-Yusof Ishak Institute in collaboration with Business China and communicate with all of you on this occasion. I wish to first express my appreciation to the two institutions for their long and productive efforts to promote closer engagement and better understanding between China and Singapore. Let me also use this opportunity to extend, on behalf of the Chinese government and people, warm greetings to the distinguished audience today and through you, to the Singaporean people.
China-Singapore relations have been making steady progress with deepening practical cooperation. During President Xi Jinping’s state visit to Singapore in 2015, our two countries established an all-round cooperative partnership progressing with the times. The purpose of my visit this time is to work with Singaporean colleagues to review past progress, further build consensus and deepen cooperation in order to lift our relations to a higher level.
China and Singapore are close neighbors linked by the sea, and our peoples are bonded with a special affinity. I still recall my visit to Singapore back in 1985 when I felt deeply impressed by Singapore’s vibrant economy, magnificent skyline, orderly society and efficient governance. More than thirty years on, I see new progress and a country bustling with new energy. Over the past five decades and more since independence, Singapore has made remarkable achievements, becoming the world’s important economic and financial center, shipping hub, petrochemical and electronics manufacturing center and a R&D center of biotechnology. It now occupies a leading position in the world in terms of development level, innovation capacity and competitiveness. I wish to hereby express my sincere congratulations on Singapore’s tremendous accomplishments.
Singapore’s success story has been underpinned by an abiding commitment to openness and vigorous efforts to develop an open economy in keeping with the trend of economic globalization. China’s progress in the past four decades has also been powered by ever wider opening-up. The decision to integrate itself into the world economy and share opportunities and benefits in the process of opening-up has not only propelled China’s own progress but also contributed to world development. The course of development of our countries thus shows that pursuing open and integrated development is a sure path leading to prosperity and inclusive growth for countries regardless of size. It is also the reason for the unprecedented and sustained growth of the post-war global economy.
We live in a world of extensive, profound and complex changes. Continued momentum of recovery coupled with the emergence of troubling risks and challenges has brought the global economy again to a crossroads. Economic globalization is facing a backlash, protectionism and unilateralism are on the rise and global trade tensions are gathering. These developments have eroded global economic and trade growth, and dampened confidence in the prospect of future development.
At the same time, the new round of technological revolution and industrial transformation on the back of economic globalization have created new opportunities for global growth, yet they are also handicapped by a lack of inclusiveness, as reflected in the uneven distribution of opportunities and benefits and hard-hit traditional industries and jobs. Facing these risks and challenges, we in the international community must decide where we should go and how we should respond.
The right decision can only be made with a proper understanding and evaluation of the realities. An objective fact that any fair-minded person would recognize is that economic globalization, by enabling freer flow of goods, capital, people and information, has delivered producers bigger markets, consumers more choices, and countries broader space for development.
Moreover, every leap in global productivity and human civilization in the past was driven by technological revolution and industrial transformation. At a time when the traditional drivers of growth are losing steam, the new round of technological revolution and industrial transformation would be critical for sustained, steady growth of the world economy.
Just as every coin has two sides, economic globalization and the new technological revolution and industrial transformation also have their upsides and downsides. Yet compared with the compelling benefits they bring, the problems and imbalances are but side effects that can be tackled with effective responses. What would be inadvisable is to allow the bigger gains to be undermined, or to quote a Chinese idiom, give up eating for fear of choking. Such a line of reasoning would help us draw a logical conclusion and make the right decision.
The rules-based multilateral trading system is the cornerstone of economic globalization and the international economic and trade order. Its authority and efficacy should be respected and upheld. Admittedly, the WTO rules do fall short in some respects, which ought to be brought up to date by reforms. China has all along been positive toward the reform. That said, the reform should be guided by some basic principles: the overall direction of trade liberalization should not change; the basic principles of openness, transparency, inclusiveness and non-discrimination should not change; and no attempts should be made to dismantle the current system or build a new one. Such attempts would weaken the foundations of the multilateral trading system and destabilize global trade.
As the reform involves the interests of all parties, there should be equal participation, with the concerns of the majority WTO members accommodated and the broadest possible common ground pursued. In particular, the development rights and interests of all developing members must be upheld in order to narrow, rather than widen, the North-South gap. The intricacy of the reform determines that a package solution that fixes all problems at the same time would be unrealistic. Instead, prioritization should be sorted out so that the most pressing issues such as the selection of new members to the Appellate Body will be addressed first.
Free and fair trade are two major concepts in the multilateral trading system. China advocates free trade, which is the foundation and prerequisite of trade. At the same time, China has all along pursued equity and fairness in trade with concrete actions, as we believe trade that is inequitable or unfair would not be sustainable. The equitable and fair trade China stands for is one underpinned by the WTO principles of multilateralism, inclusiveness and non-discrimination. What we oppose is the practice of imposing unilateral rules or engaging in protectionism in the guise of fair trade. Specific issues concerning fair trade should be tackled in the broader context of free trade. Only in this way can the reform of the WTO move forward along the right track and can the world economy grow further through openness, exchanges and integration.
History tells us that humanity has the wisdom and means needed to tackle all kinds of risks and challenges. No obstacles would be insurmountable when we join hands and work together like we did during the global financial crisis. I have strong confidence and expectation that this togetherness will tide us over any difficulty and usher in a bright future for the world economy.
Ladies and Gentlemen,
Our region East Asia, home to such economies as ASEAN, China, Japan and the ROK, has a combined population of 2.2 billion, and takes up over one fourth of both the global economic output and trade. Our fast-growing and dynamic region has been an important engine of global growth, thanks to the ever-widening intra-regional openness and cooperation. In the past 20-plus years, intra-regional trade has taken up an increasing share in the overall trade of ASEAN, China, Japan and the ROK, and reached nearly 50% today. Intra-regional investment has surged, so has the number of visits exchanged among regional countries. All these have given a strong boost to the economic growth and living standards in this region.
East Asian cooperation enjoys unique advantages, a solid foundation and bright prospects. Geographic proximity and similar cultures have nurtured a long-standing friendship among us. The different stages of development, resource endowments and industrial structures have made us highly complementary and deeply integrated in the industrial and value chains and increased the potential of our cooperation. To fully unlock this potential, we must go with the trend of economic globalization and make more institutional arrangements for regional trade and investment liberalization and facilitation.
At the summits on East Asian cooperation last year, we all agreed to pursue opening-up and cooperation at a higher level and work toward an early establishment of an East Asia Economic Community. This is a long-term, comprehensive undertaking that requires sustained, step-by-step efforts.
We could use the Belt and Road Initiative as an opportunity to enhance connectivity and advance big project cooperation. We must fully leverage the existing regional cooperation frameworks, accelerate the upgrading of existing FTAs or sign new ones, and expand industrial capacity cooperation and third-market cooperation. The RCEP covers nearly half of the world’s population and close to one third of global trade. Its conclusion on the basis of WTO rules will contribute to regional integration. This year has seen substantial progress in RCEP negotiations. China will continue to follow a win-win and flexible approach and work with other parties to advance negotiations. We hope all parties will make concerted efforts toward concluding the negotiations in 2019, with a view to securing a modern, comprehensive, high-standard and mutually beneficial agreement. We also need to strengthen cooperation on health, education, culture, tourism and poverty reduction, and expand people-to-people and subnational exchanges to strengthen the bond between our peoples.
East Asian cooperation cannot thrive without a peaceful and stable environment, which requires the efforts of all parties. We need to pursue common, comprehensive, cooperative and sustainable security, deepen mutual political trust, respect and accommodate each other’s legitimate security concerns, and address differences and disagreements through dialogue and consultation.
The South China Sea has seen greater stability and easing of the situation. China is ready to work with ASEAN countries to fully and effectively implement the Declaration on the Conduct of Parties in the South China Sea (DOC), deepen practical maritime cooperation, and strive to conclude consultations on a code of conduct (COC) in the South China Sea in three years’ time on the basis of consensus. This will go a long way to advancing regional peace and development.
The Chinese nation loves peace and upholds justice. We believe in harmony in diversity and amity with one’s neighbors. China will unwaveringly pursue peaceful development and will never impose its will on others. No matter how developed it may become, China will never seek hegemony or expansion. We will continue to follow the policy of building friendships and partnerships with all neighbors in keeping with the principle of amity, sincerity, mutual benefit and inclusiveness. We will endeavor to be a trustworthy and reliable partner for regional countries.
Ladies and Gentlemen,
This year marks the 40th anniversary of China’s reform and opening-up. In the past four decades, China has achieved tremendous progress in its development and transformative changes in the country. China’s GDP registered an average annual growth of 9.5%, which made our country the second largest economy in the world. People’s lives have significantly improved from shortage and poverty to abundance and moderate prosperity. More than 700 million people have been lifted out of poverty. Those of you who are regular visitors of China may have personally witnessed such changes. China’s development has not just benefited its own people but the whole world. In recent years, it has contributed over 30% to global growth and 70% to that of East Asia.
What is the fundamental reason for China’s fast development over the years? In the final analysis, it has been down to the hard work and perseverance of the Chinese people in the face of difficulties and hardships. The Chinese nation is known for its industry, wisdom and fortitude. We have made continuous efforts to deepen reform, free up prices and the market overall, and remove institutional barriers and unreasonable restrictions, thus unlocking people’s entrepreneurship, creativity and drive for innovation. In recent years, we have advanced the reform of streamlining administration and delegating powers, and adopted a prudent yet accommodative regulatory approach. As a result, the number of market entities has seen exponential growth, to the tune of more than 100 million today. Emerging industries have flourished, and traditional industries are being transformed at a faster pace. A powerful new driving force has thus been created for the sustained and sound growth in our country.
Another factor contributing to China’s achievements has been opening-up, which has helped China to leverage its comparative advantages and raise its competitiveness and development level by integrating it into the global division of labor and industrial and value chains. In this process, we have also endured huge pressure, paid a high price, and experienced growing pains. Some obligations China assumed upon WTO accession far exceeded what was required of a developing country and even approached the level of a developed member. For example, China undertook to cut tariffs for agricultural products to around 15%, only one quarter of the world’s average level and lower than that of many advanced economies. Some industries in China were inevitably affected in the open marketplace, leading to bankruptcies and lay-offs. In some sectors, domestic brands came to be outnumbered by foreign ones, such as in passenger vehicles.
Yet, we view these developments with an open mind and from a win-win perspective. We value good faith. To date, we have delivered on all our WTO commitments and even outperformed some of them by taking voluntary measures of opening-up, including making multiple rounds of tariff cuts that have brought our average tariff level down to 7.5%. Between 2001 and 2017, China’s import of goods and services reached US$20 trillion and US$3.7 trillion respectively with annual growth rates of 13.5% and 16.7%, 6.9 and 8.8 percentage points higher than the world average. This year, import of both goods and services has seen double-digit increase. In its pursuit of greater opening-up, China has made important contributions to global economic and trade growth.
Some foreign friends may wonder whether China remains a developing country now that it is the second largest economy in the world. To understand a country as large and populous as China and to determine its development stage, one needs to take a comprehensive and multi-dimensional view and put things in perspective. Yes, China has a big economic aggregate. Yet its per capita GDP is merely about 80% of the world average and less than one sixth that of Singapore. Yes, China is seeing fast growth in new industries and new forms and models of business. Yet its traditional industries, still a considerable share of the economy, urgently need transformation and upgrading. Hence China’s overall industrial development remains at a medium-low level in the global context. Yes, some Chinese cities may seem modern and the coastal areas fairly advanced. Yet there are significant disparities in development between rural and urban areas and among different regions.
Primitive infrastructure remains a big challenge for many places in China’s rural areas and some remote regions, where access to roads, electricity and the internet has only just been provided. China has nearly 600 million people living in the rural areas and more than 200 million migrant workers, who live and work under conditions far below what is available to urban residents. Our estimate at the end of last year put the number of rural residents with a per capita annual income of less than 3,000 RMB yuan at over 30 million. Furthermore, China lags far behind developed countries in education, elderly and medical care and health. All these realities speak to the fact that China remains a developing country, and there is still a long way to go before China achieves modernization.
China has come this far thanks to reform and opening-up, which will continue to serve as a key driver for development. Yet still there has been no shortage of doubts and misgivings about China’s commitment to reform and opening-up. As I see it, such concerns are unnecessary. Why should China take a pause, slow down the pace, or even backpedal in its reforms when reform and opening-up has brought such tremendous changes and benefits to our country and its people? Reform and opening-up enjoys broad public support as it represents the will of the people. It is the default option for China in pursuing greater progress. Our reforms will only intensify and our door will only open wider to the world.
China is committed to market-oriented economic reform. We will work to remove institutional obstacles and see that the market plays a decisive role in resources allocation and the government better fulfills its responsibilities. Putting the concerns of people and businesses at the front and center of its agenda, the Chinese government will continue to streamline administrative approval procedures, exercise fair and impartial regulation and provide more efficient services. We will strengthen protection of property rights and abolish all regulations and practices that impede the development of a unified market and a level playing field in order to further improve the business environment.
The reform to transform state-owned enterprises (SOEs) into standard companies and joint-stock companies has been basically completed. It is entirely up to the SOEs themselves to make business decisions and take responsibility for any profits or losses. Those that perform poorly will be put out of business or closed down. In our laws and regulations, there is no provision on subsidies or special policies that favor SOEs. Continued efforts will be made to deepen the reform of SOEs and state-owned assets, including mixed ownership reform in an active and prudent manner. Foreign investors are welcome to participate in the reform and restructuring of Chinese SOEs. The private sector, an important part of the Chinese economy, will receive greater support. And targeted measures will be taken to ease their difficulties in accessing affordable financing. China’s industrial policy, which is transparent and in line with international rules, provides fair and equal treatment to enterprises of all types of ownerships.
China is committed to building an open economy at a higher level. We will further ease restrictions on market access, shorten the negative list for foreign investment, and accelerate the opening of financial and other modern services sectors. To break new ground in opening-up, we will continue to improve the quality of pilot free trade zones and explore the development of free trade ports, to foster new highlights in our opening-up endeavors. We will take more active steps to lower tariffs and facilitate customs clearance to expand import of quality goods and services. The first China International Import Expo concluded a few days ago was an earnest initiative to open China’s market to the rest of the world and a solid step to support free trade. A total of 172 countries, regions and international organizations and more than 3,600 enterprises participated in the event, attracting more than 400,000 domestic and overseas buyers. The Expo saw booming sales and deals worth US$57.83 billion reached for intended purchase of goods and services within a year.
The recent fluctuations in the RMB exchange rate have prompted some discussions and concerns. Persistent depreciation of the RMB will only do more harm than good to China. Therefore we will not engage in competitive devaluation. Instead, we will work to create conditions for keeping the value of the yuan stable. Given the healthy fundamentals of the Chinese economy, the sound balance of international payments and abundant foreign exchange reserves, there is no basis for persistent depreciation of the RMB. There is every reason that the RMB exchange rate will remain basically stable at an adaptive and equilibrium level.
Stringent IPR protection is crucial for all companies, Chinese and foreign-invested alike. It also serves China"s own needs for high-quality development. We will align our innovation protection system with international business rules, further improve IPR-related laws and regulations, strengthen law enforcement, handle IPR cases more efficiently, and introduce a more rigorous mechanism of punitive compensation for IPR infringements to deter violations. The Chinese government will never allow forced technology transfer or make technology transfer a precondition for the approval of foreign-invested projects. Innovation can only be self-sustaining and its value fully realized when the outcomes are successfully commercialized. More innovative businesses from around the world are welcome to pursue business success in the Chinese market, which provides a broad stage for innovation application.
Ladies and Gentlemen,
China-Singapore friendly relations and cooperation have come a long way in the past forty years. Looking ahead, China is ready to join hands with Singapore to advance the development of the Belt and Road and build the three cooperation platforms of connectivity, financial support and third party cooperation. Let’s make the pie of our trade and economic cooperation bigger, expand innovation cooperation and work to upgrade China-ASEAN cooperation. Continued progress in the China-Singapore all-round cooperative partnership progressing with the times will bring more benefits to our peoples and make new contributions to peace, stability and prosperity of Asia and the world.
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