Speech by Prime Minister Anders Fogh Rasmussen at the Graduate University of Chinese Academy of sciences (GUCAS) in Beijing on 23 October 2008

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Distinguished professors, dear students, Ladies and Gentlemen.

Four years ago I travelled to China for the first time. It was a visit that made a huge impression on me personally and as a politician.

Personally, I was impressed by the poetic beauty of Chinese culture.

Politically, the visit made it clear to me that Denmark and Europe had to introduce thorough reforms to meet the challenges of globalization. I was hugely inspired by China’s investments in education, research and innovation. Therefore, on my return to Denmark I introduced two initiatives. Firstly, the elaboration of a Danish globalisation strategy. Secondly, the development of an internal market for research, education and innovation in the European Union.

I am therefore extremely pleased to be back to exchange views on the challenges of globalization. To get a first hand impression of China’s development. To bring back new ideas to Denmark and Europe. And maybe introduce some Danish ideas here in China.

Because globalisation is not only about trading goods and services. Globalisation is also about trading ideas and viewpoints.

At a first glance it is difficult to imagine that Denmark and China has much to learn from each other. China is the world’s most populous country and located in the very centre of Asia. China is known as “the Middle Kingdom”. While Denmark - a small country in Europe - is situated at the outskirts of the Eurasian Continent.

To underline the differences further – the 5 million students enrolled each year at universities in China roughly correspond to the size of the Danish population.

These differences, however, do not change the fact that we are connected by globalisation. Globalisation is transforming our lives in fundamental ways. It changes the way we buy, how we produce, and the way we live. And both our countries share the challenges and opportunities of a globalised world.

But on top of that Denmark and China also share a long, common history. Emperor Kangxi and the Danish King Christian V exchanged letters back in 1674, stating a strong relationship of cooperation and trade.

The first Danish Diplomat in China was received by Emperor Guangxu in September 1908. And this auspicious year – 2008 – actually marks 100 years of Danish diplomatic presence in China. Denmark was among the first countries to establish diplomatic relations with the People’s Republic of China from the beginning in 1950.

Culturally we also have things in common and depend on each other. How would we get anywhere if you, the Chinese, had not invented the compass? And how would the Danish fairy-tale writer, An Tu Sheng [HC Andersen], bring his stories to the world, if not for the Chinese invention of paper and the art of printing?

This history of trade and cultural exchange between Denmark, Europe and Asia is rich and long. And forms a positive basis for the challenges we face together in the era of globalisation.

* * *

In the following I would like to focus on three aspects: Firstly, the current financial and economic crisis and how it affects international economy and international cooperation. Secondly, the Danish approach to globalisation and ways that Denmark and China can cooperate to reap the benefits from globalisation. And thirdly, the need to cooperate to meet the key challenges of tomorrow - especially energy security and climate change.

The international financial crisis is affecting most parts of the world. We are witnessing potential serious consequences of the crisis for the world economy. As a consequence, we are now hearing calls for renewed regulation of the economy and a new economic order.

While I agree on the need for cooperation to deal with the financial crisis and the need to regulate financial markets, I strongly reject calls for protectionist measures. What we need in order to deal with the crisis is not protectionism, but open markets and more liberalisation of world trade.

Of course, we need to cooperate and coordinate short term aid to the financial markets. And we need to tighten up rules on stability and responsibility of the financial system. But we should avoid national protectionist behaviour.

Instead we should continue promoting international engagement, structural market reforms and economic liberalisation. We must consolidate and further promote global free trade and the free flow of capital and ideas to further our common interests.

China itself is the best example of the benefits of economic liberalisation and opening markets. During the last 30 years 300 million people have been brought out of poverty. And today China is the second largest economy in terms of purchasing power parities.

* * *

Denmark has – like China – benefited tremendously from globalisation and free trade. Denmark has demonstrated that high economic growth based on global competitiveness can be combined with a high level of social security.

Let me briefly outline some characteristics about Danish society in order to explain our approach to the challenges of globalisation.

Firstly, we have an open and trade-orientated economy.

Secondly, we have a unique combination of a flexible labour market and social security known as 'flexicurity'.

Basically, “flexicurity” consists of three elements:

• A flexible labour market with virtually no restrictions on the right of companies to hire and fire.
• A high level of social security focussing on the protection of income rather than on the individual job.
• And an active labour market policy.

So you can hire and fire practically without any restrictions. But in exchange we have a high level of social security. In the case of unemployment you have a high unemployment benefit – a compensation rate of up to 90 percent for those with the lowest income. You may ask then, what are the incentives to work? The answer is that those who are able to work are obliged to accept jobs in order to get the social benefits. And the system works, at the present time the Danish unemployment rate is only around 1.6 percent.

Thirdly, we have a well-educated society with a strong social cohesion. Since 1814, we have been providing free education for all.

Fourthly, we have gender equality and family policies that make it possible to combine work and family life harmoniously. Perhaps this is part of the reason why Danes are rated “most happy people” in most international surveys.

And finally, our democratic values, which are an important prerequisite for our welfare society and securing support for the redistribution of resources within the society.

These factors have been instrumental in turning Denmark into one of the most wealthy, competitive and strongest economies in Europe. According to the Economist Intelligence Unit Denmark was for the second year in a row rated as the most favourable country to do business in. Also the World Economic Forum rated Denmark as the most competitive economy in the EU in 2007.

The challenge is to keep it that way, which is why Danish Government has launched a Globalisation Strategy.

Nationally, we are carrying out reforms aimed at ensuring our continued competitiveness. Key factors are:

• Increased job market participation in Denmark.
• Attracting new talent to Denmark through a green card arrangement
• Further improvements in education, research and development as well as in the Danish business environment
• And we would like to see Chinese work in Denmark to a larger extent than today.

Internationally, we are working to further improve the internal market of the European Union – the world largest market. In particular, I have proposed to create an internal market for knowledge – a market in which ideas, researchers and students can move freely without barriers.

And Denmark is a strong believer in global free trade. We are working to bring down barriers for globalisation, mainly through WTO. We all have an interest in free trade. We also share an interest in an equal playing field, including on intellectual property rights.

There is a huge potential for increased prosperity and stability in increased free trade across the world. I had hoped to see the achievement of a broad WTO-agreement earlier this year. We must keep pushing for an agreement promoting rule-based, free, international trade.

We will also pursue our international agenda through bilateral cooperation with the key actors such as China.

Danish companies are already well established here in China. Today, more than 350 Danish companies do business with China, and the number is growing. During this visit, I am accompanied by a number of leading Danish business people, which proves there is a great interest in China.

* * *

Ladies and gentlemen,
It is being predicted that the 21st century will be the century of Asia. Denmark wants to be a part of that.

Three days ago in Shanghai, I launched a new action plan for future cooperation between Denmark and China. The focus is on the many opportunities for developing stronger ties between China and Denmark. Particular emphasis is on strengthened collaboration within the sectors of education and research as well as renewable energy and environment.

Yesterday Prime Minister Wen and I agreed on a comprehensive strategy for collaboration between China and Denmark. As part of this strategy and in cooperation with the Chinese Academy of Sciences, we have just witnessed the signing of an agreement on the establishment of a Sino-Danish Centre for Education and Research here at the Graduate University of Chinese Academy of Sciences.

I believe this will open a new chapter in the cooperation between China and Denmark on education, research and innovation.

The aim of the new centre is to promote the exchange of students and researchers between Denmark and China, and to provide a platform for Danish and Chinese researchers and companies to develop new knowledge together and learn from each other.

I also expect the Sino-Danish Centre to develop into an important hub for the exchange of knowledge and talent between our two countries.

* * *

In Denmark, globalisation is generally viewed as something positive, as something which provides opportunities. We have always looked beyond our own borders for opportunities and explorations. From our seafaring days as Vikings 1,000 years ago to our focus on opportunities in the global market place today.

But with a global outlook comes awareness of the long term challenges of globalization, which are increasingly affecting us all.

* * *

This brings me to my third point: The need for an agreement to combat climate change. With the financial crisis, some argues that we need to put on hold the efforts to tackle climate change.

But I will argue that this would be a huge mistake. Because the policies needed to tackle climate change are also the ones that can help rebalancing our economy. Combating climate change is not a part of the problem – on the contrary it is a part of the solution.

The future economic growth potential lies in green technology and the transition to low carbon economies. It will require the creation of a long term predictable framework to generate the necessary private sector investments. Governments need to adopt policies and measures to encourage the right development.

And it is possible to combat climate change and increase economic growth at the same time. The Danish experience proves it. In Denmark we use about the same amount of energy today as we did in 1980. The key tools are energy technologies and incentives that promote efficiency and the use of renewable energy resources.

China can follow the same path, although I know the challenges you face are far greater.

There is another good reason for moving towards low carbon economies – energy security. We need to ensure stable and reliable supplies of energy – and at predictable prices.

If we continue to depend on fossil fuels, we are heading for a new world order where energy suppliers rule over energy consumers. We should avoid that scenario. We need diversity in the energy supply and we need to look for other energy sources and expand the use of renewable energy.

At the UN Climate Change Conference in Copenhagen in December 2009 we hope to achieve a comprehensive and global climate change agreement. We will combine our national and regional efforts towards a balanced global agreement.

The new agreement must set even more ambitious targets for dealing with the causes of climate change. And we all have to contribute on the principle of common but differentiated responsibilities.

This principle can be explained by the Danish proverb: “the broadest shoulders must carry the heaviest burdens”. But no one is exempted from contributing to the solution. Therefore, I hope to see key players like the United States, China and India accept their responsibility and reduce their greenhouse gas emissions in accordance with their level of development.

Tackling climate change must be an urgent priority. If we are to limit global warming, we must act now and set the direction for the coming decades. So far burdens and costs have been at the centre of the negotiations. But this is not about poor against rich countries or the United States against China. Climate change is a problem we all share. We need to find a common solution.

In fact, we need to find a smart solution – a solution that offers opportunities for all of us.

We ought to be striving for the front runner position when it comes to new green technology. I am convinced that China will share this common goal as you are a competitive nation. The last Olympic Games prove that.

* * *

Ladies and gentlemen, dear students,

It will most likely be your own generation that will need to deal with the global challenges of the future. This places great responsibility on your shoulders.
And to sum up, it is my hope that you will take it upon yourselves this responsibility. This entails, in particular;

• that you will continue and strengthen the opening and reform policy on which China embarked 30 years ago to the benefit of China and the rest of the world
• that China and Denmark will continue and strengthen cooperation to fully reap the benefits of globalisation
• And that together we will continue and strengthen our common efforts to combat climate change and move towards a low carbon economy.

You are the ones who will usher your country into the future and bring new ideas into your society. An old Chinese saying goes: “As in the Yangtze River where the waves behind drive on those before, so a new generation always excels the last one.”

I look forward to hearing your views on the challenges ahead.

Thank you.