(24th March 2011, Caledonian Club)

Mr Adam Lee, Mr Nicholas Bell,

Ladies and gentlemen,

It is a privilege for me to be a guest of this distinguished Chatham Dining Club.

It has been a 'Chatham' week for me.

I spoke at Chatham House just last Thursday, and now here I am at the 101-year-old Chatham Dining Club.

Last week, I spoke about the 12th Five-Year Plan: China's Scientific and Peaceful Development at Chatham House. I understand that Chatham Dining Club was founded by a group of army officers to discuss matters outside military world. Now the membership is much wider, but this interest in world affairs has persisted to this day. So today I will talk about what China's development means to global security.

The outside world, especially the West, appears to be concerned about China's development both in the economy and in the security fields. Last week at Chatham House I was asked: Should the world fear the rise of China? How can China assure the world that its rise is peaceful? My response was this: China's development presents opportunities for peace and prosperity, not threats.

I will develop my theme for you this evening. I will start with an ancient Chinese story.

Long, long ago in China in the State of Qi, there was a man who was worried that the sky would fall down on him. He was so concerned that he couldn't eat or sleep. A friend of his told him the sky was just a cluster of clouds. It was everywhere and how could it ever fall down? This finally put an end to his anxiety. This is the origin of the Chinese proverb "Qi Ren You Tian", and exactly what Franklin Roosevelt meant when he said "the only thing we have to fear is fear itself".

I truly believe that a more developed, forward-looking and prosperous China will make the world a safer place.

First, China is a stakeholder in world peace and stability.

Over the past 30 years a peaceful international environment has enabled China to reform, open up and develop. In an age of globalisation, China's interests are increasingly linked to those of the world. As the world's number one exporter and number two importer, 60% of the economic growth of China has been driven by trade. By the end of 2009, Chinese investors had set up thirteen thousand businesses in more than 170 countries and regions. In addition, more than half of crude oil and iron ore consumed in China was imported.China has a growing stake in regional stability and world peace if it is to sustain its development.

My second major point is that China is an active advocate of a peaceful foreign policy.

As Confucius said, "Do not do to others what you do not want them to do to you." China went through foreign aggression and humiliation in its modern history during the past two hundred years. As a result the Chinese people know as well as any nation the cruelty of wars and the value of peace. China was the first to propose the 'Five Principles of Peaceful Coexistence' that arose out of dialogue between China and India in 1954. China always abides by the UN Charter. China stands for non-interference in others' internal affairs and peaceful settlements to international disputes. China solemnly proclaimed to the world that neither hegemony nor expansion is an option for China. China was the only nuclear-weapon state to commit itself to no first use of nuclear weapons and no use of such weapons against non-nuclear-weapon states. China believes that security should be based on mutual trust, mutual benefit, equality and coordination.

The third point I want to share with you is about defence.

China is a staunch practitioner of a defensive national policy. China has no offensive defence strategies. China has limited military capabilities which do not pose a threat to others. The Chinese military capabilities are solely for safeguarding independence, sovereignty and territorial integrity. China follows principles of self-defense and a reactive approach in its military strategies. Let me say a few words about China's military spending, which has attracted some interest lately.

First and foremost, China's military spending is kept at a low level in comparison with other countries. The IISS compiles the international military report. In the latest Military Balance 2011 this shows that China's military expenditure in 2010 only accounted for 1.3% of its GDP. This is much lower than 4.7% in the US; 2.5% in the UK; or 2.8% in Russia. China's military expenditure was even lower than emerging countries such as India and Brazil, whose military spending took up 2.5% and 1.7% of their respective GDPs. Even if we take into account the 12.7% growth in military budget this year, the figure is only 1.4%. Calculated in per capita terms, the US military spending is 38 times that of China - and the UK 20 times. Apart from this international comparison, a fairly large portion of the increased military budget will be used to improve our servicemen's lives. One reason for this is to take account of rising inflation since the financial crisis.

At the same time, China is working hard to improve people's livelihood and increase their income. Last year the farmers' income increased by 10.9%. We don't see why we should not improve our servicemen's life. They deserve a pay rise for their service to the country, not to say many of them have to take care of their children and aging parents. For those of you who have military career, this might be easier to understand.

My fourth point for you to consider this evening is that China is an important contributor to international security.

China is the largest contributor of peacekeepers among the 5 permanent members of the UN Security Council.My country has sent 10,000 peacekeepers on 24 UN missions. You will find Chinese peacekeeping officers in Congo, Sudan, Liberia, Lebanon or Haiti. 8 Chinese peace-keepers laid down their lives in the Haiti earthquake last year. 1,546 people are working on 10 peacekeeping contingents in 4 regions as we speak. As I said earlier China is committed to a peaceful rise in the world. As a result, China advocates the Six-Party Talks as a channel for upholding peace and stability in the Korean Peninsula and Northeast Asia as a whole. Chinese mediation efforts after the Cheonan incident helped ease tension in the region. China stands for a peaceful and negotiated solution to the issue of South China Sea. Pending a final solution in this area, we can "put aside differences and go for common development". Thanks to China's efforts, freedom and safety of navigation in the South China Sea have never been affected. This is of global importance as this is one of the busiest shipping lanes in the world.In the Gulf of Aden, Chinese naval ships have been part of the escort missions in waters off the Somali coast. By the end of last year, our naval ships had escorted over 3000 vessels from more than 50 countries, including Britain.

To put it simply, China is a positive force for world peace and security in every aspect.

I will conclude by quoting Mr Deng Xiaoping, the chief architect of China's reform, opening-up and modernization: "China seeks to preserve world peace and stability, not to destroy them. The stronger China grows, the better the chances are for preserving world peace."

Thank you.