Honorable Members of the Parliament,
Ladies and Gentlemen,

Good Evening.

It is my pleasure to meet and discuss with you, members of the Committee on Economic and Monetary Affairs of the European Parliament. Under the current financial and economic crisis, how to promote reform of the international financial system? How to accelerate the moves towards a new international financial order and work for early recovery of the world economy? These are issues of great concerns to all. And I think your Committee on Economic and Monetary Affairs also has important responsibilities in this regard.

I noticed that the EU Spring Summit on 19 and 20 of March reached a series of important consensus on effective response to the current crisis, including the principle of "reshape the regulatory framework for financial markets", "give priority to restoring the functioning of credit markets", recommend to "ensure appropriate regulation and oversight of all financial markets, products and participants that may present a systemic risk, without exception and regardless of their country of domicile" and "avoid all form of protectionist measures". These consensus have captured a lot of attention outside of Europe.

I look forward to in-depth discussions with you on the topic "Stay committed to opening, create business opportunities and join hands in response to the crisis". Before that, let me give you a brief introduction of China's current economic situation.

2008 has been an extraordinary year for China and many other countries. Despite the major natural disasters and the impact of the international financial crisis, the Chinese economy has maintained steady and rapid growth, and progress has been made in various social undertakings. China's GDP exceeded 30 trillion Yuan, an increase of 9% over 2007. Consumer price level rose by 5.9 percent over the previous year, and inflation was put under control. The registered urban unemployment rate was 4.2%. People's lives have further improved. Fiscal revenue totaled 6.13 trillion Yuan, an increase of 19.5%. For five consecutive years, the grain output has remained increasing, totaling 528.5 million tons, an increase of 5.4%, the highest record in history. The total volume of import and export reached 2.56 trillion US dollars, an increase of 17.8%. Actual use of Foreign Direct Investment(FDI) reached 92.4 billion US dollars, an increase of 23.6%. In 2008, China's outward non-finance FDI totaled 40.7 billion US dollars, an increase of 63.6%. By the end of last year, our foreign exchange reserve increased to 1.95 trillion US dollars. The RMB exchange rate stood at 6.8346 Yuan against dollar and 9.659 Yuan against Euro, appreciating 6.9% and 10.4% respectively on an annual basis.

To put it in more direct terms and help you better understand China's development, I would like to quote another set of figures. By the end of 2008, there were 24.38million passenger cars in China, among which 19.47 million are private, an increase of 28%. Phone penetration was 74.3 for every 100 people. Internet subscribers reached 300 million, of which 270 million had broadband Internet access. These figures give evidence to how quickly this big market is growing in China.

We have set major targets for economic and social development in 2009: GDP growth rate around 8% with more optimal economic structure; registered urban unemployment rate below 4.6%; consumer price level rising at around 4%; improvement in international balance of payments. It is true that we face difficulties and challenges to meet these targets, but we are still full of confidence.

At this moment, the financial crisis is still ongoing, and its impact on the real economy is still spreading. Like the EU and its member states, China is also facing unprecedented difficulties and challenges: the international market demand continues to decrease, the global deflationary pressure is obvious, trade protectionism is on the rise, and the external economic environment is more demanding with uncertainties mounting substantially.

In the face of the serious situation, the work of the Chinese government will focus on responding to the international financial crisis and promoting stable and rapid economic development. To this end, we have introduced a series of strong measures, including large-scale increase in government investment, implementation of 2-year investment plan totaling 4 trillion Yuan, to which the central government will contribute 1.18 trillion Yuan. We have implemented structural tax cuts to stimulate domestic demand. We are carrying out a large scale industrial revitalization programs. We are significantly improving the level of social security, creating more jobs in urban and rural areas, and promoting social development.

At present, the policies taken by China have begun to take effect. After several months of efforts, we have already seen some signs of stabilization and improvement. They include: stable consumption and relatively robust investment; growth in some major export commodities, rise of Purchasing Managers Index for the manufacturing industry to 49%. PMI has picked up for 3 months running, almost reaching the 50% benchmark indicating economic expansion.

China cannot achieve its development in isolation of the world, nor the world could sustain prosperity and stability without China's development. Based on this recognition, the Chinese Government will continue to carry forward the strategy of opening up for mutual benefits and win-win outcome. We will work together with the international community to prevent the international financial crisis from further spreading, resist trade and investment protectionism and work for the early recovery of the world's economy. We believe only by sharing responsibilities and interests and working in harmony for mutual benefits, can we best serve interests of our own and others as well.

Now, I want to have a few words on the economic and trade relations between China and the EU and its development prospect.

 

Economic relations and trade are important parts of China-EU comprehensive strategic partnership. China-EU bilateral trade volume was only 2.4 billion U.S. dollars in 1975 when they established diplomatic relations. In 2008 this figure reached 425.6 billion U.S. dollars, an increase of 177 times. Since 2004, the EU has replaced the United States as China's largest trading partner. Since February 2007, the EU once again overtook the US to become China's largest export market. Since January 2009, the EU surpassed Japan for the first time, to become China's largest source of imports. I believe this is the message you are most happy to hear. The EU is also China's largest technology supplier, accounting for about 40% of China's technology imports. In addition, the EU is China's fourth largest foreign investor. Today, the Chinese products help each European family save 300 Euros each year. Many European companies and brands, such as Mercedez Benz, BMW, Chanel, EVIAN are very well known in China. The interdependence, mutual cooperation and mutual promotion between China and the EU have never been so close as they are today. This is probably beyond the imagination of the most talented prophet when China and the EU first started their official relations.

Many figures show that the international financial crisis has affected world trade, China-EU trade included. According to WTO estimation, the global trade will fall by 9% this year, the biggest drop ever since the Second World War. According to Chinese statistics, since November last year, China-EU trade volume has registered negative growth for four consecutive months. It is gratifying that, in the face of this grim situation, both China and the EU have reaffirmed to open markets and oppose protectionism. The Joint Statement issued during Premier Wen Jiabao's visit to the EU Headquarter in late January this year emphasized that both China and the EU will further promote facilitation and liberalization of trade and investment, and that an open, free and fair trade and investment environment and the creation of business opportunities are important means to tackle the global financial and economic crisis. In late February, as a follow-up to Premier Wen's visit to Europe, Chinese Minister of Commerce Chen Deming headed a trade and investment promotion delegation to visit Europe and signed procurement contracts worth more than 13 billion US dollars. In early March, the Ministry of Commerce organized a working group visit for investment cooperation in Europe. By taking these concrete actions, China has shown its commitment and good will to open market, conduct close cooperation with countries around the world, and work for an early recovery of the world economy.

 

In May this year, two important events will take place in China-EU relations. First, the 11th China-EU summit in Prague, capital of the Czech Republic holding the EU presidency. Premier Wen Jiabao will attend the Summit. Second, the second HED, the High-level economic and trade dialogue in Brussels. Chinese vice Premier Wang Qishan will head the Chinese delegation. In the second half of this year, there will be the 12th China-EU Summit and the 24th Joint Commerce and Trade Commission meeting, and some other important bilateral activities. I am sure that the success of these activities will provide enormous driving force for the continuous and stable development of China-EU economic and trade relations.

Looking ahead, we have confidence in China-EU economic and trade cooperation. Our two economies have strong complementarities. The EU has a clear comparative advantage on high-tech, high value-added and capital-intensive products, which China needs to import. China's advantages are mainly in labor-intensive products, such as textiles and garments, computer and office equipment, electronic equipment and so on, which have benefited European businesses and consumers a lot by bringing down the costs and saving more money. At the same time, the growing Chinese market means immense business opportunities for the EU businesses. According to European Commission forecasts, by 2010 China's middle-income population will reach 150 million, China's high-end consumer goods market will be more than one trillion Euros, and will continue to grow at an average annual rate of 12 percent. The size of Chinese services market will exceed 500 billion Euros, and continue to expand by an average annual rate of 14 percent. I believe that based on the principle of equality, mutual benefit and friendly consultation, China-EU economic and trade cooperation will surely reach a new level.

Ladies and gentlemen,

To further promote economic cooperation and trade between China and the EU, our two sides need to do a good job in the following areas:

First, stay committed to the opening of markets and jointly respond to the crisis. History has told us that the more we are in crisis, the more we need to commit ourselves to opening. Protectionism is not helpful in finding the real solution to the crisis. Instead we should stay with the right choice of opening. We should vigorously promote liberalization and facilitation in trade and investment, oppose all forms of protectionism, refrain from putting up new barriers in trade or investment, and work energetically for an early conclusion and balanced outcome of the Doha round negotiations.

Secondly, strengthen bilateral dialog and appropriately handle differences. As China-EU trade and economic cooperation grows rapidly, it is natural that certain issues would emerge. What's most important is that whenever problems occur, both sides should take a strategic view and keep in mind the larger picture of the overall interests, and resolve the differences through dialog, consultation and cooperation. We should take advantage of our mechanisms such as China-EU Summit, HED and JCCT to develop exchanges, build mutual understanding, increase consensus, promote cooperation and overcome differences.

Thirdly, expand areas of cooperation to achieve sustainable development. The EU is in the world's leading position in the development of wind energy, nuclear energy, renewable energy, and waste treatment. In the next 5 years, China will invest more than 300 billion US dollars in energy conservation and environmental protection, accounting for 30% of the world market. We can further explore the possibility of more cooperation in joint research and development, application of energy efficient technologies and prevention and treatment of pollution, to jointly protect our planet.

Fourthly, take concrete steps and intensify trade and investment promotion. It is important that both sides take concrete steps to further facilitate trade and investment. Following the trade and investment promotion delegation and the working group visit for investment cooperation at the beginning of the year, China is prepared to send similar delegations to visit Europe again, to demonstrate the commitment and good willingness of China to open each other's market and further cooperation with the EU. In addition, taking into account the important role of SMEs in our economies, the two sides may consider to build more platforms for SMEs to strengthen cooperation in technology transfer, market sharing, processing trade and human resources, so as to nurture new sources of growth in China-EU economic and trade cooperation.

Ladies and Gentlemen,

Today, China-EU cooperation covers virtually every area, and we can hardly find any area where there is no China-EU cooperation. This is the result of concerted efforts by the two sides over the years, and could not have been possible without the care, support and participation of all parties, including all of you present today. As Chinese Ambassador to the EU, I feel gratified with the successful cooperation, and would also like to express deep gratitude to all of you for your share in that success.

As President Hu Jintao pointed out, "China's rapid development in the past 30 years is based on reform and opening up. China's future development will also need reform and opening up". Premier Wen Jiabao stressed in the Report on the Work of the Government that "Reform and opening up is the inexhaustible driving force of China's economic and social development. We will not waiver in reform and opening up". To further enhance the China-EU comprehensive and strategic partnership is not only in the interests of China and the EU, but also the need for the promotion of world peace and prosperity. China-EU relationship is now standing on a new historic starting point. Let us work together to contribute to an even better tomorrow of China-EU comprehensive and strategic partnership, and to the benefits of the Chinese and European people.

Thank you.