Commissoner Waldner, Secretary General Merritt, Ladies and Gentlemen, Friends,

In a few hours, I'll leave for Prague for the 11th China-EU summit. But I am very happy that, before taking part in tomorrow's high-level political dialogue, I am able to join you for this academic strategic dialogue.

I think no discussions nowadays can stay away from the financial crisis. Our economy suffers from its impact, so does our society.

For the first quarter of the year, China's GDP growth was at 6.1%, much lower than the double-digit rate for the past decades. China's foreign trade dropped by nearly 25%. Many export-oriented enterprises are now in great difficulty.

The EU economy, on the other hand, will contract by 4% this year, as estimated by the Commission, while unemployment will rise to 10.9%, amounting to 8.5 million people.

All statesmen, entrepreneurs and scholars are watching closely on the dynamics of the world economy and the rescue actions taken by other economies. We all hope that the economy will hit bottom and turn around quickly. We all fear that a prolonged recession might incur social contention, political strife and even international conflicts.

But the crisis will not fade away if we sit idle. We ought to take decisive actions and effective measures. We ought to have closer coordination and stronger cooperation.

Last December, the EU launched a 200 billion euros stimulus plan, which was followed by many national plans from the member states.

China adopted a series of forceful measures since the second half of last year, which developed into a stimulus package that was aimed at ensuring economic growth, people's welfare and social stability.

To expand demand, the government took the lead to increase investment and cut tax, and the total investment was planned at 586 billion US dollars.

To optimize supply, ten major industries are undergoing restructuring and upgrading.

To improve production, technological innovation is encouraged by heavy investment in R&D capacity-building.

To sustain growth, social security benchmarks have been raised, and employment will be expanded.

This policy package is producing effects. There are already some positive signs of economic rebound.

Investment keeps growing. For the first four months, fixed asset investment went up by more than 30%.

Consumption keeps growing. In April, retail expanded by nearly 15%. Housing sale is getting up. Moreover, China has become the largest car market in the world. 1.15 million new cars went on China's roads in April alone.

Production keeps growing. Industrial growth was at 7.3% in April, a few points higher than the beginning of the year.

Confidence keeps growing. The Manufacturing PMI hit 53.5% in April, recording a five-month consecutive growth.

In general, the trend of China's economy towards growth and expansion has not changed. The economic fundamentals remain solid.

Meanwhile, China has taken an active part in the global effort to confront the crisis. China is determined to tide over the hard time hand in hand with the international community.

Last October, when China hosted the 7th Asia-Euope Summit, we modified the agenda to slot more time to discussions on financial crisis, which produced extensive and important consensus.

On Washington and London G20 summits, President Hu Jintao expounded China's views and positions on confronting the crisis and reforming the international financial institutions, with an emphasis on strengthening supervision, opposing protectionism and protecting the developing countries.

By presenting both ideas and actions, China contributed to a coordinated global response to the crisis, and helped boost the confidence on an early economic recovery.

In face of this storming crisis, China and Europe hold hands even tighter.

Early this year, the Journey of Confidence by Chinese Premier Wen Jiabao anchored our joint effort to fight the crisis.

It was followed by a trip of China's trade and investment delegation, who signed 13.6 billion US dollar worth contracts with European companies.

Ten days ago, we had a successful Second High-level Economic and Trade Dialogue, where we agreed to oppose protectionism, increase mutual investment, support the development of medium and small size enterprises, promote bilateral cooperation on energy, environment, climate change and sustainable development.

Ladies and Gentlemen,

In retrospect of China's policy, action and influence since the outburst of the financial crisis, it gives us a clearer idea about what a country China is and what our relationship means to us and to the world.

First of all, China is a country that achieved rapid development.

Thanks to three decades of reform and opening-up and stable development, China has become one of the largest economies and traders of the world. The Chinese people enjoy a better life. China's democracy and rule of law have improved, giving people better guarantee on their political, economic, cultural and social rights.

Today, visitors from other countries, once they step on China's land, will be overwhelmed by the vitality of the nation and the ethusiasm among the people.

China has chosen a development path that fits its national conditions well. The Chinese Government has put in practice the "People First" creed of governance and the theory of comprehensive, coordinated and sustainable development.

In sum, China's rapid growth is attributed to the reform and opening-up policy and the path of peaceful development.

Secondly, China remains a developing country.

With 1.3 billion population, China's GDP per capita ranks below 100th in the world. Its per capita possession of arable land, surface water, coal, oil and many other resources are all below world average.

China's development is still stumbled by many structural problems, such as income disparity, unequal regional growth and imbalanced urban and rural economy.

More than 10 million people are still living below poverty line, a population equal to that of Belgium.

Each year, China needs to create more than 30 million new jobs, about the whole number of the UK's work force.

Last week, when we commemorated the anniversary of the Sichuan earthquake, 15 million displaced people in the disaster area have been relocated. It's almost giving every Dutch family a new home.

So, it is quite impossible for an outsider to imagine the difficult situation China faces.

Thirdly, China is a country that shoulders its responsibility.

Despites its heavy burden on development, China spares no effort to promote world peace and development and cooperate with the international community on issues that involves interest of mankind. In this realm, China maintains a balance between rights and obligations and act in accordance with its capability.

In coordinating global response to the financial crisis, China played a constructive role from the beginning.

For maintaing world peace, China dispatched largest number of peacekeeping personnel among the permanent members of the United Nations Security Council.

To promote common development, China has offered more than 30 billion US dollars in asssitance to other developing countries. China pledged to cancel all outstanding debts of the 46 Least Developed Countries which were to mature at the end of 2008.

Let me say a few words on the issue of Climate Change, which the Europeans have the utmost concern.

Though the developed countries are held responsible for the majority of historical emission of greenhouse gases, though China's current per capita emission is only one fifth that of the United States, though China is still in the course of industralization and urbanisation, which normally requires a higher standard of emission, China has made tremendous effort to build up its capacity in dealing with climate change and protecting the global climate.

China is doing this on account of the interest of the Chinese nation and the mankind, and on the basis of the principle of Common but Differentiated Responsibilities.

China is doing this with a combination of measures, including restructuring national economy, optimizing production models, advocating energy saving, improving energy efficiency, remixing energy consumption and promoting afforestation.

China's effort has produced positive results. Over the past three years, energy consumption per GDP unit fell by a slice over 10%, COD emission was reduced by 6.6%, sulpher dioxide by nearly 9%.

In the year 2007 alone, by making wider use of renewable energy, China reduced emission of 500 million tons of carbon dioxide.

The New York Times recently hailed China as the world's leading builder of more efficient, less polluting coal power plants, by mastering the technology and driving down the cost.

Fourthly, China is a country that advocates win-win cooperation.

China was once bullied by foreign powers and therefore knows dearly the humiliation of inequality.

China will never bring such agony to others. Nor will it pursue its own development at the expense of others' interest.

China's cooperation effort benefits both China and its partner and facilitates both sides' social and economic development.

To the developed countries, thanks to its vast market potential and labour resources, China is able to provide the companies with space of business expansion and bring the consumers low-cost, good-quality commodities.

For the developing countries, on the basis of mutual respect and benefit, China helps them upgrade their economy by transforming their advantages on natural and human resources into economic benefit, and improve their people's life by assisting their social service construction, such as on medical, health, education and sport facilities.

China does not seek hegemony or self interest. Nor does it pose any threat to any country. Many leaders in the world stated their views on China, not as a threat but as an opportunity.

Some European friends said to me, it is a miracle that China could have made such great achievements in development by going along its own way.

Here, I would like to add one more judgement. China going along its own way of peaceful development will make greater contribution to lasting peace and common prosperity of the world. And that will be the next miracle.

Ladies and Gentlemen,

May I come back to the financial crisis, which in my view, not only hindered the economic growth of every country, but also contorted the global political and security pattern. It also speeds up reshaping the global order.

Under such circumstances, China and Europe, as two major economies, political forces and cultural sources of the world, have witnessed their relationship transceding bilateral scope and obtaining greater global and strategic significance.

Our coordination and cooperation, on the economic side, will boost the world's confidence in overcoming the difficulties brought about by the crisis and help ensure economic stability and recovery; on the political side, will promote the transition of global order in the direction of justice and fairness and serve the interest of world peace and development; and on the cultural side, will advocate constant progress of humanity towards a better and harmonious world.

At this juncture, our hands must hold tighter.

At this juncture, old-day mentality, narrow minds and conventional move won't push our relations ahead.

At this juncture, we need historical insight, cross-board vision, astute wisdom and resolute decision.

I am sure that we have such qualities and will apply them to pushing forward our comprehensive and strategic partnership.

Tomorrow, the 11th China-EU summit will be an event important for both sides. It is of special importance given the current global background.

Under the storm of the financial crisis, we all understand better that our cooperation means a lot to us and to the world.

The Chinese side has maintained close contact with the EU Presidency and the European Commission in preparation of the summit.

Leaders from both sides will exchange ideas on promoting our partnership as well as meeting challenges from the financial crisis, climate change and other international issues.

We are expected to stand higher and look farther, and on this occasion of top-level contact, reach more consensus and agreement on stepping up our cooperation.

If so, the summit will infuse more vitality into our relations. It will send a positive signal to the international community. It will testify the strategic nature and global significance of our partnership.

I am confident that the summit will be a success and another landmark in the history of our relations.

Dear friends,

You have been following the development of China and the China-EU relations. I hope you will continue broaden and deepen your understanding of China. I believe in the following discussions, you will be able to reach positive conclusions on the role of our relationship. And I look forward to more constructive suggestions on fitting our relationship to the frame of our national development and the development of the world.

I wish this dialogue complete success. Thank you.