Ladies and Gentlemen, Dear Friends,

I am very pleased to be here at the invitation of the British Chamber of Commerce in Belgium. I would like to take this opportunity to review, together with all of you, the economic cooperation and trade between China and the EU, and envisage its future development.

The business community has always been in the forefront of China-Europe relations. Two thousand years ago, the Silk Road opened trade between us. In the 7th century, many Europeans traveled long distance to China for business with the Tang Dynasty. Some even settled down. Fifty-six years ago, Jack Perry, a British with his fellow merchants, took a bold move to start trading with the new-born People's Republic. He was then an icebreaker of China-Europe relations.

Our economic cooperation and trade have developed rapidly since 1975, the year when China and the EC set up diplomatic relations. In 1975, our trade volume was only 2.4 billion US dollars. Last year, it was 425.6 billion US dollars, 176 times larger. Mutual investment was virtually non-existent in mid 1970s. But today, the EU's investment to China totals 63.9 billion US dollars, and the Chinese enterprises have started investing in Europe. China has imported technology from Europe with total contract value of 122 billion US dollars. At present, the EU is China's largest trading partner, source of import, export market and technology supplier. China is the EU's second largest trading partner, and the fastest growing market for EU export, an increase of an astounding 65% from 2004 to 2008.

Our economic cooperation and trade is a story of success featured by mutual benefit and win-win results. As our cooperation keeps on expanding and deepening, the structures of our economies are being optimized, evidenced by the constantly rising productivity and level of economic development. Thanks to our growing trade, nowadays, the low-cost high-quality Chinese products help each European family save 300 Euros every year, and keep inflation at bay. By importing technology and equipments from Europe, China managed to accelerate its industrial upgrading and move up in the value chain. Through their investment, the European companies boost employment, generate tax revenues and promote the economic growth of China and, at the same time, achieve greater development of themselves. In 2006, their business revenue in China was 206.6 billion US dollars, much bigger than the EU's trade deficit of that year, which was 91.7 billion US dollars.

What shall we learn from this success story of fast growth of cooperation and good economic and social returns? How shall we keep this positive momentum in the coming years? I would like to share with you some of my observations.

Firstly, it's essential to consider and conduct China-EU economic cooperation and trade from a strategic point of view. Between China and the EU, there is neither conflict of fundamental interests nor geo-political rivalry. Both support a multi-polar world and economic globalization. Since establishing diplomatic relations, China and the EU have always pursued common interest and mutual benefit. This has created a stable environment for business cooperation and trade. Looking back in history, a stable China-EU relations always went hand in hand with intensive economic and trade cooperation. And the opposite was also true. At present, China and the EU are working to deepen the comprehensive and strategic partnership. It's logical that we develop long-term program for economic cooperation and trade with strategic farsight. It's essential that we strengthen policy coordination and dialogue and pursue common development. It's useful that we set our eyes on the mainstream cooperation, rather than focusing on differences over concrete or transient issues.

Secondly, we should adhere to the principle of mutual openness and win-win cooperation. The European Union supports open market. It applied Most Favored Nation status to China in 1978, 22 years earlier than the United States did. For China, the success of 30 years of reform and opening-up reinforces our conviction that we must continue opening up without hesitation. But our opening-up is by no means just taking without giving. We insist on fair competition and complementary cooperation. While pursuing our own development, we also take into account the interests of our partners to achieve mutual benefit and win-win results. Protectionism will go nowhere and benefits nobody. Whether at present or in the future, China and the EU should firmly reject all forms of protectionism, keep our markets open, strengthen coordination to create more trade and investment opportunities, and keep a favorable environment for cooperation between our companies.

Thirdly, we must maintain a mechanism of smooth communication and effective co-ordination. The two sides have established a multi-level and wide-ranging economic and trade dialogue mechanism, which includes meetings between leaders and officials at various rankings. This mechanism serves as an effective channel of communication that plays a critical role in trouble-shooting and promoting cooperation. It also generates powerful driving force for our economic cooperation and trade. Not long ago, some important consensus were reached at the 11th China-EU summit and the Second High-level Economic and Trade Dialogue, which would steer our cooperation through this turbulent time of crisis.

Fourthly, we should give full play to the comparative advantages of our economies. Europe is strong in technology, capital and international marketing, with cutting-edge hi-tech manufacturing, high-end commodities, energy efficiency, environment and service industry. China has abundant workforce, low cost of production and is very competitive in durable goods and other labor-intensive industries. At present, China's per capita GDP is less than one eleventh of the EU. We are at different stages of development. The EU economy is mainly driven by knowledge and innovation. Its strength in science and technology, R&D, branding and global network will continue to grow. China is still half way through industrialization. Its manufacturing sector will further develop. For a long period of time to come, China and the EU will continue to enjoy their respective competitive advantages, and such complementarity will be a strong stimulus for our economic cooperation and trade.

Fifthly, we need to conform to the trend of development in our economies and that of the world. Though hit hard by the crisis, the world economy is nurturing new sprouts. The EU is turning towards "green economy". China is transforming its model of economic development by upgrading industries and promoting innovation. Against this backdrop, we need each other more, we rely on each other more and we continue to complement each other. We expect that our cooperation will further expand and upgrade. At present, China and the EU are just beginning to develop cooperation in energy saving, environmental protection and high-tech industry. We hope the EU will relax restrictions on high-tech exports to China to facilitate common and sustainable development.

Ladies and Gentlemen,

It is true that the process of deepening economic cooperation and trade is never free of differences and disputes. China is vexed by issues like non-recognition of its market economy status, anti-dumping measures against China and difficult visa access for our business people. The EU is concerned with trade imbalance, market access and etc. However, our common interests are far stronger than differences, and our expanding cooperation will bring solutions to them. We should address those issues in an open and cooperative spirit and through dialogue and consultations to ensure the overall economic cooperation and trade are not impaired.

This year, because of the crisis, our trade fell by 22.1% until May, and EU investment to China shrank by 8.9%. We are indeed facing serious challenges. But I am confident that we have the ability to overcome the crisis and the wisdom to resolve disputes. I am confident that our business cooperation will come back to growth, so long as we make the concerted efforts. I say this because of the following:

Firstly, we share a strong consensus to promote cooperation and prevail the crisis. Business cooperation is part and parcel of our comprehensive and strategic partnership; it enables our economies to move more quickly out of crisis. Both sides are fully aware of this. During recent high-level visits, China-EU Summit and HED meeting, we highlighted the necessity of cooperation and assured the business community with a strong pledge to oppose protectionism and promote trade and investment. China and the EU have concluded new agreements on energy, environment, hi-tech and SMEs. One after another, China sent over trade and investment promotion delegations, by which we demonstrated our sincerity and determination to cooperate with the EU and overcome this crisis.

Secondly, our respective economic stimulus plans provide tremendous business opportunities. The Chinese Government is rolling out a stimulus package, which includes 4 trillion RMB Yuan investment and the restructuring plans for ten key industries. Infrastructure and innovation are the key areas which the European companies can seek to expand in the Chinese market. Siemens estimates that in the next three years, government stimulus plans around the world will generate 15 billion Euros of new orders for the company, among which 2.1 billion, about 14% of the total, will come from China. I believe that as China returns to the track of fast growth when the crisis subsides, more and more foreign companies will win new orders in China.

Thirdly, the market potential will be enormous for both China and Europe after the crisis. China's large population constitutes a big market. The consumption demand is growing rapidly and becomes much diversified. From 1978 to 2008, China's domestic retail sale grew by 15.2% each year on average. The Chinese government has always worked for a pattern of economic growth mainly driven by domestic demand. It is particularly true today. We emphasize the need to boost domestic demand, especially consumer demand. As people's income goes steadily higher, social security better and policy stronger towards domestic demand, the Chinese market will enter into another booming period. According to the European Commission, by 2010, China's middle class will grow to 150 million, high-end consumer product market will exceed 1 trillion Euros, and services market 500 billion Euros. And all these figures will continue to grow at double-digit rate. The EU is a big market with a 500 million populations and high per capita income. Europe is the world's largest consumer market. Many Chinese entrepreneurs recognize the unparalleled importance of the EU market, and some have already developed plans to explore the EU market as part of their corporate strategy.

But most of all, China will continue its opening-up and pursue win-win cooperation. Since reform and opening up and WTO accession in particular, China has greatly uplifted its level of openness. Our general tariff level has decreased to 9.8% from 15.3%. Tariffs on agricultural products are only 15.2%, about one fourth of the world average level. Among 160 service trade sectors, China has opened 104. In 2008, China imported goods and equipments of 1.13 trillion US dollars, creating about 20 million jobs for other countries and regions. In the future, while we maintain stable export, we will import more, mainly advanced technological equipments, key components and parts, key resources and raw materials. We will attract more foreign investments and direct them more to high-tech, energy and environmental industries. We will also give active support to Chinese enterprises to go global and encourage them to promote economic development and create jobs for the host countries.

Ladies and Gentlemen, Dear Friends,

I sincerely hope that you make more friends with Chinese entrepreneurs and that your businesses grow further through expanding and strengthening connections with China. I am sure that your cooperation with China will be handsomely rewarded. Together we can build a "New Silk Road" between China and the EU. At the same time, I hope that you extend this spirit of cooperation beyond your own businesses, beyond your own communities and work together with your Chinese colleagues for a good environment for stable, open, complementary and win-win cooperation. This will definitely contribute to the China-EU comprehensive and strategic partnership.

Thank you.