Moscow, 28 October 2008

Your Excellency Prime Minister Vladimir Putin,

Ladies and Gentlemen,

Dear Friends,

It is a great pleasure for me to attend the Third High-Level China-Russia Economic Forum with my old friend, Prime Minister Vladimir Putin. The theme of the Forum "Fresh Progress, Higher Level" has a profound meaning and succinctly summarizes the trends and tasks of China-Russia economic cooperation and trade. I sincerely wish the Forum a complete success!

The year 2008 has witnessed continued and in-depth development of China-Russia relations. Leaders of the two countries have reached a high degree of consensus on advancing China-Russia strategic partnership of coordination in an all-found manner and the boundary issues between the two countries have been fully resolved. China received valuable assistance and support from Russia in its rescue and relief efforts in the wake of the Wenchuan earthquake and in hosting the Olympic Games. The Chinese people have keenly realized what is meant by good neighbour, good friend and good partner. The Chinese Government and people will never forget the profound friendship of the Russian Government and people.

Both China and Russia are emerging economies with important influence on the world. To strengthen economic cooperation and trade between the two sides is not only conducive to the all-round development of bilateral relations, but also to the promotion of prosperity and stability of the world economy. In recent years, with the joint efforts of the two governments and people from all walks of life, China-Russia economic cooperation and trade has achieved remarkable success.

-- Trade volume has increased and quality improved. The trade volume between China and Russia grew by nearly ten times in the decade from 1998 to 2007, and will top US$50 billion this year, making attainable the trade target of US$60-80 billion the two sides set for 2010. While the trade volume grows, the trade structure has also improved. The export of electro-mechanical products from Russia to China has been on the rise for two consecutive years, and the two sides will launch a number of new demonstration projects in helicopter, metallurgy, machinery and other areas. With synchronized growth in both quality and quantity, China-Russia economic cooperation and trade has entered a new phase of development.

-- Cooperation in energy and resources has picked up speed. The stable huge market of China has provided broad space for Russia to implement its energy export diversification strategy. The establishment of the China-Russia energy negotiation mechanism has put bilateral cooperation in oil and gas, nuclear energy and electric power on a fast track, leading to marked progress in such key projects as China-Russia oil pipelines, upstream-downstream integration and construction of demonstration fast reactor. Cooperation in forestry, mining and intensive processing has also produced positive results.

-- High-tech cooperation has deepened. China and Russia have conducted effective cooperation in manned space flight, Mars exploration, information and communication, energy conservation and environmental protection, which has contributed significantly to industrial upgrading and the development of innovation-based economy in both countries. By setting up R&D and industrial demonstration bases, the two sides have carried out all-directional cooperation in basic research, application research, and commercialization and industrialization of research results in the priority areas of nanoscience and nanotechnology, life system and resources utilization.

-- Mutually beneficial cooperation between the business communities have yielded more fruitful results. To date, the accumulative mutual investment between China and Russia has exceeded US$2 billion. Large cooperation projects such as Tianwan Nuclear Power Plant, Baltic Pearl residential complex and Chinese Trade Center in Moscow are operating smoothly. Businesses' interest in cooperation is growing. More and more Russian consumers are choosing China-made communication equipment and household electric appliances. Russian Aluminium, System Group and Rosneft Oil have either built or plan to invest in large projects in China. The compiling of the Outline of Sino-Russian Investment Cooperation Plan is progressing smoothly.

Ladies and Gentlemen,

Dear Friends,

The current global financial turmoil poses unprecedented challenges to the world economy. As I have stated on many occasions, in face of crisis, confidence and cooperation are more important than gold or currency, for confidence is the source of strength and cooperation an effective means to overcome the crisis. Without confidence and cooperation, we would not have been able to overcome difficulties and move the world economy forward over the past several decades. Now, to stabilize the global financial markets, developed countries should shoulder their due responsibilities and obligations, and implement more effective policies to stabilize their own and the global financial markets. Other countries should adopt appropriate macroeconomic policies to maintain economic and financial stability and the stability of the capital markets. The international community should join hands to promote the development of the world economy and take seriously and strive to minimize severe damage caused by the crisis to developing countries, the least developed countries in particular. To maintain stable and relatively fast economic growth is the biggest contribution that China, a large developing country with a 1.3 billion population, makes to the world. China will continue to play an active role with a responsible attitude and make joint efforts with the rest of the international community to handle global challenges such as the financial crisis.

As the Chinese saying goes, "it is not too late to mend the fold even after some of the sheep have been lost". It is, therefore, necessary for us to draw serious lessons from this crisis, and properly handle the relationship between savings and consumption, between virtual and real economy, and between financial innovation and financial regulation. It is the right time to establish a new international financial order. And this is our most urgent task now. To achieve this goal, we need to do the following: First, improve the system of international financial organizations and bring into full play its role in maintaining international and regional financial stability and strengthening financial regulation. It is important to ensure that emerging and developing countries have greater right to know, to speak and to set rules. Second, reform international financial regulatory system, set up reasonable and effective financial regulatory standards, early warning system and risk prevention system, and particularly tighten supervision over the major reserve currency countries. Third, speed up the building of a diversified international monetary system by making use of multiple currencies, and work together to sustain stability of the international monetary system.

I would like to take this opportunity to brief you on the current economic situation in China. This has been a most special year for China. We have appropriately handled the severe challenges posed by catastrophic natural disasters and the drastically changing international economic and financial situations, promptly and resolutely implemented flexible and prudent macroeconomic policies and adopted a series of policy measures. All this is achieving positive results. China has maintained steady and relatively fast economic growth, its financial system remains healthy and stable, and the overall rate of price rise is under control. Employment continues to expand, grain output has been growing for five consecutive years, and new progress has been made in economic restructuring, energy conservation and emission reduction. Reform and opening-up has further deepened, and social programs focusing on improving people's well-beings have been strengthened. On the whole, the basic trends of China’s economic development are good. However, we are keenly aware that there still exist some institutional and structural problems affecting China's economic performance, and the international financial crisis and global economic downturn have caused some impact on China's economy. Notwithstanding this, our economy has the ability and resilience to fend off risks, and we have every confidence in China's economic development and financial stability.

Ladies and Gentlemen,

Friends,

The relationship between China and Russia is the most unique, most important and the strongest strategic partnership of coordination. To deepen our cooperation in political affairs, economy, trade, science, technology, cultural and people to people exchanges, and security is not only crucial to safeguarding the vital interests of our two countries, but also important to maintaining peace and stability in Asia and Europe and the world at large. Under the new circumstances of accelerated changes in the international situation and fast economic growth in our two countries, it is all the more necessary for us to work hand in hand to promote bilateral relations to a higher level, our economic cooperation and trade in particular. To achieve this goal, I wish to make the following proposals:

First, deepen energy and resources cooperation. Intensified long-term strategic cooperation in energy and resources between China and Russia is conducive not only to the economic development of the two countries, but also to the maintenance of stability in the international markets. The two countries should give full play to their respective advantages, accommodate each other's interests and concerns, and shift the focus of their cooperation from resources trade to intensive processing, so as to stimulate cooperation in resource equipment and technology including those for gas and oil, nuclear power, forests and minerals. We should also explore and develop new projects in the utilization of coal resources, new energy, energy conservation and environment protection, so as to upgrade our overall level of cooperation in energy and resources.

Second, deepen cooperation in trade and technology. It is in our long-term interests to accelerate the coordinated development of bilateral trade and ensure it grows in both speed and quality, and improve and upgrade our trade structure. To this end, efforts should be made to increase the share of electro-mechanical products and high-tech products in bilateral trade, and promote joint research and development and cooperation in technology application in such fields as aerospace, information and communication, nanotechnology and new materials. China welcomes the entry of competitive products and technologies of Russian enterprises into Chinese market, and will provide support and conveniences to their endeavor. The Chambers of Commerce for Import and Export of Machinery and Electronic Products of both countries can play a more active role in this regard.

Third, deepen cooperation in finance and investment. Given the current volatility in the international financial markets, it is particularly important for China and Russia to strengthen strategic coordination in the financial sector. The two sides should further intensify information exchanges and cooperation, jointly explore policy measures to counter the global financial crisis, and promptly exchange views on macroeconomic policies, so as to jointly contribute to the building of a healthier international financial system. We should continue to encourage banks of our two countries to open branches in the other side to expand their cooperation in lending and financing. In addition, the process to sign and implement the Outline of Sino-Russian Investment Cooperation Plan should be accelerated to make good project arrangement and provide policy guidance for the orderly development of bilateral investment cooperation in priority areas. We should also step up cooperation in improving legislations regulating the market, establishing sound cooperation order and protecting the lawful rights and interests of investors.

Fourth, deepen local cooperation and cooperation in the border areas. Sharing a long border and having many twin provinces/states and cities, China and Russia should increase exchanges in culture, education, science, technology and tourism to further enhance mutual understanding and traditional friendship between the two peoples. Particularly we should strengthen policy coordination and overall planning for rejuvenating the old industrial bases in China's Northeast and developing the Far East of Russia, speed up the construction of cross-border transportation infrastructure, promote cooperation in utilizing and protecting cross-border water resources, and actively explore new cooperation models in developing modern logistics and establishing economic cooperation zones in the border areas. Let us work together to make our long common border the strongest bond of friendship between our two peoples.

Fifth, deepen cooperation on international economic issues. To seize opportunities and meet challenges of the economic globalization, China and Russia need to cooperate closely in setting international economic and trade rules, fighting trade protectionism and participating in regional economic integration. I would like to reaffirm that the Chinese Government firmly supports Russia's entry into the World Trade Organization and strongly opposes politicising this issue. Russia has the ability and conditions to contribute to the multilateral trading system.

Ladies and Gentlemen,

Friends,

This year marks the 30th anniversary of China's reform and opening up. In the past 30 years, great changes have taken place in various social and economic aspects of China, and captured worldwide attention. There has been a historic change in the living standard of the Chinese people from lack of food and clothing to moderate prosperity. And we have found a path of socialism with Chinese characteristics. We will remain committed to the policy of reform and opening-up in our effort to speed up the building of a prosperous, strong, democratic, culturally advanced and harmonious modern country. We will continue to deepen economic and political reform and reform in other areas, liberate and develop social productive forces, and promote social harmony and progress. We will open China wider to the outside world in greater depth, and draw upon the achievements of all human civilizations. Present here today are business leaders from China and Russia. Strong actions and active participation of the business communities are needed to implement the agreement reached between the leaders of the two countries. I firmly believe that so long as we seize opportunities and cooperate in good faith, Sino-Russian economic cooperation and trade will surely enter a brand new era.

Thank you!