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A Bright Future for the China-Australia Economic and Trade Cooperation

--Speech at a Luncheon hosted by

China Chamber of Commerce in Australia

(Sydney, April 29, 2008)

Distinguished Mr. WU Shiqiang, Chairman of the China Chamber of Commerce in Australia,

Ladies and Gentlemen,

First of all, I would like to thank the China Chamber of Commerce in Australia (CCCA) for inviting me to attend today's luncheon. Thus I have an opportunity to meet and exchange views with the elite members in the business circles of the two countries.

Since its establishment in 2006, the CCCA has developed really fast. It has currently over 100 member companies, and 4 branches each in Sydney, Melbourne, Perth and Brisbane. As a result, the CCCA has now become an important bridge connecting the business circles of the two countries. I am glad to take this opportunity to express my appreciation and gratitude to the CCCA for its contribution to promoting our bilateral economic and trade cooperation.

As early as two months ago, the CCCA invited me to talk about 'New opportunities for Australian business in China'. In my view, it's true that Australian business is facing vast business opportunities in China, but more importantly, the China-Australia economic and trade relationship as a whole is also enjoying a broad future with tremendous chances. My comment is based on three main reasons:

First, China will continue to persist in its opening-up policy unremittingly, and enhance its cooperation in an all-around manner with all countries including Australia. This gives a great impetus for the continuous development of the China-Australia economic and trade relationship.

This year marks the 30th anniversary of China's reform and policy of opening-up. In the last 30 years, China has made remarkable achievements. Its economy has maintained an average annual growth rate of 9.5% during the last 29 years. In 2007, China's total GDP reached 3.24 trillion US dollars and it remains the fourth largest economy in the world. China's commodity trade volume was 2.2 trillion US dollars, ranked No.3 in the world. China's GDP per capita exceeded 2000 US dollars. According to the criteria set by the World Bank, China has moved from a low income economy to a middle income economy.

China's experience of development has strengthened its determination of adhering to the opening-up policy. In October last year, the Communist Party of China held its 17th National Congress, reaffirming that China would be committed to sound and fast economic growth and therefore aims to quadruple the GDP per capita for the year 2000 by 2020. To this end, China will unswervingly follow a win-win strategy of opening-up and continue enhancing its cooperation with the world.

China's opening-up and its development is not only good for China, but also for Australia and the rest of the world at large. Since 2001, China's average annual import volume has reached close to 560 billion US dollars, generating some 10 million jobs for its trade partners. China now contributes to over 10% of global economic growth and over 12% of global trade expansion. According to the statistics, China's import volume in 2007 was 955.8 billion US dollars, a 20.8% increase over the previous year. It is expected to exceed 12 trillion US dollars by 2020. Nowadays, many Australian friends regard China both as the locomotive to keep Australia's economy growing and as the firewall to safeguard Australia's economy from external risks. Some Australian economic institutions even say, 'As long as China is fine, Australia is fine.'

However, during the past few months, I did hear some pessimistic voices. A few people are worried that China's economic growth could slow down since the US sub-prime mortgage loan crisis is not over yet and China suffered the snow crisis early this year. I don't agree with these voices. In fact, the Chinese government is fully aware of the risks and challenges and has been strengthening the macro-adjustment and adopting measures to ensure the stable development of the economy. The result is obvious. In the first quarter of this year, China's GDP reached 878.4 billion US dollars with a 10.6% increase compared to the same period last year; China's import and export trade volume amounted to 570.4 billion US dollars, increased by 24.6%; China's actual use of foreign investment totaled 27.4 billion US dollars, an increase of 61.3%. All of these show us that the good momentum of China's economic growth will not change.

Second, China and Australia's economies are highly complementary and we are natural partners. It lays a solid foundation for deepening the economical and trade cooperation between our two countries.

China and Australia possess different advantages in areas such as manufactory,energy and resources,technology and services and therefore should complement each other. China is able to provide Australia with manufactured goods of high-quality and low price. In the meantime, with the growth of China's economy and the improvement of the Chinese people's living standards, China's demand and import volume of Australian iron ore,alumina,LNG,coal,wool and agricultural goods will continue to rise. China also hopes to learn from Australia in the areas of advanced science and technology and developed service.

To illustrate how the two economies are complementary, here I take our bilateral trade volume as a good example. In the past several years, the China-Australia bilateral trading volume has achieved a leap in development. In 2007 the bilateral trading volume reached 43.8 billion US dollars with a year on year increase of 33.08%. This is a tremendous growth of more than 10 billion US dollars in just one year. China now is Australia's largest trading partner. According to the statistics of the Chinese customs, in the first two months of this year, the bilateral trading volume amounted to 8.6 billion US dollars, with an increase of 36.8% over the same period of last year, and Australia enjoyed a trading surplus of 1.26 billion US dollars.

The bilateral cooperation in the area of energy and resources is especially outstanding. Australia now is China's largest source country for iron ore and alumina, the second largest source country of coal and the forth largest source country of copper ore. In last September, the China National Petroleum Cooperation signed a LNG key terms agreement with Woodside Energy Ltd. with a total value of 45 billion AU dollars, which is the biggest single commercial export contract in Australia's history.

However, our economic and trade cooperation goes beyond the areas of energy and resources. China and Australia have developed active cooperation in all areas including tourism and education. In 2007, 607,000 Australian tourists visited China, with a year on year increase of 13%. 357,000 Chinese tourists visited Australia, increased by 16%. China is Australia's fastest growing source country of tourists. Nowadays, more than 100,000 Chinese students are studying in Australia, and China has become Australia's largest source country of international students. According to the forecast of the Australian International Economy Center, the number of Chinese mainland students studying in Australia will exceed 120,000 by 2020, which will bring 2.4 billion AU dollars for Australia every year. I believe that this kind of "Green Income" will help Australia to tackle the climate change issues.

Third, the development of the China-Australia relations has maintained a good momentum in recent years. The two countries have witnessed frequent high-level exchanges and increasing mutual strategic confidence. It provides political assurances for further development of our bilateral economic and trade cooperation.

From the Chinese side, since 2005, at least one of the Chinese leaders visited Australia every year. Last September, President Mr. HU Jintao paid his second state visit to Australia. During the visit, the two countries signed a number of agreements and contracts in the fields of trade, energy, justice and culture, which have raised our mutually-beneficial and practical cooperation to a new level. Two months ago, the Chinese Foreign Minister Mr. YANG Jiechi visited Australia and co-initiated strategic dialogue with his Australian counterpart Mr. Stephen Smith, which further enhanced our bilateral relations.

From the Australian side, the Prime Minster Mr. Kevin Rudd just visited China between April 9 and 12 of this year and reached a broad consensus with the Chinese leaders on how to further deepen the China-Australian relationship. The two sides have decided to advance the free trade agreement talks for an early consensus in an active and practical manner; to develop a win-win, long-term and stable cooperation in energy and resources; to set up a roundtable mechanism at the ministerial level for the business and service industry to push forward cooperation in relevant areas; and to carry out closer cooperation in coping with climate change. Following the talks, the two sides issued a joint statement emphasizing a closer cooperation on climate change. Also in this month, the Australian Minister for Agriculture Mr. Tony Burke and the Minister for Trade Simon Crean visited China successively. During their visits, the two sides explored new ways to expand our cooperation in the field of agriculture and trade.

Ladies and Gentlemen,

While we enjoy the vast opportunities for our economic and trade cooperation, we have to acknowledge that there are challenges and difficulties as well, such as cultural differences, a low level of cooperation in certain areas and a weak channel for information exchange and communication.

To overcome these challenges and difficulties, and fully seize the opportunities, I, as an old friend of Australia, would like to share with you some of my personal views and advice.

The first one is to get to the right point of cooperation. The key is to know the market, choose the best areas for investment and select the right partners.

Last month, China held the First Session of the 11th National People's Congress, Premier Mr. WEN Jiabao said in his government work report that in the following period China will focus on the development of such areas as agriculture, medi-care, education, energy-efficient and emission-reduction technology, hi-tech, bio-medicine, services, broad-band communication and internet. These are all potential areas for cooperation between the two countries. I recommend you to read the report carefully and I'm sure it is helpful for you to know more about China's economy and market.

In the near future, I believe the two countries can do a lot in the field of climate change. During the Prime Minister's visit to China early this month, he visited Gaobeidian power station in Beijing. This coal powered plant is the site of a pilot post combustion carbon capture project by the two countries. If successful, it will be able to capture about 3,000 tons of carbon dioxide each year. Another project I want to mention is a feasibility study into the development of the largest solar city in the world at Weihai - a coastal city in the northeast of China. It is led by BP Solar working with the Chinese Academy of Sciences, Weihai City Council, State Grid and BP SunOasis. If successful, the photovoltaic installation is expected to generate enough electricity to power more than 50,000 Chinese homes based on current energy use. I believe that the companies in the two countries will carry out more and more cooperation in this field with the support of the two governments.

The second piece of advice is to put the emphasis on mutual benefits. The Chinese generally believe in common prosperity because the Chinese understand that only in this way can cooperation last. China is always open to Australian investment, and has taken measures to guarantee the Australian companies' interests in China. As China is developing continuously, more and more Chinese companies will come to Australia to invest and set up factories. This will have a win-win result. I hope that the Australian side could view the Chinese companies in a fair and square way and provide assistance for their investments in Australia within the framework of the Australian laws.

The third piece of advice is to get to know each other better. Doing business is more than business itself. The sound bilateral relations, mutual and good understandings between the two peoples are also important preconditions for the improvement of our economic and trade cooperation. All of you here travel a lot between China and Australia and have a deep understanding of China. I hope you could make efforts in increasing the friendship and mutual understanding between the two peoples.

Five days ago, the Canberra leg of the Beijing Olympic Games torch relay was held successfully. Canberra was not only the only stop of the torch relay in Oceania, but also was chosen for the first time in its history to host such a torch relay organized by a foreign country. On the day, I was deeply moved to see tens of thousands of Australian people came to the streets, to welcome and cheer the torch. From this great event, I can see the Australian people's hospitality and friendship towards the Chinese people. Therefore, I am confident in the future development of our bilateral relations.

Ladies and Gentlemen,

To conclude my speech, I am glad to say that China-Australian relations at present are in the best shape since the two countries established diplomatic ties in 1972. Within the context of this sound relationship, the opportunities for economic and trade cooperation greatly outweigh the challenges and difficulties. I am very positive about the future.

The healthy development of our bilateral relations accords with the fundamental interests of the two countries and the peoples. I would like to work together with all of you here to further promote the China-Australia relationship for their mutual benefit and comprehensive cooperation, and look forward to its great future!

Thank you!

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