Ladies and Gentlemen:

　　I am much honored to be invited here to meet you, successful business and professional leaders from all walks of Danish life.

　　To be frank, I accepted your invitation with pleasure, since I am happy to know that many of you are interested in Chinese things. My topic for today is China’s today and tomorrow, opportunities and challenges.

　　My speech has three parts:

　　1 Today’s China

　　2 Chinese financial reform and opening up

　　3 Bilateral trade and investment between China and Denmark

　　1 Today’s China

　　What does this mean? Means not yesterday’s China? The answer is yes, and no. Why? The reason is that what I would like to show you is not a static China. In my opinion, today’s China is the result of 28 years of hard work by the Chinese people. In other words, I would like to show you a vivid picture of a dynamic China.

　　Let’s see these figures. Our GDP grew from 140 billion USD in the 1980s to 2.71 trillion USD in 2006. The average annual growth rate is 10% over 28 years. Global ranking rose from the15th to the 4th. At the same time, our foreign trade increased from 20.6 billion USD to 1.76 trillion USD. The average annual growth rate is 17%. According to WTO report, both Chinese exports and imports total volume ranked the 3rd in 2006. In 2006, Chinese paid-in FDI reached 69.5 billion USD. In the first 3 months of this year, the paid-in FDI was 15.83 billion USD, up 11.56%. China is the largest FDI recipient among developing nations for 16 consecutive years. At the end of 2006, China’s foreign exchange reserve was 1.07 trillion USD. By the end of this month, it had reached 10202 trillion USD. When talking about GDP, I’d like you not to forget low inflation rate and 1.5% of the CPI. So I am proud to say that China’s economy is under sound and fast growth.

　　But what is behind the above figures? Generally speaking, in the past 28 years, the driving force behind Chinese developments is the reforming of old systems and opening up to the outside world. In this process the preliminary establishment of the socialist market economy is the greatest achievements we have.

　　It is not anything but this market economy that guides Chinese reform and opening up in the right direction.

　　It is not anything but this market economy that we have to depend on for our future sustainable and efficient economic developments.

　　What is socialist market economy? It is the combination of market and socialism. In another word, we call it the combination of justice and efficiency. In this system, market plays a fundamental role in the allocation of resources. Market players, mainly the enterprises, are free of administrative interference and run their operation in a market environment ruled by law. The government regulates macro-economy mainly through fiscal and monetary measures.

　　But the fundamental aim of this system is to achieve common prosperity at the very end. In the preliminary distribution, the decisive factor is only efficiency or contributions, while in the secondary one; we take justice into consideration. During the whole process of the market operation, the government only focuses on social causes, such as social securities, education, environmental protection and so on.

　　We have made great progress, but there are still some challenges. China is still a developing country with 1700 USD of GDP per capita. The present market mechanism is far form mature. Economic growth is imbalanced. There is income gap between rural and urban areas, between different regions, disharmony between man and environment, conflict between developments and resources. The growth quality needs improvements. Domestic demand has to be expanded. Energy consumption per unit GDP is to be reduced; renewable energy is to be explored; and environment pollution needs to be decreased.

　　2 Chinese financial reform and opening up

　　Speaking of Chinese financial system, there are three basic features compared with that of the other countries. Firstly, it is a divided operation and management system. We have our central bank, the People’s Bank of China who performs monetary policy independently. Along with it, three units hold sole responsibility of financial supervision according to the three financial sectors: banking, securities and insurance. The three units are: China Banking Regulatory Commission, China Securities Regulatory Commission and China Insurance Regulatory Commission. With the four together, the complete financial supervisory system is taking shape. In operation, between commercial banks, securities institutions and insurance companies, there is fire wall separating their business. The commercial banks cannot do securities business, the same with the securities institutions and insurance companies.

　　Secondly, indirect financing or let’s say banking credit plays a predominant role in enterprises’ financing.

　　Thirdly, we have already established a relatively complete financial market structure, although derivatives financial market, for example, the financial futures, still needs time to be set up. Under this structure, we have credit market, capital market, money market, foreign exchange market and gold market. The major players in the credit market are banks, domestic ones and foreign ones. As I mentioned before, up to now, the credit market is playing a predominant role in enterprises’ financing. Almost 80% of it is provided by banking system.

　　Securities markets (A shares and B shares), all kinds of bonds market form our capital market. This market is played by mutual funds and securities institutions. The money market includes inter-bank borrowing, short-term financing securities and discount of commercial bills. In foreign exchange market we have spot exchange, forward exchange and swap. Right now we are initiating the derivative market such as stock index futures.

　　In recent years, we have finished and succeeded in shareholding restructuring in state-owned commercial banks and reform of the shareholder structure in listed companies. Both of them have established a new foundation for future development of Chinese banking and securities market.

　　Now, share-holding commercial banks are the major participants of our commercial banking sector. Except the Agricultural Bank(which is also preparing for listing), the other four biggest commercial banks of China, the Industrial and Commercial Bank, the Construction Bank and Bank of China the Transportation Bank, all have listed on domestic or overseas stock markets.

　　By December 11, 2006, China has fulfilled its WTO commitments and has eliminated foreign banks of all the geographical and business restrictions. The foreign financial banks now enjoy complete freedom to do all kinds of banking business, including RMB business in whatever place within mainland china. Besides, they can choose between forms of commercial presence in China such as branches, joint ventures and wholly-funded foreign enterprises of legal person status as they like. Now four foreign banks with legal person status is going to do RMB business in China and 12 foreign bank branches are going to change into wholly-funded banks of legal person status.

　　About the securities reform, from 2005, China began the share holding restructuring within Listed Companies. It is the greatest move in Chinese securities market and has great impact on future’s Chinese securities market. The split share structure reform is specifically designed to float the non-tradable shares of A-share listed companies and to balance the interests of shareholders via a negotiation mechanism.

　　With the combination of economic rapid growth and deepening of financial reforms, Chinese stock markets began to get out of trouble and into an active upswing. The fundraising function of the stock market began to assume restoration and improvement. Chinese mainland market capitalization overtook that of Hong Kong, reaching 14? trillion USD last Friday.

　　In the future, as to its direct financing function, the securities market will play a more and more important role. So there is great potential in our capital market. More direct financing channels should be developed such as securities market and enterprises listing and issuing bonds.

　　Right now, our financial reform focuses on the marketization of the interest rates and the improvement of the exchange rates forming mechanism.

　　It is true that we still have some control on interest rates. But room for adjusting rates according to the market is expanding. We have entirely freed the inter bank rates in all Shanghai banks. The market is determining the rates according to demand and supply. The very end of the reform is the rate marketization, but we have to widen the floating scope step by step and gradually give more freedom to financial institutions.

　　Our target for the reform of the exchange rate forming mechanism is to establish a market-oriented and flexible exchange rate mechanism within macro control. China is entitled to choose its currency exchange rate mechanism based on the need of our own macro-economic stability. This is not subject to negotiation or bargaining with any other countries. We must push forward our reform but always stay on top of the challenges so as to prevent fluctuations in the financial market. I think this is a responsible attitude. And the practice will contribute to the stability and development of not only Chinese macro-economy but also the economy of the surrounding countries and the larger world.

　　3 Bilateral trade and investment between China and Denmark

　　Up to now, almost all Danish important companies have invested in China. In meeting the need of this reality, Danish Business Forum, this civil association, has been established and grows quickly. Danish government also pays more attention to our bilateral relationship, especially the economic relationship. The Danish Last October, in Danish Ministry of Foreign Affairs’ globalization report, it states clearly that Denmark and EU should attach greater importance to Asian countries including China and India. Two ambassador-level of diplomats will be sent to Danish embassy in Beijing.

　　I think Danish business circle and the government have made a wise decision, because Chinese economy is under sound and fast development.More importantly, Chinese economy has entered a new stage of growth. More and more attention is put to the quality of development in stead of speed. At this stage, Hi-technology, innovation, energy efficiency and renewable energy are key points of great importance. As we all know, Denmark enjoys great advantage in the above fields. By this means tomorrow’s Chinese market is even more inviting to Danish companies.

　　Let’s see the following figures.

　　According to the statistics from China’s side, by the end of 2006, there had been 433 established Danish invested enterprises altogether. The contractual foreign investment reached 2.21 billion US dollars. The actualized foreign investment reached 880 million US dollars. I also know that many Danish people believe the exact figure may be bigger than that.

　　Still according to Chinese statistics, the total bilateral cargo trade volume increased 2.3 times from 1.52billion USD in 2001 to 4.96billion USD in 2006, with an annual growth rate of 20%.

　　Besides cargo trade, our service trade is also of a considerable scale. Take shipping industry as an example, according to the statistics of Danish Ship-owners’ Association, the total revenue of the Danish shipping companies from Chinese market (including Hong Kong) from January to November in 2006 was around 2.08 billion.

　　At present, China is the 8th largest trading partner of Denmark and Denmark is China’s 8th largest trading partner among EU countries.

　　In 2006, China continued to import many technologies from Denmark. 52 such contracts were signed with the contract value of 223.86 million USD, up 164.13%. Among them, the technology fee was 105.16million USD and the equipment fee was 118.70million USD.

　　Encouraged by great profits made by larger Danish companies in China, more and more small and medium sized enterprises are becoming active in Chinese market. At the end of this October, the small and medium sized enterprises expo under Asian and European Conference will take place in Qingdao. All kinds of activities will be carried out such as exhibition, investment discussion, international purchase and symposium. The key problems for SMEs will be discussed, such as financing, technological creativity, market exploration and brand building. I really think this will be good news for you.

　　The middle and western part of China is becoming a new attraction spot for Danish investment. As far as I know, Carlsberg has developed its business very successfully and rapidly in many western parts of China, such as Xinjiang and Yunnan. This very much corresponds with our country’s “go west” policy.

　　Believe me or not, China is and will be an even more profitable place for Danish businessmen. China will keep its policy of opening up and reform steadily. Free trade is also one of Danish basic state policy. We both share that more efficient and more reasonable international trade system should be established and should be the major drive for trade and technological creativity. We are very thankful to Denmark’s support in EU’s anti-dumping cases against China and Denmark’s efforts to urge EU to grant China the market economy status. Denmark is China’s good friend within EU. The trade and economic ties between China and Denmark will be even closer tomorrow.

　　In recently years, our embassy has arranged frequent reciprocal high-level visits and organized quite a few large-scale symposiums. All these activities help create a sound political and scientific basis for our trade development. And you can log to our website for all kinds of needed information for your business. Of course we don’t think we have done all our work perfectly. There is still a long way to go.

　　As the wholly representative of China to Demark, I welcome all levels of exchange and cooperation, no matter that is between governments or enterprises. Our embassy will do our best to support DCBF and serve all the Danish enterprises who are interested in Chinese markets.

　　That’s all and thank you.