(26 Aug 2011, Ahmedabad, Gujarat)

Honorable Mr. P S Deodhar, President of ICEC,

Distinguished guests,

Ladies and Gentlemen,

I am very happy to visit Gujarat again, a beautiful and vibrant state and also the birthplace of Mahatma Gandhi. I also feel greatly honored to attend this gathering to inaugurate the Gujarat Chapter of India and China Economic and Culture Council and participate in a presentation on "India China Trade and Investment Opportunities" to exchange views with you on how to advance our bilateral economic and commercial cooperation. First of all, on behalf of the Chinese Embassy in India, I would like to express my gratitude to all friends present here today for your keen interests in and valuable support to the development of China-India cooperative relations. Today, I want to use this occasion to share with you my views on our relations and cooperation.

First, on China and India bilateral relationship.

As we all know, economic relations can not be separated from political relations. The political relations always have direct bearing on economic cooperation. This is more so in China and India relations. In the past 61 years since China and India established diplomatic relations, our bilateral relations on the whole enjoyed a steady development, except for a very short period of ups and downs.

Since the beginning of the 21st century, the relationship between China and India has entered into a fast track of development. The past few years in particular have witnessed active and fruitful interactions between two countries. In 2005, Chinese Premier Wen Jiabao visited India. Two sides established strategic cooperative partnership for peace and prosperity. In 2006, two countries formulated the "Ten Pronged Strategies" to deepen the partnership during Chinese President Hu Jintao's visit to India. In 2008, during Indian Prime Minister Mamohan Singh's visit to China, two countries announced A Shared Vision for the 21st Century. Last year, President Patil and Premier Wen Jiabao paid successful visits to each other's country on the occasion of the 60th anniversary of the establishment of bilateral diplomatic relations as well as the China Festival and Indian Festival. This year has been declared as China-India Exchange Year, aiming at pushing the friendly exchanges and cooperation in education, culture and people-to-people to a new height. All these high level exchanges and related events have increased mutual trust and provided solid political assurance for the development of our relations in all aspects.

Moreover, it is encouraging to see that the leaders of our two countries have viewed our relationship in a long and strategic perspective, and attach increasing importance to the development of our mutually beneficial cooperative relations. President Hu Jintao once said India is an important neighbor of China. China is ready to work with India to maintain the sound momentum for further advancement of the China-India Strategic and Cooperative Partnership and work with India for the common interests of our two countries. Indian Prime Minister Dr. Mammohan Singh stated on several occasions that there is enough room in the world for India and China to achieve common development. On top of this, Chinese Premier Wen Jiabao added that there is enough space in the world for China and India to cooperate with each other. With the personal care and support of our leaders, China-India relations have gone beyond the bilateral dimension and assumed global and strategic significance.

We are fully aware of the fact that there are differences and challenges left over by history in our relations. But two countries are matured enough to properly handle them and not let them to hinder our cooperation in other fields.

In spite of the media hype on China-India relation, I am in firm belief that China and India are partners for cooperation, rather than rivalries or bitter competitors as some one have claimed. If China and India speak, the world has to listen. If two countries join the hands and work together, we can achieve what we want and prosper together. On the basis of above assessment, I am optimistic about the future of our relations as well as our economic cooperation.

Second, on bilateral economic cooperation.

China and India are two fast emerging economies in the world today. Their economic performance and interactions have attracted increasing attention around the world. With a total population of more than 2.5 billion and a growth rate at 8 to 9 per cent annually, China and India have become powerhouses for world economic growth. Under this circumstance, our bilateral economic cooperation has acquired global significance.

Thanks to the concerted efforts of both sides, China and India economic cooperation has scored significant progress and become a main feature of our relations. The bilateral trade volume reached 61.7 billion in 2010, 20 times of increase within 10 years. During the first half of this year, the bilateral trade maintains a strong momentum of growth. The two-way trade volume has reached 35.27 billion USD, with 16.1% of increase on year on year bases.

As two fast emerging economies, China and India each has its competitive edge. China is strong in manufacturing and infrastructure development. India, on its part, has its advantage in areas such as service sector, software outsourcing and bio-pharmaceutical. Two economies are complementary to each other in many ways and enjoy certain degree of synergy. We should give our respective potentials to full play and expand our cooperation on the basis of equality and mutual benefit.

Recent years also witnessed growing mutual investment between two countries. Some renowned Chinese companies have come to India to invest or entered into joint venture with Indian counterparts. Huawei Telecommunications India and ZTE Telecom India have set up R&D centers in India to develop software for their equipments. Several Chinese manufacturing enterprises, such as Sany heavy Industry (India) Pvt. in Pune, Liugong India Pvt. in Indore are already producing construction equipments in India for several years. It is worth mentioning that YAPP-ZOOM joint venture in Pune is the first of its kind producing automotive plastic oil tank in India. Furthermore, many Chinese companies in power sector, home appliances, light industry, etc. are also planning to set up production lines in India as well. Those projects would not only increase the manufacturing capacity and upgrade the local industry structure, but also create a large number of job opportunities for the local people and promote the social and economic development in the regions.

Before I came here, I was in Bangalore attending the Commissioning Ceremony of Xindia Steels Limited yesterday. Two Chinese Manufacturing and Trading Companies, China Xingxing Group and China Minmetals Group, have formed strategic alliance with two Indian companies and one American company. The first phase of construction of 8-hundred-thousand million tones per annual Iron Ore Pelletization Plant has been successfully completed and commissioned. In next phases, a ductile iron pipes factory with the production capacity of 2 hundred-thousand tons and a steel factory with the production capacity of 2.5 million tones per annum will be added. By the time when the whole project is finished with total investment of Rs. 8500 crores, it will increase the capability of iron processing and steel production of India. From the above, one can see the vigorous cooperation between China-India in economic field. But I must say, in view of the magnitude of our two economies, the level of our cooperation is still rather low whether measured by scale or quality. Therefore, there are still plenty of rooms for us to explore.

Third, suggestions to boost our economic cooperation.

In view of the potentiality of our two economies, the current level of our economic cooperation is far from being satisfactory or adequate. During Premier Wen Jiabao's visit to India last December, two sides have set a new trade target of 100 billion USD by the year of 2015 and agreed to expand the scope of our cooperation by extending it into infrastructure, environment, transportation, telecommunication, and banking and finance. How can we accomplish the target set by our leaders, it is a challenging task for us. I think the following areas are crucial.

First, boosting and diversifying bilateral trade. Currently, the main exports from India to China are mineral products, cotton, chemicals and medicines as well as products of iron and steel, jewelry and precious stones etc. While the main exportation from China to India are electrical equipments, construction machinery, organic chemicals, products of iron and steel, etc. In my view, both sides should actively look into the ways and means to diversify our bilateral trade structure, expand the scope and items, and increase the technological content and added value of exporting products, with an aim to achieve a balanced, sustainable and healthy bilateral trade.

Second, expanding service trade. China and India hold great potential for cooperation in this sector. China is relatively strong in tourism, transportation, while India strong in software, IT, finance, insurance etc. Both countries have big markets for service trade. Taking tourism for example, last year, there were 16.56 million people from China, Japan and South Korea traveling between three countries. While the figure for China and India is less than 6 hundred thousand. There is no comparison to speak of. Besides, Chinese companies can also take full advantage of the English language skill as well as the technical talents in India for the benefit of both countries.

Third, promoting two-way investment. According to the statistics from both sides, the accumulative investment of each in the other side is less than 400 million USD by the end of 2010, occupying very low ratio in each other's total FDI. It does not match with the economic scale and rapid development of both countries. Chinese government encourages Chinese investors to go abroad and also welcome foreign investors to invest in China. We also hope that the Indian government including the state governments could provide more conducive investment environment and favorable policy support for the interested foreign companies including Chinese enterprises to come and invest in India.

Fourth, enhancing cooperation in infrastructure development. According to the just announced 12th Five Year Plan, India is going to invest 1 trillion UDS in infrastructure development. So as China, infrastructure development will remain to be a main sector for investment in the China's 12th Five Year Plan. This opens new opportunities for companies of both countries to cooperate with each other.

Fifth, negotiating bilateral Free Trade Agreement or Regional Trade Agreement. Both FTA and RTA can significantly facilitate bilateral trade in big way. China and India should start as early as possible the negotiation process. As first step, two countries can work on a regional trade arrangement and at the same time preparing the ground for a full-fledged FTA.

Besides, China and India shall continue to collaborate within WTO, BRICS, G20 and other international mechanism as well as in Doha Round and climate change negotiations, and in the reform of international financial system so as to effectively safeguard our common interests and the interests of other developing countries.

Fourth, cooperation between China and Gujarat.

Gujarat, the land of the legends, is situated in a very strategic geographical location. As a vibrant state, Gujarat occupies number one position in many areas, such as exporting volume, GDP growth rate and per capita of GDP, just to mention few. It emerges to an industrial hub with India's most industrialized state. It is strong in chemical and petrochemical, automobile and engineering, agro and food processing, textiles and jewelry. Furthermore, Gujarat is also the pioneer of Indian dairy industry, known as White Revolution, and has long tradition in handicraft industry. In recent years, it has enjoyed fast economic growth and become an ideal destination for foreign investments. But I must confess that the level of cooperation between China and Gujarat is low. The presence of Chinese companies is insignificant. Which indicates that not enough has been done in the past. It also means that there are great potentials for us to tap. In this respect, India-China Economic and Cultural Council can play critical role in facilitating the expansion of cooperation. Business community of Gujarat is world-famous for their entrepreneurship. I encourage you to seize the opportunity and explore the cooperation with Chinese enterprises in trade, investment and joint projects. Your ideas and suggestion for further promotion of economic cooperation between China and the State of Gujarat are most welcomed.

Ladies and gentlemen,

Currently, the world is still facing with turbulent economic and financial situation. The USA and European countries are beset with debt crisis. The recovery of the world economy is slowing down. In view of the situation, China and India have every reason to work together to tide over this difficult period and ensure a sustained and healthy development of our respective economy, bringing tangible benefits to the peoples of both countries as well as to the whole world.

Finally, I wish you all the very best. And wish all of you good luck, good health and good fortune.

Thank you.