It's a great privilege for me to be here to inaugurate the 16th Annual International Steel Seminar. I sincerely wish it all the success.

In the last few months when people spoke about the economy, there was hardly any good news. We heard only negative words such as slowdown, meltdown and downturn.

However, today I would like to say something positive.

First, about China-India trade.

During his China visit in June 2008, the Minister of External Affairs of India, H.E. Mr. Pranab Mukherjee, said, "The trade target of US$ 60 billion by 2010 set by our two Prime Ministers is very likely to be surpassed before 2010. China is now our largest trading partner. "

In the last few months I anxiously paid special attention to the monthly statistics of Sino-Indian trade because I knew that in 2007, the US was the largest trading partner of India and China was number two. That year, US-India trade was 41.6 billion US dollars and China-India trade was 38.6 billion US dollars.

Finally, we have received the figure of China-India trade for the year 2008. According to the latest statistics from China's Customs, our bilateral trade reached a historical high of 51.8 billion US dollars in the last calendar year.

At this moment, the annual figure of US-India trade for 2008 is not available, but the data of the first 11 months from January to November is on hand, that is 41.5 million US dollars. Now, I can safely say that H.E. Mr. Mukherjee was right and China is, now, the largest trading partner of India.

This is a great achievement of our two countries, especially considering the fact that ten years ago, in the year 1998, China-India trade was less than two billion US dollars.

Second, about current economic situation of China.

China's economy has been losing steam over the past six months because the global economic downturn has dealt a blow to its exports sector. Exports dropped last November, the first time in seven years.

The Chinese Government announced a 586-billion dollars fiscal stimulus package last November and according to the Chinese Premier Mr. Wen Jiabao, these measures have already taken effect and December's data was better than expected. Some economic indicators such as corporate revenue and electricity usage have already begun to rebound.

Some Chinese economists are of the view that China's economic growth would pick up between the second and third quarters this year because local enterprises are likely to have reduced their inventories substantially by then.

In such a context, the Chinese Premier recently said, "Our aim is to be the first to recover from the financial crisis. We must have faith and determination." He also said that the Chinese Government will introduce more measures in the next two months to bolster the economy.

Third, about a special rescue package for China's steel industry.

The global financial crisis has hit Chinese steel industry hard, which is facing a very difficult situation because demand has dropped sharply both at home and abroad.

Just one week ago the Chinese Government approved a stimulus package to help the steel industry to deal with the international financial crisis. The main features of the package are:

One, the Government will take measures to stimulate domestic demand and adopt a flexible tax policy on steel exports to stabilize China's share in the global market.

Two, it will strictly control the increase in the steel-making capacity and continue closing down low-tech, inefficient plants.

Three, It will encourage restructuring of steel-makers and formation of competitive large-scale steel groups through mergers.

Four, the Government will allocate a special fund for research and development, encouraging the steel industry to adjust the structure and enhance the quality of products.

Five, it will take measures to regulate the market and establish a mechanism to ensure producers and dealers of steel jointly shoulder risks.

The stock market in China has responded positively to the new package. Investors believe that the general stimulus package of 586 billion US dollars announced last November together with these new schemes will create enormous demand for steel.

Fourth, about the potential for cooperation in the steel industry between our two countries.

Economic cooperation between China and India has already covered nearly all the sectors of industries of our two large economies. But if there is a sector which will take a lead in further development of bilateral economic relations, I believe it must be the steel industry. I have two points to support my argument:

Point one: recent history has shown us that the development of the steel industry of the two countries is inter-dependant.

In the last three years, China imported 80 million tons (on an average) of iron ore each year from India. Now 80-90% of India's exported iron ore is to China, which accounts for around 20% of China's total imported iron ore.

At the same time, India needs to import around two million tons of coke every year, most of which comes from China.

Point two: We shall see in the near future that steel industry cooperation between China and India will benefit each other in a big way.

For many years, China has been progressively raising steel production; it has also been importing substantial quantities of steel. Now China is the world's largest steel producer, with an estimated output of 500 million tons last year. China has also become a net exporter of steel. This indirectly means that China has reached a level of production saturation, and to reserve steel production capabilities, Chinese steel industry needs to go abroad.

Meanwhile, India's current capacity of steel production is around 53 million tons. But India's economic development has entered into a stage when it is estimated that steel consumption in India will reach 200 million tons by 2020. The huge demand of the future is creating a scenario for Chinese steel companies to enter into the Indian market.

Actually this process has already begun. A Chinese steel giant has incorporated a joint venture with its Indian partner in Karnataka. And more and more Chinese companies have been obtaining contracts of steel projects in various parts of India and the trend is moving upwards.

Therefore, I believe that steel industry cooperation between China and India will have a bright, win-win future.

Thank you.