(March 16th, 2012)

Dear Director Noble Trenham
Distinguished guests,
Ladies and Gentlemen,

Thank you for having me today. Rotary Club is one of the biggest NGO in the world, and many Rotarians have been undertaking marvelous tasks. I am happy to see so many colleagues from the Los Angeles Consular corpse as well. As requested, it gives me great pleasure to talk about Sino-U.S. relationship, China??s trade and business policies, and Sino-US trade relationship.

On China-US relationships

China-US relations have become one of the most important, dynamic and promising bilateral relationships in the world. It can be characterized in the following four aspects.

First, the Sino-US high-level exchanges and dialogue mechanism has been firmly established and expanded. When China and the United States first established diplomatic relations some 30 odd years ago, leaders of the two countries could barely meet once or twice in several years. But they now meet more frequently. Since President Obama took office, President Hu Jintao has met with him on 10 occasions. Last January, President Hu Jintao paid a successful state visit to the United States and reached important consensus with President Barack Obama on working together to building a cooperative partnership based on mutual respect and mutual benefit. One month ago, Vice President Xi Jinping concluded a successful visit to the United States to further implement the important consensus of the two heads of states.

In addition to top level exchanges, the two sides have established more than 60 dialogue and exchange mechanisms, covering a wide spectrum of fields. In the past year, China and the United States successfully held the third round of strategic and economic dialogue, the second round of the high-level consultation on people-to-people exchanges, the 22nd Joint Commission on Commerce and Trade meeting. The two sides also initiated three new mechanisms of dialogues and exchanges: the Sino-US strategic security dialogue, the Sino-US consultation on Asian and Pacific Affairs, and the Sino-US Governor??s forum.

Second, the Sino-US economic and trade cooperation has expanded to form a win-win pattern. China and the US have long been each other's second largest trading partner. In 2011, Sino-US bilateral trade reached 446.6 billion U.S. dollars, and is expected to exceed $ 500 billion this year. For 10 consecutive years, China is one of the fastest growing export markets in the United States. China gained from the development of Sino-US economic and trade relations. The same holds true for the United States.

According to a survey by the American Chamber of Commerce, in 2010, 85 percent United States-owned enterprises in China achieved revenue growth, 41% of these enterprises profit more than the global average interest rate. From 2001 to 2010, U.S. exports to China created more than 3 million US jobs. There are also more than 1,600 Chinese enterprises invested in the United States, which also boosted U.S. economy and employment. Among

America??s 50 states, 47 states exports to China increased by 3-digit or 4-digit.

Third, rapid development of people-to-people exchanges builds more solid foundation for bilateral relationship. China and the United States personnel exchanges each year have exceeded three million person/times. China and the United States have established 38 pairs of friendship and sister provinces and states, and 177 pairs of sister-city relationship. Currently, there are about 160 thousand Chinese studying in the US, while more than 20 thousand American students studying in China. The Chinese government is now implementing a ??three ten-thousand?? project. Namely, in four years, the Chinese government will provide scholarships to ten thousand American college students to study in China, the ??Chinese Bridge?? project will attract ten thousand Americans to study in China, and China will send ten thousand Chinese students to the United States for PhD studies. From the American side, The U.S. government is actively implementing the ??100 thousand strong initiative??. Namely, the US will send more than one hundred thousand students to studies in China, starting from 2009.

Fourth, China and the United States maintain effective communication and coordination on major regional and international issues. Together with the world community, the two sides joined hands in coping with the international financial crisis and promote world economic recovery; pushed forward the denuclearization of the Korean Peninsula and the Six-Party Talks; strengthened communication and coordination on Afghanistan, South Asia, Sudan, the Middle East and other global hot issues.

It is worth mentioning that China and the US have many common interests in the Asia-Pacific region. We welcome the United States to play a constructive role in promoting regional peace, stability and prosperity in the Asia-Pacific Region. We believe the Pacific Ocean is big enough to accommodate China and the United States. Our two countries can work together with other countries in the region to secure a stable and prosperous Asia Pacific.

However, it should also be noted that due to differences between China and the United States in social systems, historical backgrounds, cultural traditions, different stages of development, there will inevitably be some differences and frictions. But both sides should treat each other in a positive attitude and handle bilateral relations from a strategic height and long-term perspective, not let friction and differences to interfere with the entire Sino-US cooperation in the overall situation. The United States in particular, should carefully handle Taiwan, Tibet and other major sensitive issues.

On China??s trade and business policies and Sino-US trade relationship.

Ladies and Gentlemen, I would now like to spend some time on China??s trade and business policies, and Sino-US trade relationship.

In 2011, China??s GDP increased 9.2 percent to 7.5 trillion US dollars. The government??s total fiscal revenue exceeds 1.5 trillion US Dollars, a year on year increase of 24.8%. Meanwhile, the consumption of urban and rural residents remained robust, the total retail sales value of consumer goods amounted to 2.6 trillion US Dollars, up by 17.1%.

According to Chinese Customs statistics, China??s imports and exports in 2011 registered US$3.64 trillion, an increase of 22.5%. Trade surplus was US$155 billion, a decrease of 14.5%. China??s trade surplus has decreased in three consecutive years, dropping from 3.1% of China??s GDP to 2%, a more reasonable proportion.

That said, Sino-Us trades imbalances remain pretty high. This is the result of global industrial specialization and structure adjustment. A substantial part of US trade deficit with China is because of the trade diversion from other countries and regions in East Asia, as well as US restriction of hi-tech products export to China. Trade surplus exists in China??s goods trade with US, but its trade in services with US has remained in deficit for a long time.

Pressing RMB to appreciate cannot resolve China-US trade imbalance or US unemployment, but will impair the joint efforts of China and US to promote world economic recovery. In this complicated, sensitive and changeable period of world economy, we need a stable international currency environment. All nations have the responsibility to deal well with their own affairs, strengthen cooperation, oppose trade and investment protectionism in all forms, and advance a robust, sustainable and balanced growth of world economy. China and the US should abide by WTO rules, prevent the politicizing of economic issues, and create a sound environment for the steady development of world trade.

In recent years, China promoted institutional reconstruction to improve the environment of overseas investment, the utilization of foreign capital steadily improved. In 2011, the actual FDI reached US$116 billion, increased by 9.72%, hitting a new record high; newly approved foreign enterprises were 27,700, up by 1.1% year on year.

At the same time, China encourages domestic companies to go global and participate in international economic cooperation. In 2011, domestic Chinese investors had directly invested in 3,391 overseas enterprises of 132 countries and regions in non-financial sectors. Over the years, China??s accumulative FDI reached US$60 billion, up by 1.8%. By the end of 2011, domestic Chinese investors established 18,000 outward investment enterprises in 178 countries and regions, amounting to US$322 billion in non-financial sectors on an accumulative basis.

Ladies and Gentlemen, talking about trade cooperation between China and the United States, it is worth mentioning that, China??s imports from the US reached 122.1 billion US dollars in 2011, an increase of 19.6% year on year, exceeding 100 billion US dollars for the first time. This is testimonial to that fact that policies implemented by the Chinese Government on boosting import expansion, including encouragement policies on expanding imports from the US have exerted positive effects.

Over the past decade, US exports to China increased by 468%, while its exports to other countries increased only by 55%. In the next 5 years, consumption in China will be growing at a fairly fast pace, and the total import is expected to reach more than 8 trillion US dollars. This will provide even more opportunities to manufacturers, workers and farmers in the US.

As to bilateral investment between China and the US, it develops rapidly in past years. So far, accumulative investment from the US has reached US$67.6 billion, and the US continues to be one of the China??s largest investors. Chinese enterprises still list the US as one of the most preferred destinations, investing enthusiastically in broad range. Chinese investors will bring substantial benefits to the US, such as increasing tax income, solving employment problem and promoting local economic development. These are encouraging aspects in Sino-US bilateral economic and trade relations over the past year.

But Chinese investment in the US is not growing as fast as it should. Among the 322 billion US dollars that Chinese enterprises have invested abroad by the end of 2011, only about 6 billion, or 1.9% was made in the US. A combination of factors attributes to this. US foreign investment review system and domestic politics have negative impact to Chinese investment. It is important that the US government provides an open and friendly environment for Chinese investment. Investment coming from China, including state owned enterprises, should be viewed in a more positive light. On the part of Chinese investors, they need to learn more about US laws, regulations, cultures and customs in order to be successful in the US.

The essence of China-US economic and trade relation is mutual benefits and win-win. Only through cooperation can the two countries effectively solve problems in economy and trade. For specific issues arising from the bilateral relationship, we should adopt a forward-looking and far-sighted strategic mentality that takes the whole picture into consideration. Chinese leadership have reiterated that China is willing to further deepen cooperation with the US in such fields as economic and trade, investment, finance, and infrastructure construction, so as to sustain economic and employment increase for both sides.

We hope that the US will make concrete steps in relaxing export control regime so that more American high-tech products have access to China market. This is not only a call from the Chinese Government, but a call from relevant American companies as well. The United States should also refrain from practicing trade remedy measures against Chinese products, and treat Chinese investors to the US on an equal footing.

I believe, if the two sides walk towards each other, with the aim of solving problems in a mutual accommodating manner, the development of China-US comprehensive and mutually beneficial economic partnership will undoubtedly progress in a sound and healthy manner.

Ladies and Gentlemen, we are happy to see, over the past years, China and LA have been coming closer to each other in trade and investment. China has been No.1 trading partners for LA custom district for many years. Nearly 40% of the total China-US trade is handled through LA custom district. In the first three quarters of 2011, export from LA custom district to China increased by 19% to 19.3 billion US dollars, the import from China increased by 5.6% to 92.7 billion US dollars.

The momentum of Chinese investment in LA continues. We have seen Shenzhen New World Group successfully acquired Down Town Marriott and Universal Sheraton, BYD open its North America Headquarters in Downtown LA, China Shipping expanded its terminal at port of LA, and Air China launched its second daily non stop flight between Beijing and LA. We encourage more and more Chinese companies operating here, integrating into local communities, boosting local economy and creating job opportunities.

On Feb 17th, the US-China Economic & Trade Cooperation Forum was held in Los Angeles. Chinese Vice President Xi Jinping attended the forum and made a keynote speech. There were 1200 attendees to the forum, including US Commerce Secretary John Bryson, Deputy Secretary Sanchaz, Governor Brown of the State of California, Mayor Villarogosa of the City of Los Angeles, Supervisor Antonovich of Los Angeles County, seven Chinese governors, enterprisers from both China and the US.

The forum has reached a fruitful achievement. During the signing ceremony, China and the US signed 59 agreements on trade, investment and cooperation, the total value amounted to 24.1 billion US dollars. The total cooperation agreements in the field of economic, trade and investment is $38.6 billion.

It is worth mentioning that Chinese buyers?? purchase from US amounted to 20.8 billion US dollars, the products consisted of computer devices, software, mobile cells, automobiles, machines, soy bean, cotton, red wine etc.

It??s our belief, the visit by Vice President XI and the forum will further promote the mutual understanding and potential economic cooperation between China and Los Angeles area.

Ladies and gentlemen, this year marks the 40th anniversary of President Nixon??s historic visit to China. Forty years ago, with extraordinary wisdom and vision of statesmanship, China and the U.S. reopened the long-closed door to bilateral exchanges. Since then, China-US relations have forged ahead despite some twists and turns and made great achievements, bringing huge benefits to both countries and peoples.

I don not think our leaders 40 years ago could imagine the close and interconnected relationship enjoyed by the two countries now, nor can we figure out what will happen in the next forty years to come.

But one thing is for sure. China and the United States account for about one third of the world economy, one quarter of the world population and one-fifth of international trade. With the backing of the 1.6 billion Chinese and American people, a sound and strengthening Sino-US relationship can only bring greater peace, prosperity and development to the world. Standing on the shoulders of our predecessors, we should take every effort to bring the Sino-US relationship into new height.

Let??s work together for a better tomorrow of China-US relationship.

Thank you very much.