(March 4, 2009)

Thank you, Mr. Chandrajit Banerjee, Director General of CII. First of all, allow me to express my thanks to you and CII for inviting me to this conference. In the face of the further deepening global financial crisis, the subject you are going to discuss is very relevant. I sincerely wish the conference a great success.

The financial crisis originating from the United States has plunged the world economy into the most difficult situation since last century's Great Depression. It not only hits the financial sector severely but also creeps into the real economy. Its real impact is yet to be seen. The latest IMF report forecasts the global economy will increase by a mere 0.5% for 2009.

China is not insulated from the effects of the crisis either. While China's financial sector remains largely intact, the sector of real economy has been severely inflicted. China's export has notably shrunk, with about 670,000 small-scale export-oriented enterprises shut down and 6.7 million jobs "evaporated". According to information provided by the Ministry of Agriculture of China, about 10 to 15 million migrant workers from rural areas are waiting for new jobs. Downward pressure on China's economic growth is still high.

To turn around the situation, the Chinese Government has promptly adjusted the direction of the macroeconomic policy, swiftly adopted a proactive fiscal policy and a moderately easy monetary policy, introduced ten measures to shore up domestic demand and put in place a series of related policies to stimulate the domestic economy. In particular, the Chinese Government has rolled out a two-year program involving a total investment of RMB 4 trillion, equivalent to 16 percent of China's GDP in 2007, aiming at injecting incentive to its economy. Some positive signs have been seen recently.

It is a widely shared view that the downturn trend of the world economy has not reached its bottom. And there is still no silver lining ahead of us. What China and India, as two largest emerging economic powers, should do in order to minimize damages and achieve an early recovery. My views are as following:

First, we must beef up our confidence. At the time of crisis, confidence is crucial for fighting against the crisis and achieving early recovery. As Premier Wen Jiabao said at World Economic Forum Annual Meeting 2009, in the time of economic difficulty, confidence is the source of strength. It is more precious than money and gold. If China and India can show to the world their confidence in their own economies as well as the world economy, it will send out positive messages and create a good effect onto the international financial and economic situation. When China and India, the two largest developing countries, run their affairs well, it can contribute positively to global economy and curb the further spread of the impact of financial crisis.

Second, two countries must adopt effective measures to tackle the crisis. China and India's economies have both the strength and resilience against the crisis. We have huge domestic markets, sufficient financial resources and opportunities for investment. So long as we adopt appropriate fiscal and monetary policies and measures, we will be able to minimize the downside of crisis and ensure a steady development of our economies. In this respect, we are happy to see that our two Governments have taken decisive actions by putting in place a series of stimulus packages with specific steps to counter the negative impact of global slowdown and boost our respective economy. Both countries should exchange experience and draw inspirations from each other with a view to achieve better results.

Third, we must guard against the protectionism. China and India should work hand in hand in a cooperative manner, instead of resorting protectionism. In the G-20 Summit in Washington last November, our leaders committed themselves not to adopting measures of trade protectionism. China is firmly opposing trade protectionism because such a policy is harmful to the recovery and growth of world economy. As a responsible member of World Trade Organization, China stands by the principle of free trade, opposes any form of trade protectionism and is ready to engage with other countries to resolve trade conflicts through cooperation and dialogue, with a view to achieve a win-win situation. We sincerely hope that Chinese and Indian Governments will encourage their respective business sectors to engage in dialogue and resolve trade problems in an appropriate manner.

Forth, China and India should strengthen cooperation and coordination in the reform of the international financial system and accelerate the establishment of a new international financial order. G-20 Financial Summit is an important forum. We two countries should work together to press the developed countries to bear their responsibility, and prevent them from shifting the burden onto developing countries. At the same time, we shall push for the reform of the existing international financial institutions with a view to increase the role of China and India in decision-making process and empower them with greater say and representation in international financial institutions. China and India also share the responsibility of safeguarding the interests of other developing countries as a whole.

Fifth, we should turn crisis into opportunity. In Chinese, the word crisis has two connotations. One is "danger" and the other is "opportunity". The current crisis offers a good opportunity for some countries to restructure their economies and push ahead industrial adjusting and upgrading. Measures could be taken to phase out backward production capacity, promote advanced productive forces, and improve the efficiency of resource allocation. It is also a good time to invest in infrastructure. By so doing we will prepare a solid foundation for a lift-up of our economies when the world economy recovers and achieve a long-term and sustainable development at a higher level.

Last but not the least, China and India should do a good job in maintaining social equality and achieving common development in all social stratums of our countries as well. In the time of economic difficulty, we have to be sensitive to the interests of people, especially those weak and under-privileged. In China, the Government sticks to the principle of putting the people first by strengthening social security and addressing the problems immediately relating to the livelihood of the common people in order to build a harmonious society. In India, the Government has also implemented the concept of "inclusive growth". All these reflect the priority of the leadership of our Governments.

Finally, I would like to conclude my remarks with an optimistic note. Yes, the challenge we are facing is great, but the future is bright. After severe winter, no one will doubt there comes spring. As long as China and India can join their efforts, learn from each other and compliment each other, the two countries will surely emerge as winners of this crisis.

Thank you!