Dear Professor Klaus Schwab, Executive Chairman

of the World Economic Forum,

Distinguished guests,

Ladies and gentlemen,

Let me start by extending, on behalf of the Chinese Government and in my own name, warm congratulations on the opening of the World Economic Forum Summer Davos 2007 in Dalian and cordial greetings to you.

It has been 36 years since the inception of the Forum in 1971. Starting from this year, the Forum will hold an annual Summer Davos in China. This shows the world's increasing interest in China's economic development and the growing cooperation between China and the Forum. The key to the success of the Forum is that political and business leaders, experts and scholars from various countries participate in the Forum with sincere wishes for equality and mutual respect. With a strong sense of responsibility and mission, they are committed to discussing major and potential issues of the world economy, paying greater attention to underdeveloped regions and people in poverty, and playing an active role in promoting development, progress and harmony of the world. This should be the spirit of the World Economic Forum.

The name of this meeting, namely, "The Inaugural Annual Meeting of the New Champions-From Davos to Dalian" and the continued theme of "Shifting Power Equation" are fitting ones and highly relevant, as they reflect both the international community's focus on the fast growing companies and regions and its strong desire to establish a new international economic order.

Since China's economic development is high on the meeting's agenda, I wish to talk to you about the progress in China's development endeavors.

Since it embarked on the path of reform and opening up nearly 30 years ago, China has seen profound economic and social changes. China has succeeded in transforming itself from a closed and semi-closed planned economy into an open socialist market economy. There has been a great change in the life of the Chinese people, from lack of basic living necessities to moderate prosperity. China has also made important progress in political, cultural and social reforms and remarkable achievements in its modernization drive. From 1978 to 2006, China's GDP registered an annual growth rate of 9.7 percent. During this period, its import and export surged to $1.76 trillion from $20.6 billion, the per-capita consumption of its urban and rural population increased by over four times in real terms, and the poor rural population dropped to 20 million from 250 million. These achievements are possible because we have embarked on a correct path of development that is suited to China's particular conditions and is in keeping with the trend of the times.

On the other hand, I want to tell you frankly that China is still a developing country with a large population, weak economic foundation and underdeveloped productivity. This is a reality that has basically remained unchanged. Although the overall size of China's economy is large, its per-capita GDP is ranked behind over 100 countries. Uneven development between urban and rural areas and among different regions is still an acute problem. China, a big country with over 1 billion population, has encountered a host of intertwined problems and difficulties in the course of social transformation. Modernization remains a long-term goal for China.

China's economy is on the whole in good shape, marked by sustained and fast economic growth, sound financial performance, growing trade and rising living standards. But problems such as unstable factors, imbalances and lack of sustainability also affect China's economic development. They include excessively rapid economic growth, acute structural tensions, the inefficient pattern of growth, depletion of resources and environmental degradation, mounting pressure on price and entrenched structural and institutional obstacles. To resolve these problems, we are putting into practice the scientific thinking on development and pursuing an innovation-based model of development. We are committed to a comprehensive, coordinated and sustainable path of development that puts people's interests first. Specifically, we are focusing our efforts on the following areas:

--Maintain fast yet steady economic growth. Excessive growth of investment in fixed assets, oversupply of credit and loans and sizable trade surplus are major problems in China's current economic development. To resolve these problems, we must give top priority to macro-regulation to prevent an already fast growing economy from becoming overheated. We will continue to work to strike a balance between promoting economic growth and improving economic structure, between investment and consumption and between domestic and external demand. We will deepen reform of the financial sector to develop a modern banking system, a comprehensive monetary regulatory mechanism and multi-tiered capital market. We will continue to reform the renminbi exchange rate. We are confident that with enhanced macro-regulation, the giant ship of Chinese economy will continue to surge ahead steadily.

--Speed up changing the pattern of economic growth. To accelerate economic adjustment and raise the quality and efficiency of economic development is an urgent task facing China. We will follow a new path of industrialization by upgrading and improving industrial structure. We will take enhancing capacity for independent innovation as a key step in changing the pattern of economic growth, strengthen IPR (intellectual property rights) protection and speed up scientific and technological development and improve industrial performance in an all-round manner. The Chinese Government takes product quality and food safety very seriously. We are working hard to adopt related legislations, improve the system of quality standards and strengthen quality control to effectively resolve problems in this area. To enhance product quality and food safety is a common task for the international community. We will continue to work with other countries to improve product quality and food safety.

--Promote coordinated development. To address imbalances and lack of