By the Chinese Consul General Hao Guangfeng

22nd September, 2009

Ladies and gentlemen,

Dear friends,

I am very delighted to be invited to this seminar entitled Doing Business with China. First of all, I would like to extend heartfelt congratulations on the opening of the seminar and sincere thanks to Wesgro for organizing and hosting this seminar, which, I believe, will give you an insight into China’s economy and the China-South Africa business cooperation, as much as business opportunities.

This year marks the 60th anniversary of the founding of the People’s Republic of China. First, I will focus briefly on China’s achievement in trade and business over the last 6 decades. Secondly I will dwell on the China-South Africa economic cooperation and trade relations. Thirdly, I will explain on how China tackled the financial crisis and what positive results China has made. Finally, I will share with you some tips for doing business with China.

I China’s Achievements in Trade and Business over the Last 60 Years

The last six decades witnessed historical economic and social changes in China. China has made great progress in terms of its growing economy, improving the living standards of its people, and enhancing its overall national strength. China has successfully made the historic transition from a planned economy to a robust socialist market economy and from a closed and semi-closed country to a country that is widely open to the outside world and integrating with the international community.

Since China carried out reform and opening up 30 years ago, particularly after 2001 when China joined the WTO, China has witnessed the fastest development in its trade and business.

Thanks to the remarkable development, China is now an integral part of the global economy. China’s economic growth has also boosted the growth of the global economy and trade.

—A Great Leap in Foreign Trade. In 1950, the foreign trade volume of new China stood only at $1.13 billion, while in 2008 it reached $2.56 trillion, which is 15 times of the aggregate volume from 1949 to 1978. China’s trade partners have increased from dozens in 1950 to over 220.China has become the third largest economy in the world. In the first half of this year, China surpassed Germany and took the lead in the world’s export for the first time. The export commodity structure has transformed from primary products to labor, capital and technique-oriented products. China is moving forward from “Made in China” to “Created in China”.

—Utilization of Foreign Investment. In 1978, there was almost no foreign investment in China. But by June this year, foreign-funded companies in China have numbered 670,000 and the actual utilized foreign investment amounted to $900billion.China has become the largest developing country in attracting foreign funds for 17 years in row. Over 480 of the 500 top companies in the world have established offices or brunches in China and with over 1200 R&D centers.

—Strategy of “Going Overseas”. In 1997, China initiated strategy of Going Overseas after endeavors in attracting overseas funds. China’s outbound direct investment soared by 20 times from $2.7 billion in 2002 to $52.1 billion in 2008.The aggregate annual operation volume of contracted projects, labor services cooperation and design consultation with foreign countries have increased from $300 million in 1978 to $65.1 billion in 2008.

—Upgrading of the Consumption Structure. When New China was founded in 1949, the total retail sales of consumption commodities valued only at 27.7 billion yuan but it reached 10.8 trillion yuan in 2008 with an annual growth rate of 10.6%. Chinese people no longer suffer from the shortage of commodities and enjoy abundance in good supply now. The consumption structure has been upgraded continuously.

What does the Chinese economic success mean for South Africa? A fast developing economy in China offers opportunity of business and provides a gigantic market for South Africa. China’s approach of development from attracting investment to China to “going overseas” may give you some food for thought. I do not mean you follow the pattern，but you will find the way that suits South Africa best.

II China-South Africa Economic Cooperation and Trade Relations

Though the international financial crisis has exerted some negative impact on the bilateral trade between China and South Africa, the economic cooperation between our two countries remained robust. In the first half of this year, China has become the largest trade partner of South Africa and South Africa become China’s largest trade partner in Africa. It is by no means easy for our two countries to have come this far. I think the achievements are not only the results of the concerted efforts of our two governments but also the results of the all-round and profound development of China-South Africa relations. Last year witnessed the celebration of the 10th anniversary of the establishment of the diplomatic relations between our two countries. Now I would like to review briefly with you about what we have achieved in our bilateral relations over the last 11 years.

—The political mutual trust has been enhanced continuously and steadily. On the basis of Partnership, which was positioned under the advocacy of President Mubeki in 2000, the relationship of our two countries had developed to Strategic Partnership of Equality，Mutual Benefit and Common Development in 2004. The national bilateral committee was set up with five sub-committees on diplomacy, economy, defense, science and technology, and education.

—The high-level reciprocal visits have become more frequent. Over the last three years, Chinese President Hu Jingtao and Premier Wen Jiabao paid state visits to South Africa, while former President Mubeki and Vice President Mlambo-Ngcuka made reciprocal visits to China. President Jacob Zuma has visited China last year during his world tour before election.

—The collaboration and consultations in the international affairs have been strengthened. In recent years, in the multilateral arenas like UN, WTO, G8 meeting with the developing countries, China and South Africa have consulted and coordinated with each other to safeguard the legitimate rights and interests of the developing countries. The Strategic Dialog Mechanism was formulated between the Ministries of Foreign Affairs of our two countries to exchange views on major international as well as regional issues.

—The fields of cooperation have been broadened. With the concerted efforts and promotion of the leaders of our two countries, the fields of cooperation have been extended. Currently, over 50 cooperation agreements have been signed, covering various areas of economy, business, culture, education, science and technology, health, tourism. In addition, the non-governmental exchanges have been conducted actively, which promote the mutual understanding of the two peoples.

Based on the solid foundation laid by the overall development of the bilateral relations, the bilateral trade and economic relations between our two countries have grown rapidly, bringing tremendous benefits to the two peoples.

—According to the China Customs statistics, the total trade volumes of the two countries rose from $1.56 billion in 1998 to $ 2 billion in 2000. The years from 2003 to 2007 witnessed a leaping development in our bilateral trade with an annual growth rate of 40%. In spite of the impact of the financial crisis, the bilateral trade volume in 2008 still stood at $17.824 billion, an increase of 26.9% over the previous year. China’s export to South Africa reached $8.593 billion up by 15.7% and its import from South Africa $ 9.231 billion up by 39.5%. In the first half of this year, the bilateral trade volume reached $6.8952 billion, down by 3.99%. China’s export to South Africa decreased by 20.25% to $3.831 billion while its import from South Africa rose by 29.84% to $3.021 billion.

—Our two countries have become each other’s important trade partner. In 2008, China was the third largest trade partner of South Africa, next to the United States and Germany. But in the first half of this year, China became the largest trade partner, the biggest export market and the largest source of import of South Africa. For China, South Africa is the largest trade partner, the biggest export market and the largest source of import in Africa.

—The commodity structure in the bilateral trade has changed. Among commodities exported from China to South Africa, mechanical and electrical products top the list, followed by light industrial and textile products and high-tech products. In the last two years, the exports of high-tech products increased by 50%. On the South African side, mineral products account for the major part and others include jewelry, precious metals and their related products, base metals and their related products. But last two years witnessed a rapid growth in South Africa’s export of textile raw materials and products, mechanical and electrical products and agricultural produces to China. Those products are expected to be the new growth point in the bilateral trade.

—The two-way investments have been increased constantly. The Industrial and Commercial Bank of China bought $5.46 billion shares of the Standard Bank of South Africa, which has been China’s largest investment in Africa till now. Many state-owned enterprises of China like Sinosteel Corporation, Jiuquan Iron and Steel Group and Hisense, have enlarged their investments in South Africa. All these demonstrated China’s confidence in South Africa’s economic development. At the same time, South African conglomerates like AngloAmerican，Sasol， SABMillers and Naspers have made presence in China for a long time.

As both of our countries are emerging economies and the two governments are committed to develop the economy and improve the living standard of their peoples, the two countries provide huge markets for each other. Where or in which field can you do business with China? I will try to outline a few.

—To tackle the financial crisis, China has formulated a package plan to expand domestic demand and boost economic growth. There will be tremendous demand for resources products, mechanical and electrical products, and agricultural produce which South Africa excels in. This has been illustrated by the big increase of China’s import from South Africa by 29.84% in the first half of this year.

—Since the inauguration in May 2009, President Jacob Zuma has maintained the governments focus on domestic issues including the alleviation of poverty, creation of employment opportunities, an increase in infrastructure projects and financial assistance to businesses. This presents China with good opportunities in economic cooperation with and investment in South Africa. For example, most recently, the Industrial Development Corporation of South Africa received a $ 50 million loan from China Construction Bank.

—As the World Expo and the World Cup will be held respectively in China and South Africa next year, there will be many common areas to be explored for the cooperation of our two countries. Currently, Chinese enterprises are actively involved in South Africa’s prep for the 2010 world cup. The most eye catching example is the Nelson Mandela Bay Stadium, whose seats are supplied and set up by Chinese leading sports equipment enterprise Zhejiang Dafeng Sports Equipment Co. Ltd.

After over ten years of development, the bilateral trade and economic cooperation of our two countries have ushered in a new era. As long as our two countries seize the opportunities to deepen the cooperation and tap the potentials, I firmly believe that there is a bright future for China-South African trade and economic cooperation.

III China’s Endeavors in Coping with the Financial Crisis

Now I will talk about how China tackled the financial crisis. Over the last year, the world economy has run into the most serious challenges ever since the Great Depression of the last century. The international financial crisis has brought unprecedented difficulties and challenges to China. Economic growth has dropped. Imports and exports have been on the decline. Industrial production has notably slowed down. Some enterprises are having a hard time in their production and business operation, and employment is becoming more and more difficult. New challenges coupled with existing problems have made the task all the more arduous.

To counter the impact of the international financial crisis and maintain steady and relatively fast economic growth, the Chinese government has made timely adjustment to its macroeconomic policies, swiftly adopted a proactive fiscal policy and a moderately relaxed monetary policy, and formulated a package plan to expand domestic demand and boost economic growth. This package plan is not simply the four trillion RMB yuan investment only. Instead, it is a plan to address both symptoms and root causes and to serve both current needs and long-term goals. It is an emergency-response plan to ensure economic growth, improve people's livelihood and maintain social stability. It also represents a long-term policy to promote scientific and harmonious development of the Chinese economy. The package plan embodies mainly the following features:

—It focuses on expanding domestic demand and is aimed at driving economic growth through both consumption and investment. In line with the plan, the Chinese government has made great efforts to stimulate consumption. Those include increasing subsidies for farmers, raising the basic cost of living allowances for urban and rural residents, offering subsidies for the program of bringing home appliances, agricultural machinery, automobiles and motorcycles to the countryside, cutting purchase taxes on small-engine and energy conserving and environment friendly cars, etc.

—It aims to address both immediate problems and long-term needs, and achieve economic growth in the course of restructuring. The Chinese government has a clear vision in expanding investment, that is, the money should focus on shoring up the weak links in economic and social development, help remove the bottlenecks in the national economy, and contribute to structural readjustment and transformation in the development model while giving a strong push to domestic demand.

—It seeks to coordinate the role of the government and the market and enable development and reform to advance in a mutually reinforcing way. The government-funded interest discount and tax tools are designed to encourage the restructuring, merger and reorganization of enterprises. And the cut in interest rate and the required reserve ratio has ensured reasonably adequate liquidity in the banking system. All the key reform measures are intended to eliminate the institutional and structural barriers in the economy and strengthen the vitality and dynamism of economic growth.

— It is designed to both sustain economic growth and improve people's livelihood. The Chinese government gives priority to projects affecting people's well-being in allocating public resources. A new rural pension system has been introduced and reform in the health care system has been carried out. Steps have been taken to expand employment, particularly jobs for college graduates and rural migrant workers.

This package plan is already paying off, and positive changes have taken place in China’s economy. In the first half of this year, China's GDP grew by 7.1 percent, investment expanded at a faster pace, and consumption maintained fast and steady growth. Domestic demand played a stronger role in driving the economy forward. From January to July, 6.66 million new urban jobs were created, income of urban and rural residents increased, and overall social stability was maintained. Banks' asset quality and ability to fend off risks were improved.

As a responsible member of the international community, China has also been actively involved in the international endeavor to fight the financial crisis. In spite of great difficulties, China has kept the RMB exchange rate basically stable. China has taken an active part in the Global Trade Finance Program of the International Finance Corporation. China has made utmost efforts to provide support and assistance to other countries and signed bilateral currency swap agreements with relevant countries and regions. China has sent large procurement missions abroad, demonstrating its firm commitment to staying open to the world and promoting global economic recovery. China has continued to offer assistance to other developing countries in the form of grant, debt relief and aid for trade.

Both China’s economic success and the difficulties of international financial crisis provide business opportunities. It is my firm conviction that China-South Africa trade and economic cooperation will expand, will survive the crisis and thrive.

The Consulate General is always ready to offer assistance and help to you and serve as a bridge between China and South Africa.

I thank you all.