urbanization and modernization. The rise of income of the urban and rural population and the change in patterns of consumption have generated a huge market demand. Housing, automobiles, electronic communication products, tourism and education are increasingly becoming priorities for urban and rural consumers. According to one estimate, by 2010, China's demand for automobiles will exceed 9 million units and the number of mobile phone users will surpass 600 million.

China's market has enhanced win-win cooperation. China is both a major exporter and a major importer. By carrying out trade and economic cooperation with other countries, China has obtained capital, technologies and management expertise to meet its own needs and facilitated economic restructuring. Foreign investors, on their part, have also gained big profits from such cooperation. Between 1990 and 2005, foreign companies in China remitted over $280 billion of profits back home. By entering the Chinese market, EU companies have secured a favorable strategic position in global competition. China is now the biggest market for Airbus in Asia and the biggest market for Nokia mobile phones in the world. France has been in China's nuclear energy market for 20 years. Many British banks have equity in Chinese commercial banks. Last year, the sales revenue of Philips China and Siemens China accounted for 10 percent and 7 percent of their respective global sales. China-EU cooperation in science and technology, culture and tourism has also yielded fruitful results.

China's market environment is being steadily improved. In keeping with China's WTO commitments, we have conducted a general review and check of all foreign-related laws and regulations. The new Foreign Trade Law of the People's Republic of China has been in force for two years. Laws governing foreign investment have been brought into compliance with WTO rules. At present, the prices of over 90 percent of commodities are fully determined by the market. As China's economy is increasingly becoming market-oriented, markets for the full range of production factors have taken shape, market intermediary organizations have grown, and market competition unfolds in a more orderly way. All this has provided a level playing field for both Chinese and foreign companies.

China's sustained economic growth and its growing market have both brought benefits to the Chinese people and created tremendous business opportunities for the international business community. The development of China is, therefore, an opportunity for and contribution to the world. It is not a challenge, still less a threat.

Ladies and Gentlemen,

After over 30 years of growth, China-EU relations and business relations in particular have become more mature and wider in scope. The EU is now China's largest trade partner, top technology supplier and fourth largest source of foreign investment. China is EU's second largest trade partner. China-EU trade exceeded $100 billion in 2003. And in just two years, it doubled and reached $217.3 billion in 2005. Between January and July this year, it rose to $143.5 billion, a year-on-year increase of 21 percent. By the end of last June, the EU had set up over 24,000 companies in China, with a total net investment of over $50 billion. China-EU business ties, being mutually beneficial in nature, have delivered real benefits to our peoples. More importantly, these ties have constituted a solid foundation of China-EU relations and greatly boosted their growth.

As China-EU business ties expand in scope and scale, differences, misunderstanding and even frictions between the two sides over some issues are hardly avoidable. To resolve these problems, we need to deepen mutual trust and understanding. Now, I wish to address several issues of concern to you.

1. Trade imbalance. According to EU statistics, the EU ran a deficit of $131.6 billion in its trade with China in 2005. A number of factors have contributed to the deficit. Ninety-five percent of the deficit occurred in processing trade and 81 percent was caused by foreign invested companies in China. Global relocation of industries has led