after the breakout of the asian financial crisis, responding to the appeal of the neighboring countries and international institutions, china significantly narrowed the floating band of the rmb exchange rate and undertook not to devaluate the rmb, thus contributing importantly to the regional economic and financial stability. what china pursued at that time was a managed floating exchange rate within a significantly narrowed band instead of a fixed exchange rate. during the past year, there have been much debates and discussions on the rmb exchange rate, with substantial different views from some of the world ’ s famous economists. some said that the rmb should be revaluated, while some believed that the rmb exchange rate should be kept stable. i would like to emphasize two points. first, with active participation in the global economic activities and close integration into the world economy, china has provided more and more low - cost and high - quality products to the international markets. this has not been achieved by the adjustment of rmb exchange rate. instead, it has been benefited from china ’ s huge labor force with low cost and improving skills. also, the problems of trade deficit and unemployment in some countries cannot be resolved by the revaluation of rmb. chinese government does not seek to maintain trade surplus, but hopes to keep a balanced current account. export expansion will inevitably result in the increase of import, thus creating opportunities for other countries to increase their export. trade partners should not blame each other for the adverse impact of others ’ products on their domestic industries. instead, they should actively participate in the international division of labor and fully exploit their comparative advantages. second, a stable and growing chinese economy will benefit the stability and development of the world economy. last year, with rapid growth of export, china ’ s import also expanded rapidly. import growth was 39. 9 percent for the whole year. in particular, import from eu, united states and canada grew by 37. 7 percent, 24. 3 percent and 20. 6 percent respectively. import growth accelerated to 42. 4 percent in the first four months of this year, 10. 5 percentage points higher than the growth of export, resulting in a trade deficit of over usd10 billion. import from eu, united states and canada in the first four months grew by 33. 7 percent, 41. 5 percent and 60. 1 percent respectively. the growth of the chinese economy has contributed importantly to the recent world economic recovery. any improper change in the rmb exchange rate policy may create new uncertainties

issued financial bonds denominated in us dollar in the inter - bank market ) ; introducing pilot reform program of foreign exchange management for overseas investment to gradually expand the channels for capital outflows. we are confident that, with the steady advancement of the reforms, a rmb exchange rate system that is suitable to china ’ s specific conditions and accurately reflects market development will be established, and the monetary policy will be playing an increasingly important role in macroeconomic management. canada is an important trade partner of china. the trade volume between china and canada for the first time exceeded usd10 billion in 2003, representing a growth rate of 26. 2 percent over the previous year, and the direct investment in china from canada reached usd563 million. financial cooperation between china and canada has also been actively promoted. two canadian commercial banks have established four branches in china and the other four have set up representative offices. there are great potentials for trade, investment and financial cooperation between our two countries. we look forward to closer financial and economic cooperation with canada. thank you.