Distinguished Guests,

Ladies and Gentlemen:

Good morning. It is my great pleasure to be in beautiful Indianapolis to talk about China’s recent economic growth, to introduce China’s new business environment and to look into the future of China-US economic cooperation.

Ladies and Gentlemen,

Against the background of downturn risks in the global economy, the International Monetary Fund recently lowered the world economic growth forecast for the next two years. However, it raised China's economic growth forecast this year. More and more people in the international community are positive about China's economy. Some institutions and media believe that China's supply-side structural reforms are effective, and China’s economy is stronger, more resilient, and more sustainable.

Those perspectives are correct. As from a long-term view, the uninterrupted growth trend for China's economy has not changed, the basic characteristics of strong economic resilience, huge potential and big leeway have not changed, the solid base and favorable conditions for sustained economic growth has not changed, and the momentum for economic restructuring and optimization has not changed. China's modernization process is still advancing, and industrialization, urbanization are not completed yet. Consumption structure is upgrading, coupled with a solid material base, a complete industrial system, a huge stock of human resources and a broad space for growth. Those factors decide that Chinese economy will maintain medium-to-high growth rate in the foreseeable future.

In the short run, even facing with the complicated situation at home and abroad, and the continuing heavy economic downward pressure, China adheres to five development principles of innovation, coordination, green development, openness, and sharing, moderately expand the total demand, accelerate the supply-side reform, and encourage mass entrepreneurship and innovation. Thanks to all these efforts, the Chinese economy is generally stable and making steady progress.

For the first half of 2016, China's GDP grew by 6.7% compared with the same period of last year, of which, the primary sector increased 3.1%; the secondary sector grew by 6.1%; the tertiary sector 7.5%. Agricultural production is basically stable. Industrial production steadily rose. And industries began to make more profits. The industrial structure continued to optimize. The value added in high-tech industry and equipment manufacturing industry increased by 10.2% and 8.1% respectively on a year-on-year basis. Fixed assets investment grew by 11%. The stock of commodity housing reduced. Market sales increased steadily, the total retail sales of consumer goods increased by 9.7%. Online retail sales grew by 26.6%, accounting for 11.6% of total retail sales of consumer goods. In the first half of this year, total value of imports and exports fell by 3.3%, of which, exports fell by 2.1%; imports fell by 4.7%, a decline that is 3.7 percentage points lower than last year. Consumer price Index rose 2.1%. The economic structure continued to optimize, and the supply-side reform made progress, The added value of tertiary sector accounted for 54.1% of total GDP. The demand structure further improved, in the first half, the consumption expenditure contributed to 73.4% of total GDP growth, increased by 13.2 percentage points compared with the same period of last year. Efforts to cut excessive industrial capacity paid off. Coal and crude steel production fell by 9.7% and 1.1% respectively.

Summing up, since this year, China’s service industry grew rapidly, ranking first in the national economy. It became the main driving force for steady economic growth and employment. It made great progress in expanding domestic demand and promoting consumption. The economic growth was mainly driven by domestic demand and domestic demand mainly relied on consumption. supply-side reforms have achieved initial results.

As the domestic and international environment is still complicated and grim, we will stick to the policy of stabilizing growth, upgrading structure, and advancing reform. In the second half of this year, China will moderately expand the total demand and unswervingly push forward the supply-side reform. China will also foster new economic structure, strengthen the new growth momentum, and promote sustained and healthy economic development.

With this backdrop, China's investment environment is continuing to improve. In recent years, China has introduced a series of measures to optimize the investment environment. First, the establishment of free trade zones. China is exploring the management model combining pre-establishment national treatment with a negative list. It aims to reduce the administrative procedures, create easy environment for foreign investment, level the playing field for all types of enterprises, and improve the transparency of foreign investment management system. On April 20, 2015, we released the management measures on foreign investment access to free trade pilot zones (negative list), in which there was only 122 special management measures. This means except for the listed areas, all the foreign investments will enjoy the treatment not inferior to domestic investments. Secondly, China publishes the ondly, China publishnegative lis”of the People's Republic of Chinalist the treatment not . This means pril 20, 2015, China is exploring the asures to oss to national treatment plus negative list management model in order to transform to the limited approval plus comprehensive reporting system. This reform will stimulate the vitality of the market. Thirdly, China updated “Catalogue of Industries for Guiding Foreign Investment” in 2015, which broadens foreign investment access, and significantly reduces restrictions on foreign investment. this is the biggest revision compared with previous ones. Fourthly, China set up new specialized intellectual property court to strengthen the judicial protection of intellectual property rights, and effectively protected the legitimate rights and interests of the intellectual property holders. Fifthly, China signed several international economic cooperation and trade agreements in order to build a business environment with international standards. These above acts will have an increasing impact in optimizing the investment environment.

With the continuous upgrading of China's industry and improvement of investment environment, new investment opportunities in China are emerging. From Jan. to July, 2016, there are 15, 802 newly established foreign invested Enterprises, with $77.1 billion actual foreign investment(not include the investment in banking, securities and insurance sectors), an increase of 9.7% and 4.3% respectively compared with same period last year. A lot of foreign investors rearrange their investment according to China’s new “Catalogue of Industries for Guiding Foreign Investment”. They withdrew from the projects with high material consumption, high energy consumption, high pollution and use of scarce mineral resources, and redirected to high value-added projects, especially in new energy and environment protection technology sector. They seized the good business opportunity.

Service sector has become an important attraction to foreign investment. Foreign investment also increased in High-tech services and high-tech manufacturing industry. From Jan. to July of 2016, service sector got $54 billion of foreign investment, an year-on-year increase of 7.7%, accounting for 70.1% of the total amount of foreign investment in China. The high tech service got $9.4 billion foreign investment, a year-on-year increase of 98%. information technology services, digital content and related services, research and design services increased by 303.5%, 57.7% and 37.5% respectively. High technology manufacturing attracted $5.4 billion foreign investment, an increase of 1.5%. Of which, the pharmaceutical manufacturing industry, medical equipment, instruments and apparatus manufacturing increase 91.4% and 80.5% respectively.

Major sources of foreign investment maintain stable. From Jan. to July in 2016, investment from the United States, the United Kingdom, and Germany increased 129.8%, 96.8% and 96.6% respectively. It grew faster in the area of information transmission, computer services and software industry, scientific research, technical services and geological prospecting industry, as well as manufacturing and other industries.

There are a lot of foreign investments for establishing new large enterprises or expanding ones. From Jan. to July 2016, there are 443 large foreign-invested enterprises with over $100 million investment in total. There are 255 enterprises receiving additional investment of over $100 million. Among them, there are enterprises which engaged in research, design and manufacture of new materials, new energy vehicles and batteries, aircraft parts, medical equipment, integrated circuits and chips. There are also companies which provided services in health, pension, electronic commerce, cloud computing, R & D in bio fuels, IOT technology and application.

the use of foreign investment through merger and acquisition keeps growing. From Jan. to July 2016, there are 795 foreign enterprises set up by merger and acquisition with total investment $15.7 billion, an increase of 4.1% and 17.8% respectively, accounting for 20% of whole foreign investment.

China’s outbound investment grows rapidly as its economy develops. Actually, China has become a net capital exporter. From Jan. to July of 2016, Chinese investors made non-financial direct investment in 5465 projects in 156 countries and regions with total amount of $102.7 billion, an increase of 61.8%. China’s outbound investment focuses on developed countries and regions. From Jan. to July of 2016, mainland of China made $75.1 billion investment in the US, Russia, EU, Japan, Australia, ASEAN and Hong Kong, accounting for 73.1% of total outbound investment. China’s investment increased sharply in the US, Germany and Australia, reaching 210%, 200% and 74% respectively. M & A is a main channel of China’s outbound investment. From Jan. to July of 2016, Chinese enterprises took over 459 projects in 63 countries and regions, covering information transmission, software and information services and manufacturing sectors, with total investment $54 billion, accounting for nearly 53% of China’s outbound investment. The amount of M & A for the first 7 months of this year has already exceeded the total M & A figure of last year.

Ladies and Gentlemen，

China-US economic cooperation holds an important position in foreign economic relation of our two countries. It is the bedrock and propeller of China-US relations, and also has an important effect on the global economy.

According to the statistics of the Ministry of Commerce of the United States, the bilateral trade value of China and US reached 558.39 billion in 2015. China became America's largest trading partner for the first time. China’s trade with the Indiana is $9.6 billion, ranking third after Canada and Mexico. China is a huge market for the United States. It also provides a variety of consumer goods to meet the demand of the United States.

Over the years, the investment from the United States has greatly helped the upgrading of China's industrial structure, playing an important role in China's economic development. In recent years, China’s investment grew rapidly in the United States. According to the data of US Rhodium Group, China invested $15 billion in the United States in 2015, an increase of 30%. In the first half of 2016, Chinese investment in the US is $18 billion. It is expected to exceed $30 billion in 2016. From 2000 to 2015, China’ investment in Indiana accumulated to $168 million in a total of 14 projects. Investment from China creates jobs, pays tax to the local communities, and promotes the in-depth economic cooperation between China and US.

In summary, China's economic situation is good. Industrial structure is upgrading, investment environment continues to improve, so China is an ideal place for foreign investors. At the same time, China's national power has been strengthened. China is now capable to make large scale outbound investment. Chinese enterprises are very active in exploring international markets and finding more cooperation opportunity. China and the United States are highly complementary economically. Our enterprises have strong desires to cooperate with each other. We should make full use of our respective advantages, and actively carry out mutually beneficial cooperation to benefit our two peoples and the international community.

In June, the Eighth Round of the China-US Strategic and Economic Dialogue came to a successful conclusion and the two sides reached agreement on over 60 outcomes. Both sides agreed to push the Bilateral Investment Treaty (BIT) negotiations forward expeditiously and exchange revised and improved negative list offers by mid-June, with a view toward reaching a mutually beneficial and high-standard treaty at an early date. Both sides reiterated their commitments to continue detailed and in-depth discussion of export control issues within the China-US High Technology and Strategic Trade Working Group. The two sides agreed to strengthen communication and enhance mutual trust to work towards reciprocal recognition of bilateral airworthiness on transport category airplanes. And the two sides will continue to promote cooperation at the subnational level on trade and investment, and further step up communication and cooperation in infrastructure development, protection of intellectual property rights, agriculture, small and medium enterprises, research, development and innovation of clean energy, as well as economic policy research.

The two countries have made major progress in financial cooperation. The two sides will strengthen cooperation in Renminbi (RMB) currency trading and clearing in the US. China agreed to extend a 250 billion RMB Qualified Foreign Institutional Investor (RQFII) quota to the US, and designate one qualified bank from China and another from the US as RMB clearing banks. Both sides welcome the ongoing cooperation among trading platforms, so as to enhance connection of their financial markets and products. Financial regulators of the two sides stand ready to advance information sharing and cross-border enforcement cooperation. The two sides agreed to step up exchanges and cooperation in supervising anti-money laundering, countering the financing of terrorism, and fighting counterfeiting currency. We also agreed to cooperate on green finance and accelerate the development of a Green Building Efficiency Fund. Both sides committed to explore ways to improve the working mechanism of the International Working Group on Export Credits (IWG) and make greater progress towards achieving new international guidelines for official export credit support.

Few days later, President Xi Jinping and President Obama will meet in Hangzhou, China during the G20 Summit. We believe it will promote the healthy and smooth development of China-US relationship and guides the cooperation in the fields such as economic and trade.

Ladies and Gentlemen,

In order to achieve more extensive and in-depth cooperation between China and Indiana, we have the following suggestions:

Firstly, engage in more forces to promote cooperation.

At present, both governments have strong desire to help our enterprises to engage in cooperation. Somehow, we feel we are short of human resources and business information sometimes. So, we suggest that our two governments take the lead to invite investment banks, law firms, accounting firms and chamber of commerce to participate in economic cooperation promotion work. We give them endorsement so as to increase their trustworthiness when they get contact with unfamiliar enterprises. Through this way, we can make full use of their commercial information and specialties to have more information resources, communication opportunities and follow-up activities. That will help enterprises from both sides understand each other better, push them to engage in substantial commercial negotiation, thus increase cooperation opportunities.

Secondly, set up on-line information exchange system and e-commerce mechanism.

Our two governments could take full advantage of convenient electronic information technology in promoting of trade and investment. We could set up a special information exchange platform. Enterprises and intermediate agencies can get onto the platform after getting an identity endorsement from government authorities of both sides. That will ensure the creditworthiness of the participants, true and reliable information on the platform. We could also set up special e-commerce website with all buyers and sellers being endorsed by the two governments. This will make buyers and sellers feel safe when they engage in e-commerce transaction. This special e-commerce website will greatly help SMEs to explore the international markets.

Thirdly, promote start-up firms to engage in bilateral cooperation.

We suggest that the Indiana government enhance the contact with those incubators and accelerators in Indiana. The Chinese side could get contact with Chinese venture capitals and private equity fund. Then we can help to organize on-line road show between high-tech and new business model start-up firms in Indiana and VC, PE firms in China. It will let them to get contact with potential partners. It will help enhance mutual understanding and promote cooperation between Chinese investors and those start-up firms.

Ladies and Gentlemen,

I firmly believe that with our unremitting efforts, cooperation between China and the United States as well as the cooperation between China and Indiana will be more extensive and deep, which will further promote the economic development of China and Unite States as well as the friendship of our two countries.

Thank you all.