The following is the full text of the address made by Chinese vice-Premier Wu Bangguo at luncheon of world economic forum held in Davos on January 29.

Ladies and Gentlemen,

I would like to thank President Schwab for his kind invitation that has given me this opportunity to brief you, friends from the business community and media, on the economic situation and the reform and opening-up policy in China at the edge of the new century in the beautiful resort of Davos.

The Chinese economy is in good shape. Despite the Asian financial crisis in 1997 and the devastating floods in 1998, the economy has maintained a good momentum of growth. The GDP grew by 7.8% and 7.1% respectively in 1998 and 1999. Although the 1999 figure is slightly lower than the previous year, the economic performance has improved visibly with a better structure. At the moment the RMB exchange rate remains stable and foreign exchange reserve exceeds US$150 billion. The living standard of both rural and urban dwellers continues to go up. The steady growth of the Chinese economy has not only laid a good foundation for its future development but also contributed to the stable growth of regional and world economy.

The maintenance of a good development momentum of the Chinese economy in an adverse economic environment should be attributed to the timely measures taken in response to the circumstances and the efforts made to persevere in reform and opening-up under the leadership of President Jiang Zemin. Main problems facing the Chinese economy in the past two years include inadequate effective demand, acute structural deficiency and mounting employment pressure. In order to tackle these problems and prepare for the long-term development in the next century, we have adhered to the policy of boosting domestic demand, pursued a pro-active fiscal policy, given full play to the role of monetary policy, and stimulated growth through increased investment and consumption. We have taken mainly the following measures. First, we have issued long-term treasury bonds to state-owned commercial banks to turn a proportion of individual savings into investment capital for, among others, infrastructure, technology upgrading of enterprises, education, science and technology. Second, we have introduced more drastic financial measures to support economic growth such as moderately increasing money supply, and lowering lending rates seven times. We have increased lending to infrastructure projects, and worked to meet the demand for working capital by those profit-making enterprises that produce readily marketable goods. We have also given more loans to small and medium-sized enterprises and considerably expanded consumer credit in housing, education and large durable consumer goods. Third, we have raised the wages of the low-income city and town dwellers by a considerable margin to stimulate consumption. (84 million people have benefited from this measure.)

Reform and opening-up is a long-term and basic state policy that we will pursue in China. The goal of our economic restructuring is to put in place a system of socialist market economy and the crux is the reform of state-owned enterprises (SOEs) with a view to establishing a modern enterprise system. At the end of last year, the Chinese Communist Party, at the Fourth Plenary Session of its 15th Central Committee, adopted a decision specifically on the reform and development of SOEs, according to which the SOE reform shall focus on readjusting the layout of the state-owned sector that is currently over-stretched and irrational in allocation of resources. The state-owned sector shall thus mainly cover industries bearing on the national security, industries of natural monopoly, and those providing public goods and service as well as backbone enterprises in pillar and high-tech industries. As for other industries and sectors, they shall undergo capital reorganization and structural readjustment to become well focused. This will improve the overall quality and efficiency of the state-owned economy so that it can better play a leading role in the national economy. At the same time, the SOEs shall, in accordance with the requirement of "a clear definition of ownership, clear-cut rights and responsibilities, separation of government functions from those of enterprises and scientific management", conduct reform in diversification of equity rights, assets management, regulation and supervision system as well as internal management mechanism and become legal entities and players in the market place that are independent in management and solely responsible for their profits or losses. We will attach greater importance to the establishment and improvement of a social security network and create conditions for a network suited to China, a network that operates independently from enterprises, enjoy diversified funding channels and is commercially based in management and services. Meanwhile, we will further the reform in the financial, fiscal, investment and foreign trade systems in an orderly manner as required by a socialist market economy.

After twenty years' efforts, an all-dimensional, multi-layered, wide-ranging pattern of opening-up has by and large come into being in China and substantial progress has been made in utilizing foreign capital and conducting foreign trade and economic cooperation. China's trade volume now ranks the tenth largest in the world. We are glad to note that the pace of China's accession to the World Trade Organization (WTO) is being expedited with the signing of the China-U.S. bilateral agreement on 15 November last year. The membership in WTO for China, a major developing country, serves the universality of the organization and the development of world economy and trade. It is also conducive to the further opening-up and economic development in China. After joining WTO, China will undertake due obligations while enjoying its rights. We will continue to lower the overall level of tariffs, encourage import of advanced technology and key equipment, speed up the opening of the infrastructure sectors including energy, transportation, telecommunications and environmental protection, and provide more opportunities to foreign investors in the financial, insurance, telecommunications, tourism, retail, foreign trade, legal advice and other services. Foreign investors will be invited to participate, in various forms, in the SOE reorganization and upgrading. Services to foreign-funded enterprises will be improved and the review and approval procedures will be simplified for foreign investment. Further efforts will be made to provide national treatment to foreign-funded enterprises, and to protect intellectual property with a view to creating a better soft environment for foreign investors.

Ladies and Gentlemen,

China is embracing the new century with full confidence. In the coming decade, China will continue its large-scale modernization drive. The economy is projected to grow by around 7%, fixed asset investment by 10% annually, and the import will exceed US$2,000 billion in the coming decade. The potential market in China is vast and is expanding rapidly. The enormous business opportunities belong not only to Chinese entrepreneurs but also those foreign businessmen with courage, vision and commitment to invest in China. The year 2000 is the Year of Dragon in China. Dragon, a symbol of prosperity and good fortune, augurs well at the beginning of a new millennium. We sincerely hope foreign investors will seize the good opportunity and come to China to invest, do business or simply as a tourist. I wish you every success and booming business in China.

Thank you.