By the Deputy Prime Minister,UK
I have a great interest in China. It is a fascinating and beautiful country,
I have visited China almost every year since the Labour Government came to power in 1997. And I have met many of your senior politicians including President Hu Jintao——who I have had the pleasure of meeting in both London and Beijing.
Of course it is right that the UK sets great store by its relationship with China. China is: a rapidly developing global power, a Permanent Member of the UN Security Council, and a member of the WTO.
According to Chinese government statistics, its economy grew by nearly 10% year on year during the first quarter of this year—making it the world's fastest growing economy. This builds on over two decades of double-digit growth. No other country I received more Foreign Direct Investment last year. Some forecasters even predict that China could be the second largest economy in the world by 2030. Crucially that will mean keeping up the momentum of structural economic reform.
This conference is about facing the future- The inventor Charles Kettering said, "My interest is in the future because I am going to spend the rest of my life there." When we look at what the future holds for China, it is difficult to make any hard and fast predictions.
The unpredictability of events is shown for example by the present crisis of Severe Acute Respiratory Syndrome- Economists have forecast that SARS will knock between 0.5% and 2% off economic growth in China this year, but even taking the worst-case scenario, this would still mean growth of 5%.
Even that level of growth, however, leaves huge challenges for China's economic and social development China Faces serions deflationary pressures. It has to reform ailing state-owned industries. It faces challenges in the financial sector to reduce the high level of bad debt.
The problems of rural-urban migration and the closure of state industries mean that China has to create some 100-200 million new jobs over the next 10 years.
There is a growing gap between rural and urban incomes, which are now wider than at any time in China's recent history.
And there is also a wealth gap between the rich urban seaboard and the poor agricultural west. All of these are huge challenges.
And the challenges are not just economic. There are political and social challenges too, China's political system will need to adapt to reflect the dramatic economic and social developments that China has experienced over the last two decades.
The risks and challenges associated with China's growth have a regional and wider international impact China's Asian neighbours are already feeling the impact of a highly competitive China on their own trade and investment flows.
The UK wishes to work with China to ensure that its economic growth is sustainable. Sustainable growth is the aim of our economic policies at home.
We have seen the longest period of sustained low and stable inflation since the 1960s. Interest rates, at 3.75%, are at their lowest levels since 1955.