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President Vladimir Putin:

Dear President Hu Jintao,

Dear Friends,

Your forum marks the start of the Year of Russia in China’s business programme. I am therefore especially happy to greet all the members of our countries’ business communities present today in this hall.

Russia and China are one of the leading driving forces of global economic growth today. We are pursuing similar goals of modernisation and raising living standards for our peoples.

In both our countries, effectively increasing our economic power requires us to make full and effective use of the potential our bilateral ties offer. We need to take our ties to a new level that matches the energetic growth of the Russian and Chinese economies.

Moreover, our business partnership plays a large part in the successful development of the Asia-Pacific Region, which today is one of the main centres of the global economic balance, and we are all equally interested in this region’s rapid growth.

It is these objectives that should define our approach to deepening the cooperation between our two countries, and that should be at the foundation of new projects and initiatives.

Dear friends,

Our countries have made great progress in developing a business partnership over recent years. Above all, I note the considerable increase in our bilateral trade. President Hu Jintao and I discussed this already. We set the goal less than three years ago of increasing our bilateral trade to $20 billion. Last year, as you just heard, our trade reached a figure of $29 billion.

Our investment cooperation is also expanding rapidly. Hundreds of Chinese investment projects are now underway in Russia and another couple of dozen projects for a total of more than $2 billion are in the process of preparation.

Russian investment in China has also become more active and now totals more than $500 million.

Our cooperation in the energy sector is increasing all the time. Russia delivered more than 8 million tons of oil to the People’s Republic of China in 2005. Our country is now China’s fifth-biggest supplier of oil.

The decision has been taken in the Russian Federation to build a pipeline system from Eastern Siberia to the Pacific coast. Transneft and the Chinese National Petroleum Corporation have signed a protocol on a feasibility study and on the construction of a branch pipeline that would connect this system to China. If this project goes ahead, and I have no doubt that it will, it will considerably increase deliveries of Russian oil to China.

The agreements signed during this visit between Rosneft, the Chinese National Petroleum Corporation and the Chinese Development Bank will also boost cooperation in this area.

Cooperation in the gas sector is another very promising area for our work together. Gazprom and the Chinese National Petroleum Corporation signed the relevant agreements yesterday as part of the strategic cooperation process. Various options are currently being examined for the construction of a gas pipeline that would connect our two countries. We are looking at two pipeline systems – one from Eastern Siberia and one from Western Siberia.

We have made considerable achievements in our relations, but we must also recognise that we also have many serious problems that need addressing.

Foremost among these is the negative change in the structure of our bilateral trade and the raw materials bias of Russian exports to China. I spoke yesterday with my colleague about this matter. Exports of Russian machinery and equipment almost halved in 2005, meanwhile, imports of similar goods from China to Russia saw a noticeable increase.

This trade structure makes us very dependent on price fluctuations on the raw materials markets and creates potential instability for our bilateral trade. In order to protect ourselves from this danger we need to improve the structure of our trade flows and develop cooperation in the technology and manufacturing sectors. Mr Hu Jintao spoke about China’s large-scale plans to buy goods on foreign markets, and I very much hope that Russian companies will be involved in these plans.

In order to resolve this issue we must draw on the immense cooperation potential that we still have in reserve and that we have not been making sufficient use of. This goes above all for the production of high-technology goods.

To name a few, they include nuclear energy, environmental protection and medicine, space research and the civil aviation industry. It is also very important to develop agri-business cooperation and pursue more rational development of marine bio-resources.

We need to make greater use of the possibilities offered by the special economic zones being established in Russia in the aim of priority development of advanced technology. A law on these zones has already been adopted in Russia and we hope that they will give our Chinese partners additional opportunities for work on our market. I am pleased that Mr Hu Jintao also made this point. A special memorandum has been signed by the relevant government agencies in our countries in order to pursue practical cooperation in this area.

The improvement of transport routes in the Far East and their integration into the transport network of the Asia-Pacific Region is another important issue. Particularly important in this respect is effective use of the potential offered by the Trans-Siberian Railway, which is one of the shortest routes from Asia to Europe. To this aim we have signed, during this visit, an agreement on the mutual use of large-tonnage containers for the transport of export and import goods and on the introduction of electronic exchange of data on international cargoes.

Establishing a well-oiled mechanism for cooperation in the financial sector is a prerequisite for successful cooperation. This mechanism should focus both on supporting joint projects carried out by major Russian and Chinese companies and on those carried out by small and medium-sized companies. I think that the Russian and Chinese banking systems are now in a situation that entirely justifies raising this issue, as can be seen yesterday in the example of the credit agreement signed between Vneshtorgbank and the Export-Import Bank of China.

Trade in services – communications and telecommunications services – and tourism, of course, are also all areas with great potential.

We are providing the required support to a project that aims at broadcasting a television signal via satellite from China to Russia. In this context we can note the memorandum of cooperation and the agreement on providing international communications services signed by major Russian and Chinese companies during this visit.

We place importance on developing tourism, which, as I said, opens up new opportunities for contact between our citizens.

With our national economies and our ties growing at a rapid pace, education services, above all the training of highly qualified specialists, is becoming increasingly important.

Russia and China have each sent 200 students, graduate students and scientific and teaching staff to do internships in each other’s higher education establishments. Overall, there are 13,000 Chinese citizens studying in Russia. Many education establishments in both our countries have set up centres for studying the Chinese and Russian languages. We plan to expand these exchanges, including by setting up joint universities and post-graduate study programmes. We are also examining the issue of organising a Russian-Chinese scholarship fund.

The expansion of our bilateral cooperation and our economic development priorities also require new approaches to ties between our regions.

Direct contacts have already become a defining factor in socio-economic development for some parts of Russia and China. My meeting with the heads of China’s northwest provinces in October 2004 and President Hu Jintao’s meeting with the heads of Russia’s Siberian regions in July 2005 confirmed yet again the importance and potential of this area of our cooperation.

More than 60 Russian regions are today involved in business ties with the People’s Republic of China. Russia’s central and southern regions have shown increasing activeness in developing ties with China of late and China’s southern Guangdong Province has been seeking to expand its presence on the Russian market. It is important that more and more Russian regions become drawn into this process, including regions in the Caucasus. The first agreement on investment cooperation with the Republic of Chechnya was signed during this visit.

These kinds of exchanges are only set to grow in the long term. It is important for us now to establish close coordination of state regional development programmes. This concerns above all the traditional partners – the Russian Far East and Siberia, and also China’s industrial centres in the northeast and its western regions.

The success of cooperation between our regions also depends on developing the necessary infrastructure. This includes the creation of trading centres in border areas, border checkpoints and bridge crossings. We will welcome any real contribution to this development both from Russian and Chinese entrepreneurs.

Dear friends,

Continued growth of our national economies and intensification of our business partnership are possible only with the active help of both the Russian and Chinese business communities. This is why it is so important that business organisations cooperate and closely coordinate their work. The Russian-Chinese Business Council, the Russian Chamber of Commerce and Industry and the Russian Union of Industrialists and Entrepreneurs are all involved in this work on the Russian side.

I am sure that your forum will provide the opportunity to strengthen the contacts and the trust between the business communities of our countries, find new areas and forms of cooperation and conclude new, beneficial contracts and deals.

We look to you for concrete proposals, expert recommendations and new initiatives, and for our part we are ready to help in their effective realisation.

I wish the Russian-Chinese Business Communities’ Economic Forum productive work and a fruitful and friendly business dialogue.

Thank you for your attention.