 Good morning everyone. I'm honored to be one of the speakers at this very high profile seminar, but my understanding as a first speaker I probably would intend to set up this background for the main topics of Chinese investment into Europe. So my topic really is about an overview of Chinese economy and it's important for the Europe. Naturally this come up like two parts. Part one would be an overview of Chinese economy. So I will briefly tell you where China from in terms of economic power and what is the current position in the world or where China is heading to, then the current problems with Chinese economy. Secondly, how China will become an important kind of a player in terms of European economic development, especially in the EU. So that come on the three aspects. One is trade, another is FDI or China Direct Investment in Europe, and the third one would be a sovereign debt crisis currently in the Eurozone. Okay, you know Chinese people and Irish people, we share this long history. We all claim we have five thousand years history, right? I heard Irish people have good memory. So you do Chinese. We have good memories. So we think about the world or situation in millennia, millennials rather than decades. It's not like a young country like United States, right? So let's turn the clock back 600 years. That was in the Ming dynasty, in the early like 15 centuries. So you would find this map was drawn in the Emperor of Ming Ler, so that is roughly 1418. So probably was the first accurate map in the world, right? It's earlier than Colombo. We have a historical figure called Zheng He who actually spent 30 years of voyage across the world. So that's the map. Okay, from this map, this map really is not that different from the current nowadays map from China. The key issue is Chinese people's perception of China is Zhong Guo. That's the Chinese two characters. Zhong means middle, Guo means kingdom. So their perception of China is the center of the world, right? So this is the map. We're from Ming dynasty, okay, not trace back millennium, only 600 or 500 years. Okay, let's look at, let's trace back 500 years. Then you know where China is from in terms of economic power. Okay, from this early 19th century back for many hundred years or even millennium, you know, China was always the dominant economic power in the world. You know, up until like early 19th century, China produced one-third of world products, right? What happened after middle of 19th century? So I guess every one of you, of you we are in history, we fought against the same kind of enemy like an open war in China. Then after, if you look at here, before middle of 19th century, there are three big blocks, red is China, amber is India, this is Western Europe. Then along with like industrial revolution in Western Europe, then China really left behind. And although in my history, the British people tried to open a China store to do the trade, send the first trade mission to China, ignored by Chen Nong, emperor, all together. Then they used the citizenship, opened the Chinese store. And the open war started there. After the open war, really China was invaded many times by foreigners and got into a civil war. The who almost first half of the 19th century, 19th century. China eventually had this second world war, then following by the four years civil war between nationalism and the communists, won the war. So the new China, the communists came into power in 1949. So if you look at, this is where 1949, when the communists came into power. So the share of world GDP become shrink to like 5% right? Then on the Morse era, you know, followed former civil union style of economic development. Then 30 years up until end of 70s, there was no change, almost keep like 5% of the share of GDP. Then start from end of 70s, launched by Deng Xiaoping, this economic reform and the open door policy. Another, let's say 30 years from 5% of world GDP up now, according to Madison's calculation, it's almost 15, 16% of the share of GDP. So this chart would tell us, okay, China now is really regaining its predominant position in terms of world economic power. Right? Oh yes. Okay. That was the story where China is from. Now, what's the position of China in the world economy? So there are four indicators would tell you where's China now, and I would say, okay, some prospect for China's future development. Okay, let's quickly go through. I see columnist, you can't get away with figures. You know, Taiwan, although it's boring, but you have to. Okay, China now, number two in the world in terms of GDP, total GDP, either in PPP term or in nominal term. So that was last year's figure from IMF. So next one, then China is the second, ranked second in the world. Is China the rich country? No. No. China is the first kind of poor superpower in the contemporary history. That means China is rich country with full of poor people. So that's China's reality. Right? So in terms of per capita GDP, China still left behind more than 90 countries in the world. Okay, international trade. China now, like in 2010, became number one world exporter. But in terms of total volume, it's number two, you know, just slightly after the United States. I'm probably a stranger. Okay. Another indicator, FDI. Oh, some strange symbols, but anyway, forget it. So this is in terms of billions of US dollars. In 2010, the first time the FDI influence to China, over like 100 billion US dollars. Increase starting from the early 90s. Foreign reserves. That's some people blame China. You know, you save too much. Right? So then you pump back to the United States and get the United States got into current trouble. So well, my argument, you know, my wife couldn't complain me saved too much for her to spend or overspend. So anyway, here you talk about foreign reserve. Actually by the end of the first quarter of this year, the foreign reserve now reached 3 trillion. That is a huge bomb there. No, if you got it wrong. Okay. What's China in a global crisis? Right? First of all, I have to say, before this financial crisis actually broke up, China really was not intentionally in a very good position to deal with the financial crisis. For instance, at that stage, China already got 2 trillion foreign reserve in hand and the 30 billion like trade surplus. And the currency ran really on the value. So all those conditions, it's good for China to deal with this financial crisis suddenly broke up. Then China's financial system broke up. Especially banking system. The Chinese government for a few years like to inject heavily into those big falls and other banks. For instance, like 100 billion US dollars actually injected into the banking system to get away those bad loans in the early 2008 before the lemon collapse. And also like big bank, for instance, the agriculture bank got like 50 billion US dollars injection. And China development bank got like 30 billion. So all this heavily kept injection into the financial system make them in a very healthy kind of state. Probably that the most important thing is that the Chinese financial system is still kind of quite isolated from the world. For the one reason, because China's currency is not convertible. So that means it's created a kind of firewall from financial contagion. So that's the condition when this financial crisis actually broke up. Then what China's response to this crisis basically like monetary policy and also fiscal policy. I think China reacted quickly and effectively. So in terms of monetary policy from September of 2008 to December 2008, interest rate was cut like five times. Before then, six years is no change in order to respond to this financial crisis. Then most influential package announced in November 2008 that is a stimulus package. So stimulus package I think now we look back is very, very effective although there's some side effects. But anyway, it worked that actually invest into a different sectors in the Chinese economy. I don't have time to go through details. But if you look at this table, that shows you, okay, response from China to the financial crisis worked and the measure was effective. If you look at last four years in terms of GDP growth rate, China probably is the only major economy left with this impressive kind of growth almost close to double digit growth. This year, first half of 2011, GDP growth rate was like by 9.6% against another. Okay, that was the current position. Where's China's economy heading to? Economy always wants to do some forecasts to impress people, to impress others. Then this is a simple exercise. Really we use only like 1980 to 2005, this kind of 25 years average growth for three countries, US, Japan and China. So China is a black line, US is kind of blue, then Japan is a pink one. That tells the story, okay, China was surpassed United States in the 2030 something and overtake Japan in 2020. But if you look at the GDP, like the table previously, China already surpassed Japan last year. So that's almost eight years earlier than this prediction. This is a quite conservative one, use extrapolating. But this one is the latest IMF forecast. That means in terms of purchasing power parity, that means in real term, so in five years China would overtake the United States become the number one economy in terms of total GDP. World Bank, a recent publication said, okay, in terms of nominal kind of use the market exchange rate, then China should overtake United States in 2030. So there are different versions of projections. But I'm the economist. That's only to tell you that trend, the track. Really the forecast is the earth obtaining people what will happen in the future, then explain why it didn't. That's the forecast. Okay, China now is facing challenges and problems with its economy. How China can be a sustainable over the next 30 years. You know, the past past is not reliable and useful anymore. So we have probably a structural problem, safe too much, like rely on the export and also a fixed asset. It's really as a two-third of GDP growth. That's too much. Then the inflation currently like over 60, over 6% like the first half of this year, the hot money getting to China, the problem full of problems. Like if you look at, you know, up till now we only look at GDP. That GDP only tell you quantitative things, but not qualitative things, right? Like social welfare, social cost of GDP growth and that. Not a problem in China. But I think a fundamental problem is the model. If Chinese model is right, then there shouldn't be a problem for China to keep on rising. But my understanding of the model here, okay, different from Mao's era or even Deng Xiaoping's age, you know, it's more or less kind of dictatorship style, right? One man's decision. But now China got this powerful standing committee of Poly Bureau. Nine people. Nobody actually above anybody else. It's almost a collective decision for the big issues and the policy. So if you like, you can get collective dictatorship or something like that. Okay. Nine members of the head. This little man's shoes. Okay. In the right hand, it's kind of still a planning element in government intervention, right? It's a visible head. You could see it. Everybody sometimes would blame, you know, China is not real market economy. But left-hand China downloads really a western market economy. Yes. All the essential efficiency, all the good things you know, China learned and learned quickly from the western. So this invisible hand. Then we have these SOEs, state-owned enterprises. Then we have this lung. So the two legs and the two hands working together is better than one or half of the body. So that's the model. Whether it's model, okay, it's still debatable, debatable whether the model would be a kind of become consensus or Beijing consensus. Okay. The importance to, for the EU, the EU, okay, first of all in trade. China is now the second largest trading partner of the EU, apart from after the United States. And also, EU is the biggest kind of trading partner of China, wasted so much time. I don't think I have details, but this chart will tell you China and the EU are trading over one billion a day. You know, the total. This figure will tell us. So FDI, okay, although the inward investment from China to the EU is still very small, only kind of one-fifth of other direction, but it's increased very fast, three times if you compare with 2010 and the 2009. Well, some of the bonds, I don't think I go too much. I would tell you that starting from last year, so many senior officials from China visited Europe. That's what they are doing. They're trying. You know, tell you what, Spain now, China is now held like 12% of Spanish kind of government debt, right? So many occasions China actually invested in a bond. And the reason why really is not for trade, because PICS economy altogether only count 3.5% of total exports of China. So really to diversify is a foreign reserve. At the moment, it's in a dangerous position. China really hold like a trillion US dollars of US Treasury bills. And with American people just print more green papers, you know, China is losing money every day. So that's not wise. So diversify is a foreign reserve. It's the main purpose. Well, the Irish case, I don't think we can discuss this after probably session. My time is limited, but my observation is there's not much activity is going on between Ireland and China. It should be. The only economy left is the Irish economy. Now China hasn't been closely or actively involved. So you need all these activities, you know, to set up a dialogue mechanism. Okay, in conclusion, in conclusion. Nowadays, you know, this because of China's rising in terms of economic power, now really is reflect by the calling of the new language. For instance, Professor Newell Ferguson from Harvard created this word called China America, right, the bilateral relations between America and China. Then the others created China and India. So I created one word, China and Europe. So bilateral relations between Europe and China, I would conclude, you know, China and the EU each become part of their solution of the other's challenges. So in other words, you know, China cannot continue her rise without the EU and the EU's future development needs China. Thank you. Thank you for your attention.