Minnesota meeting is delighted to present today's speaker The Honorable wrong irem. Who will talk today on China's changing economy? new opportunities for American Business chairman wrong will discuss the changes transforming China and the growing opportunities for American Business. As well as the Vanguard role of the China international trust and Investment corporation or citic as we call it. The role that city is playing in implementing dung xiaoping's open policy by incorporating capitalist methods into China's Economic Development. Mr. Wrong is Chairman of siddik, which was established in 1979 for the purpose of introducing foreign capital and advanced technology into China as part of mr. Dongs modernization program. Since the establishment of the People's Republic in 1949 chairman wrong has served as the vice mayor of Shanghai. the vice minister of the ministry of textiles and the executive director of the Bank of China. At the present time he also serves as the vice chairman of the standing committee of the national people's Congress. China's legislative body. Chairman wrong and his distinguished delegation are here at the invitation of Governor Rudy perpich and as guests of the Minnesota trade office. Following chairman wrongs presentation he will address questions from you the audience. Stephen Young attorney with Winthrop and Weinstein and former dean of the Hamlin School of Law. Will move among you to manage the question and answer session. Ladies and gentlemen, it is now my great honor to present to you the honorable wrong, Aaron. The moment he is a man. Perseus Asia enjoy she even down the Baja so you know healthy young woman. Like you said, he's good situation for what it isn't ladies and gentlemen, I can speak some English, but I do not speak the language well enough so as our chairman of the board of City for our subsidiary and west coast to translate for me. I think I'll start off by if you you my speech perhaps only the for the first two paragraphs and let mr. Yahweh to do the rest the purpose of which is to save more time so that we would have a good discussion and exchange of views and I apologize for this. So Celia songs in Kashi. So first of all, I'd like to express my sincere thanks to our host for their hospitality and meticulous arrangement for our visit which has made possible for me to know so many friends and the business community. Here I have visited your country many times. But this is my very first time in Minnesota or Land of 10,000 lakes. You might have known that in addition to my political and social activities at home. I have long been involved in Chinese economic and technological exchanges and cooperation with other parts of the world. I therefore would like to Avail myself of this opportunity to give you a brief account in this regard and especially of China international trust Investment corporation Holdings of which I am the chairman so easy it will come as soon as China itself from a state of chaos and seclusion. She shifted her emphasis of work to economic construction, which was followed immediately by the Shouldn't of revitalizing her domestic economy and opening the nation to the rest of the world as well as a series of reforms geared to economic and political restructuring. Ever since then China's economy as with this is sustained steady and coordinated development against this background China international trust Investment corporation or city was established. It served both as a window on China's open policy devoting itself to the promotion of Sino foreign economic and technological cooperation as well as a test case for China's economic restructuring. Over the past nine years citic in accordance with this goal and guideline as been following International methods and practices to explore and develop businesses in the field of production technology Finance trade and services. Firstly to cater to the needs of Chinese economic construction great efforts have been made to induce foreign capital and invest money in manufacturing Enterprises to increase their production capacity and sharpened their Competitive Edge on domestic and international market. To cooperate with foreign investors is one of our priorities. By the end of last June city has organized 75 Chinese foreign joint ventures and Cooperative Enterprises. Most of which are industrial projects as an organizer and investor siddik in line with the principle of equality and mutual benefits takes the initiative to coordinate internal relations of these Enterprises help solve external difficulties of various descriptions to create opportunities of profit making On the other hand are Corporation entered into the world Capital Market to raise fund to set up either solely owned Enterprises at home or joint ventures with domestic partners. It had set up 147 such Enterprises by the end of June this year geographically speaking. Our investment is focused on China's coastal areas and in terms of business. Any terms of business lines the provide the priority is given to light and heavy Industries energy and transportation some of the products from City invested Enterprises as met the Urgent needs of the nation and still others are exported to generate hard currency in addition citic as play the role of a bridge as well as a Matchmaker between domestic Enterprises and their foreign counterparts. Secondly city has taken the two-pronged approach to catch up with science and technology revolution of the world and promote domestic advancement on the one hand. It has actively introduced Advanced and applicable Technologies into China and on the other hand. It has painstakingly promoted technical development that home and put research results into practical use By way of Leasing and Technical transfer it helps with a technical modification of some home Enterprises side-by-side with setting up a number of advanced high-tech Enterprises. Moreover it has been active in marketing. China's Advanced Technologies internationally for instance City tech one of our subsidiaries established last year, which is mainly engaged in the development and Import and Export of new technologies has become the sole export agent for Karthik automated real instrument, which has awarded a group of gold medal. at the Geneva International invention exhibition Thirdly, we've been devoted to finance business and promoting structural reforms in the Financial Field. Siddik took the lead in entering International Financial Market becoming new China's first institution that issued bonds overseas up to now, we have floated 13 Bond issues in different foreign currencies. Additionally, we have borrowed money from International financial institutions and absorbed foreign currency deposits through various kinds of channels. Most of the funds raised is meant to domestic clients whose business is promising and repayment repayment capability reliable. Are wholly owned subsidiary citic Industrial Bank is engaged in savings and deposits of Chinese and foreign currencies trade and non trade settlement as well as Securities Trading. The bank is in the process of expanding business blinds and take part in international Syndicate Loan in line with banking practices in the world. To support the economic development along China's codes. The bank has opened Branch offices in Shanghai Shenzhen and Darian and similar efforts will be followed in other coastal cities. Our Corporation injected Capital Chairs into the Cobra Bank in Hong Kong last year making it another Financial arm of City Coatings to complement and coordinate with acidic Industrial Bank. We have initiated leasing business in China, which has become an important part of a financial activities. It has integrated trust activities with trade and this has proved to be a big success. Fourthly efforts have been made to develop foreign trade following the principle of strictly abiding by contracts and maintain a good reputation city has expanded trade without a stop at the initial stage this Corporation only concentrated on important exporting products equipment and Technologies of those Enterprises, which it had invested in or helped with financing city is now conducting full-fledged trade including processing with supplied materials designs and samples compensation compensation trade. Also play the role of agent and trade related Consulting Services. In order to expand trade in an organized way. We have set up citic training Corp Incorporated another wholly owned subsidiary of Citigroup besides Civic development in corporate Incorporated, which is mainly engaged in investment as carried out trading activities as well. Fifthly efforts have also been made to provide services aiming at helping foreign friends with the economic cooperate with the economic cooperation in China. Citic was among China's first under to undertake real estate business and has built office apartment buildings residential quarters hotels and restaurants in the capital of Beijing and other cities with foreign business people working in China. The year before last saw the establishment of City real estate Inc. To develop commercial housing business in order to provide foreign clients with economic consulting services with also formed China's first consulting company China international economic Consultants Inc, which was officially recognized by the World Bank and undp it provides a broad range of services including studies of credit and market research assessment and evaluation and feasibility studies. Affiliated to it is a CNC law office, which actively provides Legal Services concerning contracts and Articles of Incorporation and also acts as an agent in District in litigation. Another one city accounting firm Which is less than one year old is highly praised for his services in the field of capital examination, accounting and plan screening. Employing the group's unique advantages of why what why contacts with Enterprises overseas? We also found that siddik travel ink which serves foreign friends in business discussion and sightseeing through business travel. With his eyes and World business citic has been exploring possible opportunities to carry out overseas investment actively and cautiously subsidiaries have been established in the United States, Canada and Australia beating with Timber hope steel and aluminum, respectively. In the states, we have a wholly-owned company by the name of City for to deal with the timber business. Not long ago. We bought a steel mill in a state of Delaware. In some other countries, we have also set up Industrial and Commercial Enterprises in Hong Kong. We have started real estate banking manufacturing and shipping businesses. We also took part in financing and investing in the second cross Harbor tunnel and purchase part of Cathay Airways shares. Last year witnessed the establishment of City Hong Kong Holdings in charge of our operations in that region. When to we plan to expand overseas business in the future and our aim is to turn the corporation into a new socialist transnational Corporation in operations with we attach importance to a strengthening ties and cooperation with different localities at present. We have established Regional subsidiaries in Shenzhen Shanghai changing and involved. We have also taken over a defense-related manufacturing plant. We just now being transformed into a producer of machinery and electrical appliances products. Complemented by Enterprises with Citrix direct investment and other corporations having close ties with Cedric. It has been already become a multi-level industrial and comprehensive Group International in nature. in order in order to enhance Mutual understanding through increasing contacts with business communities both at home and abroad we are range Mutual visits for Enterprises and financial communities in addition to organize economic symposiums and seminars to discuss and promote economic cooperation. Our achievements in this short period are principally attributed to political stability and unity at home. And the correct open policy of revitalizing is is economy. It has created a favorable climate for economic cooperation with other nations. China is known for its abundant cheap and skilled labor force and potential markets. Furthermore our legal system related to economic relations with foreign countries as initially being formed which guarantees foreign clients client interests in China. The 22 article provision promulgated by the state Council to encourage foreign investment has raised the interest of overseas investors and heightened their sense of security. Since 1979 till the end of June this year 1200 161 Enterprises using foreign funds were approved by our government. With direct foreign investment amounting to 20 billion US dollars or more a new investment agreements involving a volume of 2.21 billion u.s. Dollars were signed and the first half of this year. to point-to-point 21 billion China's open Coastal front line consists of special economic zones Coastal Open Cities and economic development regions as advanced export-oriented economy and gradually pushed up the volume of Import and Export at the same time. We're clearly aware. The Chinese investment environment needs to be further improved and efforts are being made to combat bureaucracy to simplify procedures and to raise work efficiency. What engine and the race work efficiency? In the meantime, we are adopting the legal measures to ensure self autonomy of Enterprises with foreign investments the first plenary session of the seventh National people's Congress convened this year amended our constitution to clearly stipulate the role and states are the private sector in China's economy. The Congress also promulgated the law of the People's Republic of China on Chinese foreign contractual joint ventures. The Chinese government has formulated an economic development strategy of coastal areas that will further speed up the opening up of the country. Only, you know, we will adopt more flexible policies to ensure that foreign business people in China can do business in line with International practices ensure the introduction of advanced managerial methods from developed Nations, and the development of an export-oriented economy emphasizing the manufacturing of products for the international market. We welcome foreign intrapreneurs to come to China for cooperation and whatever forms suitable to both sides including equity and contractual joint ventures and solely foreign own projects. Reform and open policy. These are China's fundamental State policy, which has brought New Life to China's Economic Development and gradually improve the people's livelihood and therefore wins the hearts of the old people and can never be reversed by anyone and by any Force In the future China will place reform in the center of all its work and carry out more in-depth reforms open The Wider is door and iron are iron out difficult problems in the process of reforms and develop a socialist commodity economy. By year 1992 we plan to increase GNP up to one thousand five hundred and fifty billion yuan marking an average annual increase rate of about 7.5% All these have open up a broader Prospect for Chinese economic cooperation with other countries and for further cooperation between City and as foreign friends. Friends, the world economy is experiencing a profound structural adjustment all nations in the world developed or developing are facing the same problem of further development through taking correct decisions the future Economic Development depends on what all nations would carry out competition through mutual cooperation and draw on each other's strong points and to make up for their weak points. Therefore such a development depends on to a large extent cooperation between the developing and developed Nations. As a developed country, the United States is rich in natural resources funds sophisticated science and technology and modern managerial skills as a developing country. China has abundant Human Resources, including Technical and labor forces as well as a huge Market plus certain natural resources ever since the establishment of cyanol us diplomatic ties, the relationship between the two countries are basically stable and considerable success of cooperation have been made in various fields. At present more than 400 contracts have been signed by the US and China including those on oil exploration and compensation trade the total amount of direct us investment in China outstripped that of all other countries the total import export volume of the two countries jumped from less than 1 billion US Dollars before the establishment of diplomatic relations to last year's seven-point-eight billion. The area of cooperation ranges from oil exploration coal industry civil aviation machine-building meters and instruments food Agriculture and animal husbandry to science technology and services many more new areas are to be tapped. Therefore as long as we both adopt sincere attitudes and Carry Out cooperation in various forms based on the principle of equality and mutual benefit to further develop friendly relations. The prospect of bilateral cooperation is Broad and bright such a prospect will push ahead you sign all US economic development and also benefits the steady progress of world economy promote International friendship and help maintain world peace in this regard. I like to work together with you with you all and contribute my share see that out. Thank you. Thank you very much, mr. Wrong and Welcome again to members of our radio audience listening to a Minnesota meeting with mr. Wrong Aaron one of the individuals who've had a particularly important role in making the courageous sometimes controversial decisions for economic reform in China at this point. We'd like to take questions from the audience Jane mrazek executive director of Minnesota meeting will assist those of you who have a question or a comment for mr. Wrong. Maybe you could just raise your hands and we'll come by with the microphone so we can come to you and he can respond to your questions. Just waiting for someone. Think back here. Yes, mr. Hips. What type of foreign investments are you looking for outside of China? Woman woman in doing investment overseas. There are two primary things that we have to take into consideration. What of course is the needs of our country and number two the market situation abroad woman's if I want you to quit As a corporation we have to think whether of course it is profitable. We have to invest in projects that will be possible profitable at the same time. We also estate Corporation wherefore also be responsible to the knees and hold that responsibility in the Investments abroad. Thank you very much. Mr. Richard. You just returned from a trip to China with mayor Latimer of st. Paul. I've got a question for mr. Wrong. We heard quite a bit over there about China's inflation and the methods being used to counteract it. And I wonder if there will be an adverse effect as a result of the inflation and the efforts to stem it on existing projects. Let alone future projects in China. It's real Wilkinson what we like in different ways using the other two of them down eat, so it's high. Should we fool to have come down the so sure and indeed you can Society the so she is e-easy Duncan the 218 whole user machines value, which is 3 y equal to voltage we can use my income was a hit as a whole anxiety. You try engaged in what they do. For the question of inflation. I think there is one aspect which I feel is it inevitable for any developing country to have some sort of inflation is something which one cannot avoid because they're in the process of being developed in like some enthusiastic. The of the inflation is caused by our change from a product economy to that of a commodity economy. And in this process of change, we have to prices existing at the same time. So some people would utilized and take advantage of the differences of two prizes and go into unhealthy practices and by unhealthy practices, I mean speculation and hoarding, that's it for me. And of course, we would not tolerate that so it woman's is a good woman. She is That's why we are adopting the legal measures strictly control and either either take care of it altogether or limit that to the small extent the answer those two women see I think the reason we do this is for the aim of developing our economy and economic construction and the more healthy state from the other workers union. They wonder that they work are constants and so in doing so we also are forming a much better investment environment for our foreign friends want to come You're trying to invest and also be conducive to the open policy as a whole. I think we couldn't talk. Well question each other really that simple little and I'm sure the result would be more foreign friends would like to invest in China. Thank you. I think we have a question over there Jane. Mr. Chairman. Am I correct that the emphasis of citic is more on getting foreign capital and foreign know how to establish businesses within China than on helping foreign companies to import their products into China. Take it easy, super Tuesday that the acidic the mood here. Are you sure can't do that. She's seen why is she in? Why would you go totally job thought room what you told her Bush shot young they all bounced away. Whoever wins the bottom the chanting through coding go. She doesn't use a woman interested in drawing in economic cooperation and technological exchange. There is a division of work. So to say between this and purely trade Import and Export trade. And that is a division of work between the ministry of foreign trade and economy. And if we don't have this there is some difference between us and Mulford. But again, there are many things we have in common. We're doing the same work in many fields. Thank you very much a question for mr. Porter you emphasize that siddik was spending a great deal of its effort in coastal in coastal provinces. I wondered what your activities if any are in the interior and specifically in Hunan Province what types of projects you might be involved in there. So in the Phi n or Judo acidic to you yet High dignified and 493306438102, which is the whole nation. Woman named nearly 21 million Sweta some woman. We also pay attention to Interior prophecies. And for the example of Hunan we have several projects there. They are who not has a goatee halogen Hunan as a province is very rich in natural resources. And they're in this area. There are many things to be done in the future. Thank you a question for mr. Dean. Mr. Chairman is citic now providing or planning to provide Venture Capital to the new private sector Enterprises such as the stone computer company City excluding a function. Whose ruins I d-- Shanks a barrage of woman that woman. Our priority is to give you consideration to those projects which siddik as the part. There is a woman don't work for those entities that Civic does not have a part in but they still are interested in in funding. They can come to siddik Industrial Bank for for discussions. Thank you a question for mr. Lowe. In the future, you think that the Chinese government will illuminate the to currency system foreign currency foreign exchange certificate and the Renminbi and also you think in the future near future Chinese government will with the evaluate the Renminbi again young wouldn't he be really too much room for sure full Queen TV shows what they are doing for V-22 white region. They are going Tina too much enforcer for which is shh children in the accident in Tianjin. How many kings? I have not heard of any specific comments on that year in China and went to pieces of India has been kind of windy so we can sue for me come over to so as far as currencies are concerned. There are all very sensitive issues. And I don't think it will be benefiting to anybody if I say too much of that. Thank you, but at least your government is thinking of the of the problem a question from mr. O'Brien of our Midwest China Center. Yes chairman wrong, you touched on the very important question of improvement of investment climate in China. There's something that I'd like to raise in connection with that that people in the United States and in our section of the country are very concerned about that is we see that there are investment opportunities. We see that Possible joint venture Partners out there in China who are worthy of consideration. We even see that now in some of the coastal provinces major state-run companies are having shares in their companies sold to International businesses. There's a question then that that comes up and especially now with China's new porch and fought the bankruptcy law and that is how can foreign investors. How can people were looking for joint venture Partners get a good grasp of which Chinese companies which possible partners are solvent. Where can we get that sort of information feeding her you simple to put on file number two you were I got hoes Leisure her over and then go to order you. Can you have partner tongo solvent The Poetry poor child. This is the only show you what I got soon our job number 2 we have What you know, it's who you re an open D XI engine quality because it was hot Jose shama food and certainly as I could talk to Garcia meanwhile you good. So it's also the associate Dean for any foreign investor wanting to invest in China. There are two main things that he or she has to take into consideration. The one is the project itself whether that is a project needed by China and secondly whether the partner he or she chooses is the most appropriate one. That's the formula. If that is young woman that you are were you and you see nothing for me a woman see how that how it would he come to answer this incident generally speaking our Planning Commission can't furnish with foreign investors on whether this what that project is needed and I did it because you knew together Susan and for the second question in the choosing a selection of Partners, I think is the foreign investor is interested. You can always go and find a qualified consulting firm in China where he can select a partner then cinemability at Salonika equally I'm going to the National estimate is reality. So the only facility my best but please don't go to anybody who comes to you who say they can consult especially those small companies with only one or two persons and that might cause you problems. Thank you. Again. This is a Minnesota meeting with mr. Runge rent. One of the leaders of China's Economic Development a question for mr. Krueger. Good morning. Mr. Chairman. I wanted to inquire about your emphasis to our Light Industry and heavy industry as it relates to what may be a formidable challenge of the electrification of the countryside what emphasis is going to be placed on nuclear energy as a source of electrical power for your industrializing goals. And as a side note, if you could comment as to where the general populace views the importance and the role that nuclear power should play given your past emphasis on so we say conventional. Our methods fossil fuels and so on. Qingdao in the end up on God hear our jungle. You've seen those guns King Kong. Uh, um. Yeah. Don't know Nick. Yeah, I do you should your coach are partying. Then you are Wendy the woman from kishida. You see the called one day. When you come to energy or this is one sector which we give high priority and we're going to assume go get soon as in law. So I'm going to choose the other faster. And in consideration of the Practical situation in China China is placing primarily at emphasis on thermal power coal. There is a finding which is I mean, you don't know. Do you think so? And of course for a nuclear power, I understand there are a lot of discussions in the world and controversies in the world. But as far as China is concerned we have built some or in the process of building some just as a supplementary to other forms of energy. So this is a formula for wait until woman dude. It's real but it will not be our main source of energy. Thank you a question from over here. Mr. Chairman. We are evaluating a project in China involving a large content to be subcontracted in China new comment on the tax implications of undertaking such work. Bacon parking. Would you repeat large large project in China where a good portion will be subcontracted in China? We'd like to know the tax implications of an undertaking that work. There's hummus uniting that junghwa. Do you go changing compact growing you? I'm not very clear about this this part the subcontracting will be done outside of China or inside of China. You do your homework. You shall now use people for not being there to water down the assume open slam subcontract women in case of safety because subconscious 0 be subcontracted with the local companies. The subcontracted company will take care of the tax with a thumbnail you won't get to you. Mr. Chairman, thank you very much. Final question. Perhaps you mentioned acidic is a socialist Corporation. I was wondering if you might tell us what happens to the profit in a socialist Corporation here. So easily the ones that you found out At this present stage the prophet is used to enhance and strengthen and expand our own Corporation since the single and the album fact later on at a certain time. We'll have to supply the country with our funds in the form of tax. This is C then a woman to the healthy fats, which is a Formula that there's a single this present stage will still expanding and building up a corporation. Of course in the future when you get the profits will be contributing to the nation by paying our do taxes. Thank you very much. Mr. Romney ran for the Minnesota meeting.