Liu: Good afternoon. I would like to begin with several announcements.

At the invitation of Premier Wen Jiabao, Chancellor Mekel of the Federal Republic of Germany will pay an official visit to China from May 21 to 23.

The fifth round of China-Japan consultation on the East Sea will be held in Tokyo on May 18. Participants include Director-Genreal Hu Zhenyue of the Department of Asian Affairs of the Foreign Ministry of China and Director-General Kenichiro Sasae of the Asian and Oceanian Affairs Bureau of Japan's Ministry of Foreign Affairs. Both sides will continue to exchange views on the East Sea matters.

The Second Ministerial's Meeting of China-Arab Cooperation Forum will be held in Beijing from May 31 to June 1. Foreign Ministers and representatives from China, Arab countries and Secretary-General of the Arab League will attend the meeting. Participants will have comprehensive and thorough discussions on the development of new China-Arab partnership and the construction of China-Arab Cooperation Forum as well as other matters.

Director-General Zhai Jun of the Department of West Asian and North African Affairs will brief you on the meeting at this venue at 9a.m. tomrrow. You are welcome to attend.

The official website of this year's Shanghai Cooperation Organization (SCO) summit was launched yesterday. You can check out its website at www.scosummit2006.org. Operated in Chinese, Russian and English, it will cover events, speeches and statements from the upcoming SCO summit. You will also be able to find other related information and how to apply to cover the summit.

With that, I am happy to take your questions.

Q: Iran's President said that he is willing to attend the SCO Summit. What is your position? How large is the possibility for Foreign Ministers of China and Japan to meet?

A: For your first question, Iran is an observer of the SCO. In light of the consensus among SCO members, leaders of SCO observers will be invited to attend major meetings of the organization, including the summit meeting to be held in Shanghai. We will respect Iran's decision and welcome the presence of its leaders.

As to whether there will be Foreign Ministers' meeting between China and Japan, I do not have any specific information to share with you.

Q: What will be discussed when German Chancellor meets her Chinese counterparts? What impact will Madam Mekel's visit have on bilateral economic cooperation? Will Maglev cooperation come up during the discussions?

A: I briefed you earlier on the official visit by Chancellor Mekel to China between May 21 and 23. It is the Germany Chancellor's first ever visit to China since the establishment of the new government. During the visit, leaders of both countries will exchange views on further development of bilateral relations and major international and regional issues of common interest. President Hu Jintao will be meeting with her. Premier Wen Jiabao will have talks with her and they will meet with journalists after that. They will also attend the Fourth China-Germany Hi-tech Dialogue Forum. Besides Beijing, Chancellor Mekel will also go to Shanghai and sign a series of cooperation agreements and project contracts. At present, specific details of the visit are still under discussion.

China and Germany enjoy extensive cooperation in political, economic, cultural, sports, scientific and technological fields as well as many other areas in environment protection and dialogue on legal governance. In recent year, there has been fruitful cooperation between the two countries. Germany is an important partner for China in various fields. Trade volume between the two reached 63.2 billion dollars last year, accounting for one third of the total between China and the EU. Germany has become the largest EU trade partner for China.

As the maglev cooperation, it is a new field of scientific and technological cooperation between China and Germany, with breakthrough progress in pilot project in Shanghai. China stands ready to continue to cooperate with Germany in the regard.

Q: Who have confirmed that they will attend the SCO summit meeting? China and Pakistan jointly developed the JF-17 aircraft which had a successful test flight last week. Do you have any comment on China-Pakistan defense cooperation?

A: For your first question, we are vigorously and actively preparing for the SCO summit meeting. The official announcement of the meeting will be released shortly. We will keep you informed on who will be attending the meeting.

On your second question, the fighter plane you asked was jointly developed by China and Pakistan. We in China call it Xiaolong jet fighter. China has had long-term cooperation with Pakistan in aviation. Xiaolong jet fighter is a new generation of light fighter. On April 28, Xiaolong FC-4 had its first test flight in Chengdu, representing significant progress in our cooperation for the current stage. We have maintained sound and close contact on further cooperation in the field.

Q: Yesterday, the exchange rate for RMB against the US dollar appreciated beyond 1:8. What will be the implications? Some countries are saying that this is not enough, believing that there is still room for RMB to rise. Do you have any comment?

A: We have made our position clear on various occasions concerning our policy on RMB forex. You can also find my comments on our position last Thursday night. Since the RMB forex reform, RMB has appreciated by 3.4% accumulatively against the US dollar. If we include yesterday's figure, the percentage will be even higher. RMB's two-way floating against dollar evidently reflects its better resilience and the changes of exchange rate of major international currencies. The appreciation and depreciation of RMB demonstrates its market-driven adjustment as a result of linkage to a basket of currencies.

China will continue to adopt the approach stressed by President Hu Jintao during his visit to the US in April, pressing ahead with economic reform, boosting domestic demand, enhancing economic restructuring and improving a managed floating forex regime. This position remains firm.

Q: There were reports from the SCO Foreign Ministers' Meeting, saying that SCO members share identical positions on current major international issues. Can you be more specific on those positions? For instance, on Iran nuclear issue and anti-terror cooperation?

A: There are three major topics for the Foreign Ministers' Meeting. One, to prepare for the SCO Summit Meeting in mid-June, which is of great significance. All participants expressed their willingness to make concerted efforts and closely coordinate with each other to make the Summit Meeting a success. Two, Foreign Ministers exchanged views extensively on security, trade and commerce and civilization cooperation. The meeting has been pragmatic and constructive. Three, participants also exchanged views on major international and regional issues, having earnest discussions on international counter-terror efforts and other major issues with broad consensus reached. The final goal is pool the efforts of members to ensure peace, stability and joint prosperity in the region.

Q: Britain, France and Germany are considering presenting a plan to ensure Iran's security and provide economic assistance to entice it to halt its nuclear enrichment activities. Do you have any comment on the plan? Reports from Iran say that Iran's Foreign Minister refused to accept the plan today. Could you comment on Iran's reaction? There will be a six-nation meeting on Iran nuclear issue in London on May 18. Will China endorse EU-3's plan on that meeting? Will Foreign Minister Li Zhaoxing visit Iran and meet with its President before or after that meeting?

A: For your first question on the package plan proposed by EU-3, we are yet to receive the official text. We have got some information from reports. China appreciates the important gesture of EU in seeking for a solution through negotiation. We hope that EU can improve and propose a reasonable, comprehensive and balanced package that benefits non-proliferation goals and incorporates Iran's concerns so as to resume talks with Iran on that basis at an early date.

For your second question, we have taken note of the initial reaction of Iran to the plan. We believe that all parties need to work vigorously to activate a new round of diplomacy and make positive response to the efforts that are helpful for settling the issue through peaceful negotiation.

As to your third question, China will send officials to attend the six-nation meeting in London. China has maintained contact and coordination with Iran on the nuclear issue. I do not have any information on whether Foreign Minister Li Zhaoxing will visit Iran or not.

 

Q: There have been several rounds of consultations between China and Japan on the East Sea. Will there be any breakthrough this time? China signed some agreements with Russia today on immigration and construction of a bridge between Inner Mongolia and Siberia. Can you brief us on that?

A:With respect to your first question, I announced earlier that the consultation on East Sea will be held in Tokyo on May 18. We deem it beneficial to build up consensus and gradually narrow differences on the issue through consultations. However, given the large gap between each other's position and the complexity of certain issues, a breakthrough is unlikely to come out in this round. Still, we will continue to adopt a positive and responsible attitude to have earnest consultation with Japan on the issue so that we can close up the gap.

Foreign Ministers of China and Russia have just winded up their talks. My information is that they signed the two agreements you asked. I was not there for the talks. I will have to check for you on the specifics of the agreements.

Q: KMT Chairman Ma Ying-jeo just paid a visit to Singapore. It's reported that the visit by Minister Mentor Lee Kuan Yew to China aims to pass a message. It is reported that Fallon, Commander of the U.S. Pacific Command has invited China to observe the U.S. military exercise at Guam. What is the significance of this invitation? Who will represent China to attend it?

A: On your first question, the visit by Minister Mentor Lee Kuan Yew to China from 10 th to 17 th, was set much earlier through diplomatic channel. I have not heard of the word passing as in your question. During his visit, Premier Wen Jiabao and Vice President Zeng Qinghon met with him respectively. Both sides made positive comment on the bilateral relations, and committed themselves to joint effort to further develop bilateral relations. Lee Kuan Yew spoke highly of China's achievement in its economic development, and Hong Kong's sustained momentum of development under the guideline of "One country, two systems". He reiterated Singapore's commitment to One-China policy and opposition to "Taiwan Independence".

On your second question, the PLA has invited the U.S. to observe a couple of military exercises in China. Over the recent year, the two countries have to work together to build trust and dissolve misgivings, and strengthen cooperation. China will give a positive consideration to the U.S. invitation on observing the Guam Military exercise.

Q: Reports from Washington said that the U.S. government was considering sanction against some small Chinese banks which were suspected to have business links with the DPRK and helped it develop WMD. Please confirm. What's your comment?

A: The Chinese Government holds a clear and firm position on non-proliferation of weapons of mass destruction. We are firmly opposed to the WMD proliferation, and will by no means allow any firm or any individual to engage in activities related to proliferation. China has consistently stood for solving the problem through dialogue, and opposed sanction or pressure.

Q: China and Japan decided to give serious consideration to the foreign ministers' meeting. Will China formally notify Japan as to whether the foreign ministers of the two countries will meet in Qatar during the Asia Cooperation Dialogue meeting? Vice Foreign Minister Wu Dawei and Ambassador Wang Yi said that the meeting demands a right atmosphere. What atmosphere is required? The Director-General of Asia Affairs Department of Chinese Foreign Ministry will go to Tokyo. It's said that there will be another meeting before the consultation. Will they talk about the date adjustment of the foreign ministers' meeting?

A: The meeting between the two foreign ministers is still under consultation. As to the right atmosphere, I think foreign minister is an important diplomatic representative of a country. The meeting should aim to solve problems, not for meeting's sake. We hope both sides can reach consensus through negotiation. As to whether the meeting will be held, it depends on the consultation result. The two sides will make consultation through communication channel on the possibility of the meeting.

Q: It's reported that President of Venezuela Chavez will visit China. Please confirm.

A: I have no information on that so far.

If there are no other questions, let's call it a day.