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How do you see the current situation in the world economy and the reasons for the crisis in Europe, especially in Slovenia?
As is known to all, the world has experienced continued economic turbulence over the last year. The economies of developed countries almost touched the bottom, recovery and growth were weak and the risk of debt increased in the US and in Europe. In the last two years, seven of the seventeen eurozone countries went into recession, the average rate of unemployment reached 10.9%, the expected income of people declined and the capacity for consumption was reduced. So the post financial crisis times will be more complicated, the confidence of people needs to be restored. Nevertheless, as a bright point, the emerging economies as a whole have shown their resilience and achieved comparatively high growth rates despite the influence of the developed countries. As a member of the EU, it's a pity that Slovenia couldn't avoid the crisis. I've noticed however, that the new government clearly identified itself as an anti-crisis government when it was established. That has shown its determination. With reference to the reasons for the crisis, the west, especially the European countries, need a lot of deep reflection, there is no need to talk about it. I'd like to emphasise that Europe and by that I also mean Slovenia, has the wisdom and capacity to conquer the crisis and lead the economy back on the right track.

China is obviously doing very well despite the crisis in other parts of the world, what do you think is the recipe for your continuous growth?
The Chinese economy has gone through an enormous test during recent years. In 2011, the Chinese economy kept the momentum with steady and comparatively fast growth, made positive progress in terms of macroeconomic control and further promoted the improvement of the economic structure and quality. The annual GDP in 2011 reached RMB 47,156.4 bn with year on year growth of 9.2%. 2011 was the first year of China's 12th Five-Year Plan. The Chinese government made strong efforts to speed up the transformation of the way of economic development and carried out the corresponding measures to control prices.
Firstly, the economic structure is more reasonable and the impetus for domestic demand has been enhanced. In 2011, the contribution rate of ultimate consumption and the investment value to GDP reached 51.6% and 54.2% respectively and imports increased 24.9%, 4.6% more than the growth rate of exports. The trade surplus narrowed 14.5%.
Secondly, regional development in China is more balanced and the development rate in the western regions kept its encouraging momentum. In the first half of 2011, among the top 10 provinces with the fastest economic growth, nine provinces are from central and western regions demonstrating that Chinese economic development in eastern and western regions is more balanced and the steps for carrying on the transfer of industry taken by the central and western regions are continuously getting faster.
Thirdly, emerging industries with strategic importance such as energy saving, the new generation of information technology, biology, manufacturing of top equipment, new energy and new material has achieved rapid progress and shown the long term potential for development.
Lastly, the wellbeing of people is continuously improving and the momentum for rising prices has been checked. In 2011, controlling prices was the priority for the Chinese government. The social insurance system covering urban and rural areas has basically been established and the wellbeing of people has been improved. In general, the Chinese economy has been transformed from policy-oriented growth to self-sustained growth whilst maintaining the right status, which doesn't come easily considering the background of a complex and volatile environment both domestically and internationally.

Where do you see the greatest opportunities for cooperation between Slovenia and China, it seems that we are talking a lot but the projects are not going ahead as planned?
In my opinion, China and Slovenia have great potential for cooperation in all fields. China has always believed that a healthy, stable, persistent China - Slovenia relationship serves the common interests of both countries. China continues to release strong signals to show that China is willing to further strengthen the cooperation with EU countries, including Slovenia, no matter whether the latter is in a status of vigorous development or temporary crisis. The Chinese are very happy to see that during the Warsaw meeting on 26 April this year of our two prime ministers, as well as in the follow-up communications, the Slovenians expressed sincere cooperative intentions. Though China and Slovenia have been affected by the world economicy and financial crisis to varying degrees, the trade volume of our two countries is on the rise, in 2011 trade increased 20.2% reaching a total volume of USD 1.88bn and Slovenia has become the top trade partner of China in the former Yugoslavia. Now more than 30 Slovene enterprises have settled themselves down in the Changjiang Delta region in China which is the largest gathering place for Slovene enterprises in Asia.
The Chinese are expecting Slovenia to improve the investment environment and attract Chinese enterprises. China and Slovenia's cooperation in the areas of infrastructure development, investment and tourism are complementary, both sides have their advantages in technology and capital markets. On 26 April Premier Wen Jiabao announced in Warsaw China's twelve measures for promoting friendly cooperation with Central and Eastern European countries such as the establishment of a USD 10bn special credit line with a focus on cooperation projects in areas such as infrastructure, high and new technologies, the green economy, setting up of an investment cooperation fund between China and Central and Eastern European countries with the goal of raising USD 500m in the first stage, sending trade and investment promotion missions to Central and Eastern European countries and establishing one economic and technology zone in each country in the next five years.

How do you see Slovenia from China, is this the potential hub for doing business in Europe?
Slovenia has played an important role in regional affairs with the solid foundation of its advanced development and its good geographical position. Since the establishment of diplomatic relations between China and Slovenia 20 years ago, Slovenia has made contributions to promote cooperation between China and the EU and China is very grateful in this regard. In recent years, Slovenia's initiation of the "Brdo Process" has positively promoted revitalisation of the development and cooperation between the former Yugoslav countries. The successful organisation of the "Bled Strategic Forum" has shown Slovenia's firm determination for taking a role as an important promoter of cooperation in the region. China attaches great importance to our relationship with Slovenia and is willing to further develop our bilateral cooperation and with the aid of Slovenia's geographical advantages such as the Port of Koper, to strengthen our trade and economic cooperation with other countries in the region.

Do you think that China will slowly lose their competitive advantage of a low cost labour force?
For many years, the low cost labour force has always been the competitive advantage of Chinese products in international markets. With the cost of labour increasing, many people now begin to worry that the competitive advantage of Chinese products will be lost. As a matter of fact, low cost labour is not the core of national competitiveness, especially under limited production, the disadvantage of low profit and low added-value products will be magnified. Although the cost of labour is increasing, foreign investors still give consideration to the enormous potential of the Chinese market. Low prices are not a long term policy pursued by Chinese producers. On the contrary, we will transition our advantage from focusing on low cost labour to focusing on technology. Actually, it has already been a process guided by the Chinese government. So, seeking new growth power and following innovative drive are the key factors to realising the second development transition of the Chinese economy during the 12th Five-Year Plan, thus striving to make innovation become the new power for economic growth. We will always take technological progress and innovation as the pillar to accelerate the transition of the economic development model, backed with improved technology, qualified workers and innovative management. Moreover, we will cultivate some new sources of economic growth vigorously, such as strategic upcoming industries, services and infrastructure to realise the transition from low-end to high-end industry and promote strength among global competition.

What are the other main advantages of your country aside from the enormous market?
China has many advantages besides a large market, for example, we have a stable political environment, rising innovative capability, etc. Above all, our advantages are based on the system which matches China's domestic features. It's superior and democratic characteristics shall be tested through practice and judged finally by the people. In recent years, from fighting floods along the Yangtze River to earthquake relief in Wenchuan, from the Beijing Olympic games to the Shanghai Expo, from coping with the financial crisis to formulating the 12th Five-Year Plan, all these events prove the superiority of the socialist system with Chinese characteristics including the National People's Congress System. We have accomplished a series of big events, celebrated a series of happy events, succeeded in dealing with a series of tough events relying on the Chinese system which is the guarantee for people's interests and sources for national power. In the 30 years since reform and opening up, it is obvious that China has achieved great success in economic and social development. The Chinese socialist system with Chinese characteristics becomes the reliable guarantee for the fundamental interests of the majority of its people and strong insurance for our country to go through all kinds of risks and difficulties.

How will you manage the environmental problems such as "collateral" damage from the huge economic progress of China?
The Chinese government attaches great importance to environmental protection and insists on a basic national policy of saving resources and protecting the environment, walking on civilised development roads with high production, a prosperous life and a sound ecological environment. We've put forward some very important strategic thoughts such as the scientific concept of development and building a socialist harmonious society. We have also set goals for building resource saving and an environmentally friendly society. The Chinese government has made tremendous efforts in protecting the environment and partial environmental quality has been greatly improved. Last year, when we positively responded to the impact of the international financial crisis and put efforts in maintaining stable and rapid economic development, we didn't slacken environmental protection, on the contrary, we significantly increased inputs into ecological and environmental protection. Through efforts, energy saving and emission reduction achieved remarkable results, the trend of pollution and ecological destruction was slowed, key river basin area's pollution control achieved initial success and the people's awareness of environmental protection was significantly enhanced.

In Slovenia we have a very active Confucius Institute, working inside The Faculty of Economics in Ljubljana, it's one of the rare institutes that also promotes economic cooperation, how did you pick Slovenia as a special location?
The Confucius Institute in the Ljubljana University is the world's third Business Confucius Institute, the operator from the Chinese side is Shanghai Institute of Foreign Trade which is an economic and trade college and this Confucius Institute is based at the Faculty of Economics in Ljubljana University. The similarities between the two make this Confucius Institute naturally put business as its priority. Besides,in the two years since its establishment, this Confucius Institute has fully used its own resources to carry out a variety of teaching and cultural activities. It has also become an important platform for Slovenian people to learn the Chinese language and culture and to know contemporary China and for enhancing exchange of our two people. I'm glad to see that the Confucius Institute in Ljubljana is warmly welcomed by all sectors of society.

What do you think is the main thing in Slovenia that we must change to attract more Foreign Direct Investments?
According to reports, Slovenia is one of the EU countries with the lowest share of FDI to GDP. In recent years, the scale for FDI inflow to EU countries has been continuously enlarged but the FDI inflow to Slovenia has been gradually lessened. The advantages for Slovenia in terms of absorbing FDI depend on the labor quality, the long term and stable cooperation, the favorable location and comparatively mature infrastructure. I think there's still room for promotion regarding the attraction for FDI. So it's necessary to formulate comparatively preferential policies and detailed measures to encourage and absorb FDI such as to perfect the taxation system, the labor market and to promote the efficiency for administration as well.

What are from your position the biggest development challenges in global Economy in next 10 years?
With the current slowdown of world economic recovery, the fragility and imbalance of the recovery have been further exposed. The debt crisis in Europe has not been solved yet; the pressure of employment in the world is still heavy, the unemployment rate in the world is maintaining a high level, and the situation of employment in Euro zone is severe; the economic growth in developing countries continues to slow down; the trade protection intensifies, the world trade financing shrinks and the trade frictions increases. Besides, the global problems of food safety, energy resources, climate changes, public healthy safety and major natural disasters become more and more outstanding. In the very critical period of global economic recovery, all countries should carry forward the spirit of mutual support and win-win cooperation, strengthen communication and coordination, maintain the continuity and stability of macroeconomic policies, promote global financial reform and improve the mechanism of managing global economy. All countries should strongly oppose and resist trade protectionism. The related countries should shoulder their responsibilities to enforce their macroeconomic policies so as to control the financial deficit and public debt at a reasonable level within a certain period of time and ensure the continuity of mid-term and long-term finance to avoid the spread of sovereign debt crisis.