Having already known Premier Zhao, one of the purposes of my visit was to make new friends. But I find, especially after meeting President Li and General Secretary Hu, that instead of making friends, I am among friends.

Mr. Premier, this has been a stimulating day. Much was accomplished, not the least of which was the renewal of the personal rapport we established during your memorable visit to the United States. Your visit permitted you to judge for yourself the intentions of the American people. I hope the good will you experienced, just as I enjoyed from your people today, confirmed to you that our citizens want our countries to work in harmony.

The American and Chinese Governments have responded to that wish in a series of formal communiques which set forth the fundamental principles of our relationship -- the 1972 Shanghai communique, the January 1, 1979, communique establishing diplomatic relations, and the August 17, 1982, communique negotiated by my administration.

Mr. Premier, by any accounting the cooperation between China and the United States already has been a boon to our people. We have both gained. In the last few years, two-way trade has taken off. There has been a veritable explosion of student, science, business, and tourist exchanges between our peoples. Joint business ventures which profit all concerned are multiplying.

We would be less than candid if we minimized the significance of the benefits we each receive from our good relations. Standing together, we can expand the trade and commercial ties that increase the quality of life in both countries. Standing together, we can further peace and security. Great nations, if adversaries, cannot draw from each other's strength.

The commitment to stand as friends has been made. The promise is solid. The challenges that remain, however, will take both patience and mutual understanding. I have suggested and, with your permission, say again this evening: Let us use as our guide the principle of hu jing hu hui -- mutual respect, mutual benefit. This principle has within it both dignity and fairness.

Another source from which to draw is our knowlege of each other, a well of familiarity which increases in depth with every passing day.

We are each working hard to learn more about the delicate and detailed workings of the other's system -- ours with its complex legal procedures based on the separation of powers, and yours with its own intricate patterns. Insights into why and how decisions are made can help both of us appreciate our agreements and accept in good faith our disagreements.

From what we see, Premier Zhao, my countrymen are enthused by what is happening in China. Your modernization program, an ambitious undertaking, makes our future relationship even more promising. You are striving to quadruple your production by the year 2000, and the eyes of the world are watching as you progress on this peaceful and productive course. The American people wish you success and offer you our cooperation in this great endeavor.

Americans, more than others, admire those who set great goals and strive to improve their lot. When that first American merchant ship set sail for China 200 years ago, our Forefathers were citizens of a weak republic living in an unexplored and undeveloped land. We Americans are proud of our accomplishments in these last 200 years, just as you are rightfully proud of the enormous contributions Chinese civilization has made to mankind.

As China moves forward to modernize and develop its economy, the United States is eager to join in a cooperative effort to share the American capabilities that helped turn our country from a vast wilderness into an industrial giant. Those American capabilities flow from the creative enterprise our society encourages. Our progress is based on what we have found to work. If it did not work, the American people, who are pragmatic by nature, would likely have abandoned it long ago.

China today, I understand, is taking its own practical approach. By increasing incentives and decentralizing decision-making, you are promoting innovation, creativity, and a better ability to adapt to local conditions. The responsibility system in agriculture has spurred increases in food production throughout China, and the special economic zones are providing dramatic examples of how incentives can raise productivity and offer bountiful opportunities for a better life.

In your drive for modernization, you have our best wishes. If you ask our advice, we can only answer with truth as we see it. But let me assure you, we want you to succeed. Having 1 billion people -- nearly a quarter of mankind -- healthy, well fed, clothed, and housed, educated, and given the opportunity for a higher standard of living, is in the interest of good and decent people everywhere. It is certainly in the interest of the American people, who wish to trade and be friends with the Chinese people.

Premier Zhao, as we're all well aware, our cooperation is based on more than simply the desire to improve our economies. Today the peace of the world is threatened by a major power that is focusing its resources and energies not on economic progress but, instead, on military power.

The shift in military might of the last decade has made trust and friendship between us even more vital. I know it is your desire, and that of the United States as well, that peace be preserved. We seek to better the quality of life of our people, and that can be done only in a peaceful environment. War is the great destroyer of all the hopes of mankind.

To preserve the peace and protect our own sovereignty and independence, we stand together in opposing expansionism and hegemony. We stand together in support of the independence of Afghanistan and Kampuchea. Both of us seek to promote peace and reconciliation through dialog between South and North on the Korean Peninsula. Both of us seek the early independence of Namibia and an end to outside interference in the affairs of southern Africa. Although our prescriptions for getting there are quite different, we share a common desire for a resolution of the turmoil in the Middle East and Central America. Both of us seek an end to the use of chemical weapons and agree on the necessity of reducing nuclear arms.

A strong China, dedicated to peace, clearly is in the best interest of international stability and in the best interest of the United States. A robust and enduring friendship will bolster the security of both our countries without compromising the independence of either. It will be the trust between us that will keep us and the world at peace. In this, let us be of the same mind. And as a saying from ``The Book of Changes'' goes, ``If two people are of the same mind, their sharpness can cut through metal.''

It is the hope and prayer of the American people that someday there will no longer be a need for our nation to use any of its resources to produce weapons of any kind. The Chinese and American people are now showing the world by our example that there is a better way than hatred and violence.

Many of us in this room have seen much history in our lifetime. My own lifetime spans one-third of the history of the American Republic. Over the many years that God has permitted me to live, I have observed the changing nature of the relationship between our two countries.

At times, our feelings toward each other were hostile and negative. Today, we have the opportunity to keep our countries on a path of genuine good will that will reap rewards for generations to come. Let us not shy from the task. It will not be easy; yet, let us move forward so that someday when the young people of our countries reach a ripe old age, they will look back, and there will be no memory of a time when there was anything else but friendship and good feelings between the Chinese and American people. That is a gift we can give to them.

In our shared spirit of friendship, peace, and cooperation, I am delighted to note that both President Li and General Secretary Hu have accepted our invitation to visit the United States. We look forward to reciprocating the warm hospitality that we've been shown in your beautiful country.

And in that same spirit, permit me, Premier Zhao, to propose a toast. To your health, Mr. Premier, to the health of President and Mrs. Li who so graciously acted as our hosts yesterday, to the health of Chairman Deng, General Secretary Hu, and the other distinguished Chinese citizens it is my privilege to meet this week, and to the friendship and cooperation between our two countries.

Note: The President spoke at 7:23 p.m. in the Banquet Hall at the Great Hall of the People in response to a toast by Premier Zhao.