INSouth

Hu Jintao, President, People Republic of China

"The international financial crisis has now spread from some parts of the world to the entire globe, from the developed nations to newly emerging market countries, and from the financial sector to the real economy, seriously affecting economic development and people's livelihood of countries in the world. It is therefore highly significant that we gather here at this crucial moment to explore ways to maintain international financial stability and promote world economic growth..."

The extent, impact, and intensity of the international financial crisis that we are experiencing have been rarely seen since the 1930s of the last century. There are many reasons behind the crisis, including improper macroeconomic policies of economic entities as well as the lack of financial supervision. Without a correct understanding of the reasons, it will be difficult to draw lessons and avoid similar crises in the future. In the wake of the financial crisis, the international community has taken action immediately and adopted a series of countermeasures in various aspects. China hopes that measures taken by the international community in response to the crisis will produce the desired results soon. In order to effectively deal with this financial crisis, countries of the world should strengthen confidence, intensify coordination, and cooperate closely with each other.

The urgent task of the international community at the moment is to continue to take all necessary measures to promptly restore market confidence, and stop the spread and development of the financial crisis. Major developed economies should undertake their due responsibilities and obligations; implement macroeconomic policies that are conducive to economic and financial stability and growth both at home and internationally; take active steps to stabilize of their own and international financial markets; and safeguard investors' interests. Meanwhile, countries should enhance macroeconomic policy coordination; expand economic and financial information sharing; and deepen cooperation in international financial regulation, so as to create necessary conditions for stability in both domestic and international markets.

At present, as the world economic growth has slowed down and factors of instability and uncertainty have increased, the situation is severe and complex. Maintaining economic growth is an important foundation for dealing with the financial crisis. Countries should adjust their macroeconomic policies and adopt necessary fiscal and monetary policies to actively promote economic growth and avoid a global economic recession. [Countries] should take measures to jointly stabilize the international energy and food markets and curb speculation, in order to create sound conditions for development of the world economy. In particular, the international community should prevent all forms of protectionism in trade and investment; and strive to achieve positive progress in the resumption of the Doha Round negotiations as soon as possible.

The international community should carefully sum up the lessons of this financial crisis; and on the basis of full consultation among all stakeholders, carry out necessary reforms of the international financial system. Reform of the international financial system should be aimed at establishing a new international financial order that is fair, just, inclusive, and orderly; and fostering an institutional environment conducive to sound global economic development. The reform should be conducted in a comprehensive, balanced, incremental, and result-oriented manner. A comprehensive reform is one that has a general design and includes measures to improve not only the international financial system, monetary system, and financial institutions, but also international financial rules and procedures; and that reflects the universal laws and principles of financial supervision, as well as considers the development stages and special features of different economic entities. A balanced reform is one that is based on unified planning with due consideration for all concerned; seeks balanced interests among all parties; develops decision-making and management mechanisms for broader and more effective participation; and, in particular, manifests the interests of emerging markets and developing countries. An incremental reform is one that seeks gradual progress; and on the premise of maintaining stability of the international financial market, proceeds in a phased manner, starting with the easier issues, to achieve the final objectives of reform through sustained efforts. A result-oriented reform is one that lays emphasis on practical results. All reform measures should contribute to safeguarding international financial stability, promoting global economic development, and enhancing the well being of the peoples of the world.

Based on the aforesaid considerations, China advocates the implementation of the following key reform initiatives. The first is to step up international cooperation in financial supervision; improve the international regulatory system; establish a code of conduct for credit rating agencies; strengthen efforts to monitor global capital flows; reinforce the supervision over various types of financial institutions and intermediary organizations; and increase the transparency of financial markets and its products. The second is to promote reform of the international financial organizations; reform the decision-making mechanism of international financial organizations; enhance developing countries' representation and right to speak in the international financial organizations; establish, as soon as possible, a global early warning system, especially for covering main international financial centres; improve the international financial organizations' internal management structure; establish a timely and efficient mechanism to help cope with the crisis; and build up the international financial organizations' ability to perform their duties effectively. The third is to encourage regional financial cooperation; enhance the mobility for mutual assistance; strengthen regional financial infrastructure; and give full play to the role of regional relief funding mechanism. The fourth is to improve the international monetary system; promote steady diversification of the international monetary system; and jointly support stability of the international monetary system.

My colleagues:

Under the condition of in-depth development of economic globalizations, countries in the world are increasing connected in their economic and financial relations. The financial crisis has not only dealt a serious impact on the financial markets of developed countries but also affected the developing countries at varying degrees; and the effect is continuing to expand. We must have a sufficient understanding of this. The developing countries' economic development levels are low, their economic structure is monotonous, and the anti-risk capability of their financial systems is weak. Therefore, when dealing with the financial crisis, the international community should pay special attention to minimizing damage to the developing countries, especially the least developed countries.

First, it is necessary to effectively help developing countries maintain financial stability and economic growth. The international community, developed countries in particular, should undertake due responsibilities and obligations and adopt effective measures to help developing countries, particularly African countries, overcome their problems. While implementing macroeconomic policies, it is especially necessary to pay attention to their impact on developing countries to avoid aggravating the plight of developing countries. International financial organizations should adopt measures, such as relaxing the loan conditions, to establish a more convenient mechanism to provide timely relief and assistance to developing countries seriously affected by the financial crisis. It is necessary to support emerging market countries' efforts to maintain sustained and stable economic growth.

Second, it is necessary to effectively maintain and increase assistance to the developing countries. As developing countries face serious challenges in achieving development, the financial crisis has worsened the situation in developing countries. It is the common responsibility of the world to find ways to overcome the financial crisis while taking into consideration the realization of UN Millennium Development Goals. The developed countries should continue to honour their aid commitments to development, and promote the international poverty reduction process. For the least developed countries, it is necessary to, even more, reduce or exempt their debts; reduce or exempt tariffs on their export goods; increase technology transfer; and, at the same time, exert the utmost effort to help them carry out infrastructure construction to enhance their ability for self-development.

Third, it is necessary to effectively maintain economic and financial stability in the developing countries. The developing countries should, on the basis of the actual condition of their own development, adopt sound macroeconomic policies to improve the financial system and enhance the capability to prevent financial crises, while striving to change the mode of economic growth and readjust the economic structure to maintain stable economic growth.

My colleagues:
Since the beginning of this year, China has been hit successively by serious natural disasters, while the international financial crisis has also affected the development of Chinese economy. In accordance with the changing situation, China has adjusted the policy and strengthened macroeconomic regulation and control in a timely way to maintain the momentum of stable and relatively fast economic growth; and the basic trend of China's economic development remains unchanged. China's stable and relatively fast economic development is in itself an important contribution to maintaining stability of the international financial market and promoting global economic growth. The Chinese government will continue to take effective measures to strengthen the predictability, relevance, and effectiveness of macroeconomic regulation and control; concentrate on expanding domestic demand, especially the demand for consumption; devote great efforts to change the mode of economic development and readjust the economic structure; strengthen the position of agriculture as the foundation and realize increased income of farmers; and persist in deepening reform and opening up wider, in a bid to achieve stable and relatively fast economic growth and play a constructive role in promoting stable development of the world economy.

In order to promote economic development, the Chinese government has taken measures, such as lowering bank deposit reserve ratio, lowering deposit and lending interest rates, and reducing corporate tax; and has recently introduced more forceful measures to expand domestic demand. It has been decided that China will appropriate from the central coffer additional 100 billion yuan in investment this year for accelerating projects on people's livelihood, infrastructure, improvement of ecological environment, and post-disaster reconstruction, which are expected to bring along a total of 400 billion yuan in the total investment of society. From the fourth quarter of this year to the end of 2010, China will invest nearly 4,000 billion yuan in the construction of these projects. The implementation of these measures will definitely give a strong boost to China's economic development, as well as help promote development of the world economy.

As a responsible member of the international community, China has actively participated in the international cooperation for dealing with the financial crisis, and played a positive role in maintaining international financial stability and promoting global economic development. China is willing to continue to take a responsible attitude towards participating in the international cooperation for maintaining the stability of financial markets worldwide and promoting global economic development; support international financial organizations to increase financing capacity in accordance with changes in international financial markets; and step up support for the developing countries that are affected by the crisis. We are willing to actively participate in the trade-financing programme of the World Bank and International Finance Corporation.

My colleagues:
During the recently held seventh Asia-Europe summit, the leaders of east Asia held in-depth discussions on ways to strengthen regional financial and economic cooperation; and unanimously agreed the following: It is necessary to regard strengthening financial cooperation to prevent and ward off financial crises as the focus of regional cooperation, and vigorously encourage flexible and diverse forms of regional financial and economic cooperation; and to fully utilize bilateral currency exchange agreements already signed to actively and yet prudently promote the development of Asia capital market, advance the process of East Asia Free Trade zones, support the ASEAN's integration construction, and combat and prevent trade protectionism. Asian and European leaders also held in-depth discussions on the current international financial and economic situation; and agreed to fully utilize regional cooperation mechanisms, such as the Asia-Europe summit, to strengthen pragmatic cooperation in information sharing, policy exchanges, and supervision and management in the financial field to effectively monitor, prevent, and deal with financial crises and promote sustained, stable, and sound development of the world economy.

My colleagues:
Stability of the international financial market and sustained development of the world economy is an important matter concerning the well being of all countries and peoples in the world. Let us work together and make united efforts to tide over the hard times and make our due contributions to safeguarding the international financial stability and promoting global economic development.
Thank you very much.

Work Together to Tide Over the Hard Times
- Speech at the Summit Meeting on Financial Market and the World Economy
(15 November 2008, in Washington, the United States)
[By] PRC President Hu Jintao