|Let Us Join Hands and Tide over Difficulties Together|
Remarks by H.E. Hu Jintao
President of the People’s Republic of China
At the Second G20 Financial Summit
London, 2 April 2009
The Rt. Hon. Prime Minister Gordon Brown,
I am pleased to come to London in this balmy spring season and join you in discussing ways to tackle the global financial crisis and restore world economic growth. Let me first of all express sincere thanks to Prime Minister Brown for his kind invitation and thoughtful arrangements.
More than four months ago, we met at the Washington Summit on Financial Markets and World Economy. At that Summit, we reached a series of agreement on working together to counter the global financial crisis, strengthen financial regulation and promote reform of the international financial system. Since then, countries around the world have adopted policies to stabilize the financial sector and stimulate economic growth, which have produced initial results. Preliminary work has begun in reforming the international financial system. The international financial crisis, however, is still spreading and deepening, and its impact on the global real economy is becoming more and more evident. The world economic and financial situation remains complex and grave. Quite a number of countries have slid into economic recession and are confronted with severe challenges in maintaining social stability.
The most pressing task now is to make every effort to restore global economic growth and prevent a serious recession, oppose all forms of protectionism and maintain an open and free environment for trade and investment, speed up reform and reshape the international financial order. We should follow through on the international consensus, enhance confidence, take more effective measures, broaden cooperation, conduct more rational reforms and strive for substantive results.
1. Further strengthen confidence. We have the enabling conditions to tackle the financial crisis: Through years of development, the world economy is on a solid material and technological footing. We have the policy means: Today, we have far more macro regulatory tools at our disposal and our regulatory measures are much more focused and effective than before. And we have the common will: The entire international community has demonstrated readiness to enhance coordination and cooperation. As long as we strengthen confidence and work together, we will tide over the difficulties and achieve our shared goals.
2. Further intensify cooperation. The international financial crisis is taking place at a time when economic globalization is gaining momentum and countries are becoming more and more interdependent. No country can stay immune from the crisis, and the only right choice is for all of us to work together and deal with it. We should have a correct appraisal of the situation, increase exchanges, support one another and overcome the difficulties through concerted efforts. It is essential that our macroeconomic policies are on the whole consistent, timely and forward-looking. The G20, with its broad representation, offers an important and effective platform for concerted international efforts to counter the international economic and financial crisis. We should vigorously advance substantive cooperation, speed up structural adjustment, stabilize markets, promote growth, increase employment, and improve people’s livelihood so as to minimize by all possible means the adverse impact of the crisis on the real economy. We should step up cooperation in trade, investment and other areas of the real economy and lay a solid foundation for restoring world economic growth. We should enhance cooperation in trade financing and increase, in particular, financial input in developing countries. We should promote cooperation among small and medium-sized enterprises (SMEs) and help them get through the difficulty as soon as possible. We should push forward international cooperation in new industries, particularly in energy conservation, pollution control, environmental protection and new energy, which may become new growth areas in the world economy. We should enhance international cooperation in science and technology, whose progress will serve as an engine for world economic growth.
3. Further advance reform. We should intensify efforts to implement the important consensus reached at the Washington Summit and continue to work for a fair, just, inclusive and well-managed international financial order. And we should do so in a comprehensive, balanced and incremental manner and lay emphasis on concrete results. It is of particular importance to make efforts in the following areas. First, strengthen cooperation in financial regulation, formulate as soon as possible universally accepted standards and norms of international financial regulation, improve codes of conduct and regulatory regimes for rating agencies and establish an early warning mechanism that covers the whole world, the major international financial centers in particular, to enhance early response capabilities. Second, international financial institutions should give more assistance to developing countries. International and regional financial institutions should actively expand financing channels and mobilize resources by multiple means. China supports increasing resources of the International Monetary Fund (IMF) and is ready to enter into active discussions with various parties on this issue and make its due contribution. We believe that in raising resources, the IMF should seek a balance between rights and obligations and combine quota-based contribution with voluntary contribution. The new resources should be used, first and foremost, to meet the needs of less developed countries. It is necessary to put in place an effective international financial rescue mechanism with rapid response capabilities. And it is important to apply objective, scientific and comprehensive assessment standards to the borrowing countries. Third, the Financial Stability Forum (FSF) should play a bigger role. Following its recent broadening of membership, the Forum should now rationalize its mechanism, map out plans and get down to business as quickly as possible. We expect to see more practical proposals from the FSF on ways to stabilize financial markets and enhance financial regulation. And we hope that the FSF will have closer coordination with other international financial institutions to bring about early progress in the reform of the international financial system. Fourth, the IMF should strengthen and improve its oversight of the macroeconomic policies of various economies, major reserve currency issuing economies in particular, with a special focus on their currency issuing policies. Fifth, improve the governance structures of the IMF and the World Bank (WB) and increase the representation and voice of developing countries. Sixth, improve the international monetary system, improve the regulatory mechanism of the issuance of reserve currencies, maintain the relative stability of the exchange rates of major reserve currencies and develop a more diverse and rational international monetary system. For the next stage, we should work out a practical timetable and roadmap on the basis of full consultations and make solid progress in various reforms, thus fostering an enabling institutional environment for the sound growth of the world economy.
4. Further oppose protectionism. Recently, trade protectionism as well as other forms of protectionism have notably increased. This goes against the consensus we reached at the Washington Summit on rejecting protectionism and refraining from turning inward in our policies. Protectionism was prevalent during the Great Depression in the 1920s and 1930s, but it only led to grave consequences. Lessons of history must be learnt. No country should resort to protectionism under the excuse of stimulating the economy. We should jointly oppose those discriminatory practices against foreign workers under the excuse of protecting domestic jobs. We should work together to oppose trade protectionism in all manifestations and reject attempts to raise the market access threshold under various excuses and all forms of investment protectionism that harm the interests of other countries. And we should fight against the abuse of trade remedy measures together. We hope that countries concerned will ease their unfair restrictions on the exports of developing countries and increase trade with them. The Doha Round negotiations are crucial to global trade liberalization. We should jointly uphold the consensus of July 2008, build on the existing framework and continue to move the negotiations forward with a view to bringing about comprehensive and balanced outcomes at an early date.
5. Give further support to developing countries. Some developing countries are now suffering from deteriorating economic and financial conditions and increased social and political turmoil. We need to pay close attention to their difficulties. True, the international financial crisis has caused great difficulties for all countries, but we cannot for this reason stop the process towards the UN Millennium Development Goals (MDGs). We should continue to push it forward, for this is conducive to restoring global economic growth. Once again, I call on the international community to pay great attention to and minimize the damage of the financial crisis on developing countries, especially the least developed countries. The international community, developed countries in particular, should assume due responsibilities and obligations, continue to fulfill their commitments to debt reduction and aid, take concrete measures to maintain and increase assistance to developing countries, help them uphold financial stability and promote economic growth, give a helping hand to developing countries, especially African countries, as they work to overcome difficulties, and improve the external environment for the development of these countries.
The international financial crisis has brought unprecedented difficulties and challenges to China. We are experiencing greater downward pressure on economic growth. Imports and exports have been on the decline. Industrial production has notably slowed down. Some enterprises are having a hard time in their production and business operation, and employment is becoming more and more difficult. This crisis coincides with a crucial juncture in China’s efforts to transform the growth pattern and adjust the economic structure. New challenges coupled with existing problems have made our task all the more arduous.
To counter the impact of the international financial crisis and maintain steady and relatively fast economic growth, China has made timely adjustment to its macroeconomic policies, swiftly adopted a proactive fiscal policy and a moderately easy monetary policy, and formulated a package plan to expand domestic demand and boost economic growth. We have substantially increased government spending, introduced a two-year investment plan totaling RMB4 trillion, and carried out structural tax cuts. We have repeatedly lowered interest rates and increased liquidity in the banking system. We have implemented industrial restructuring and rejuvenation plans on a large scale and vigorously promoted scientific innovation and technological upgrading. We have worked hard to conserve energy, reduce pollution and protect the eco-environment. We have made further efforts to adjust the distribution of national income and worked energetically to expand domestic markets, especially rural markets. And we have significantly raised the level of social security. These measures are producing positive initial results, including fairly strong domestic consumption demand, steadily rising investment demand and overall social stability. It shows that China’s approach in response to the financial crisis is pragmatic and the policies are active and effective. The array of measures adopted by China will have a positive impact not only on its own economy but also on the economy of the region and the world at large.
Despite the continued adverse impact of the international financial crisis on China’s real economy, neither the fundamentals nor the positive long-term prospects of China’s economy have changed in any major way, and the foundation supporting China’s sustained and relatively fast economic growth remains solid. Thanks to continuous and rapid development over the past 30 years of reform and opening-up, China has built a fairly strong material foundation and further improved the institutional environment. There is great scope for infrastructural development, industrial upgrading, scientific and technological advances and innovation, environmental protection, consumer spending and social programs. China has enormous potential in domestic demand, rich human resources, a generally sound financial system and adequate room for macroeconomic policy adjustment. China is working hard to turn pressure into driving force and challenges into opportunities, minimize the impact of the international financial crisis and maintain steady and relatively fast growth.
In the face of the international financial crisis, we will continue to follow the basic state policy of opening-up and unswervingly pursue a win-win strategy in opening to the outside world. It is our firm belief that a more dynamic and open China will be in a better position to not only maintain steady and relatively fast economic growth at home, but also contribute to the global efforts to tackle the financial crisis and promote world peace and development.
As a responsible member of the international community, China has been actively involved in the international endeavor to fight the financial crisis.
In spite of great difficulties, China has kept the RMB exchange rate basically stable.
China has taken an active part in the Global Trade Finance Program of the International Finance Corporation and decided to provide US$1.5 billion as the first portion of its financial support to the Program. We support regional development banks in providing financing services, and we will continue to coordinate with international financial institutions and relevant countries to further strengthen multilateral, regional and bilateral cooperation in trade finance.
China has made utmost efforts to provide support and assistance to other countries and signed bilateral currency swap agreements worth RMB650 billion with relevant countries and regions. We are ready to conclude more such agreements as circumstances may require. We have actively participated in the Self-managed Reserve Pooling Arrangement of the Chiang Mai Initiative Multilateralization scheme in an effort to uphold economic and financial stability in our region and promote regional financial cooperation and trade.
China has sent large procurement missions abroad, demonstrating its firm commitment to staying open to the world and promoting global economic recovery.
China has undertaken in unequivocal terms to implement the assistance measures announced at the Beijing Summit of the Forum on China-Africa Cooperation. We will continue to increase aid for Africa and reduce or cancel debts owed by African countries as our ability permits. We will expand trade with Africa, increase investment there, and enhance practical cooperation with Africa. As part of South-South cooperation, China will continue to offer assistance to other developing countries to the best of its ability, in the form of grant, debt relief and aid for trade.
China will continue to work with the rest of the international community to enhance macroeconomic policy coordination, advance the reform of the international financial system, maintain the stability of the multilateral trading system and contribute its share to world economic recovery.
After the chilly winter is gone, we will again embrace spring, when everything will take on a new look. As long as we build confidence and cooperate, we will overcome the severe challenges of the international financial crisis and usher in an even brighter future.