【正确答案】Join Hands to Contribute to Asia's Econcomic Rise
Speech by Mr. Zeng Peiyan at the Luncheon of the Bo'ao Forum for Asia annual Conference 2009
(18 April 2009)
Ten years ago this time, the countries battered by the Asian financial crisis were struggling toward economic recovery. That crisis was thought-provoking as people began to pore over the future of Asia and the Boao Forum for Asia, created shortly after the crisis, offered a useful platform for high-level dialogues among countries in the region. The ongoing crisis is wider and deeper than the Asian financial crisis and has dealt a blow to economic globalization. However, I am confident that as long as all the countries make effective efforts, the crisis will be overcome and the trend toward globalization will not be reversed. We meet at the Forum to discuss ways to tackle the crisis, learn hard lessons from setbacks and put in place a new international economic order in an effort to make world economic growth more stable, global economic structure more reasonable and North-South development more balanced.
As impacted by the financial crisis, global consumption, investment, trade, production and employment have contracted, and the world economy, which is still in recession, may record negative full-year growth this year. Globalization has made economies closely-interconnected and countries will rise or fall together. This calls for stronger cooperation among major economies to discuss economic responses, advance policy coordination, guide market behavior and help the world economy out of the crisis as soon as possible.
Since the outbreak of the crisis, economies around the world have introduced a range of stimulus plans, which are expected to deliver encouraging effects. It is noteworthy that sometimes inflation and deflation are not far from each other. At present, tight liquidity has yet to be notably reversed and in response to the deflationary pressures, it is necessary to take supra-conventional and more creative fiscal and monetary policies indeed. However, as countries are stepping up bailout, combating deflation and addressing draining liquidity, inflationary risks must not be ignored. The Federal Reserve's massive purchase of US government bonds based on its quantitative easing monetary policy has added the pressures of turning budget deficit into inflation. This has become an issue of concern among countries over their heavy investment in the US. To assure the world, the US should improve the mechanism of pegging government bonds earnings to inflation to ensure the good value and value increase of its government bonds and protect the interests of Asian countries and other international investors. Meanwhile, it will help the US Government obtain continued foreign funding support and pave the way for an early recovery of the US economy.
International trade and investment have always been important drivers behind world economic growth. As global market shrinks and unemployment rises, trade and investment protectionism are mounting in more complex, diverse and invisible forms. The beggar-thy-neighbor approach will end up harming everyone. In stead of saving the world economy, it will, quite the contrary, worsen trade frictions and investment disputes. The world market will not prosper without a just, fair and reasonable order. Amid the ongoing crisis, it is necessary to encourage the expansion of international trade and investment. Developed countries need to lead the way in dropping restrictions on goods and services import, relaxing review on foreign investment access and dismantling barriers on the export of technology and related goods. Developing countries should also open up their markets and promote trade and investment liberalization and facilitation. Only with that, can developing and developed countries grow in a mutually-beneficial manner.
The just concluded G20 London Summit produced positive and practical outcomes on strengthening the resources base of international financial institutions, tightening international financial regulation and helping developing countries, and showed to the international community the confidence and willingness on jointly overcoming the crisis. Although the participating countries agreed in principle with the consensus of the summit, the implementation will still be very challenging. The curtain of the reform of the international financial system has just been raised, many fundamental and systematic challenges have yet to be addressed and the enormous systematic risks that built up in the international financial system remain unresolved. The international community should make unremitting efforts to build a new global financial order, bring into full play the roles of international financial institutions in upholding international financial stability and strengthening financial regulation, give developing countries greater say in the international financial system, implement in real earnest the agreed global financial regulatory and supervisory measures and diversify international reserve currency system. The reserve currency countries should take up their due international responsibilities, keep their currency value stable and prevent exchange rate war incurred by competitive devaluation.
In the recent years, emerging economies have risen rapidly. Due to the fact that their development models are mostly export-driven, sliding export, declining foreign investment inflow and mounting unemployment in the crisis have taken a toll on their real economies and dealt a heavier blow to them than to developed countries. Many emerging economies are in Asia and at this critical juncture, an inappropriate response may ruin their development achievements for years. Asian countries and regions need to build up capacity to cushion themselves against risks and roll out stronger economic stimulus plans. In addition to relying on existing international rescue mechanisms, Asian countries should fully tap into their internal potential and make the most of regional cooperation mechanism to jointly respond to the crisis. The steps that can be taken into account include strengthening regional monetary cooperation to scale up bilateral currency swap and making use of the sizable foreign exchange reserve of the region to create special fund for infrastructure and agricultural investment and support real economy. Recently, the Chinese Government announced a series of steps to strengthen cooperation with the ASEAN including signing the Investment Agreement for China-ASEAN FTA, launching an investment fund for infrastructure networks development and extending loans to ASEAN countries. These focused measures embody China's sincerity in strengthening collaboration with partners to weather the tough times and I believe they will help Southeast Asian countries come out of the crisis sooner. I hope these measures will be implemented and take effect at an early date.
For much of the period since the beginning of the new century, the Chinese economy has been expanding at an annual rate of over 10 percent. But the tough international environment today has also made adverse impact on China. Our economic growth slowed down to 6.8 percent in the fourth quarter of last year and further declined to 6.1 percent in the first quarter of this year. Despite the dropping growth rate, as the effects of our policies aimed at boosting domestic demand are increasingly felt, the slowdown is decelerating and the economy is expanding more steadily. The fixed asset investment in the first quarter of this year grew 28.8 percent, an increase higher than that of last year, and the investment is on track to continue to rise faster as the fiscal and monetary policies take effect. The retail sales of consumer goods expanded 15.9 percent, which is faster than that of the corresponding period of last year, but the consumer demand can hardly increase significantly in the short term. The volume of import and export dropped 24.9 percent year on year and will not bounce back sharply pending the recovery of other major economies. In addition, the uncertainties and destabilizing factors affecting the Chinese economy are many. China's future economic growth will, to a large extent, hinge upon boosting domestic demand, and investment increase will have an important role to play. In scaling up investment, the need to improve people's well-being, support jobs and restructure industries should be taken into account, and it is imperative to act promptly to get policies and programs implemented on the ground to drive up immediate demand. The major drivers behind boosting consumption are rural areas and urban middle-income groups, which should remain as priorities on our policy agenda, I am confident that the Chinese economic growth will make important contribution to world economic recovery and Asian economic stability.
Ladies and Gentlemen,
The world economy keeps moving forward as ocean waves and growing in an upward spiral. The crisis will be behind us and the recovery is bound to come. However, both developed and developing countries should learn lessons from the past as we tackle the crisis and must not pursue short-run economic growth at the expense of resources and environment any more. Rather, it is important to be committed to a scientific outlook aimed at sustainable development, support green modes of production and styles of life and promote efficient and clean development. We hope the next round of world economic growth will be led by green recovery instead of being a simple repeat of the previous economic cycles.
Thank you!