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Statement by Ms. Dong Zhihua, Counselor of the Chinese Delegation at the Second Committee of the 67th Session of the General Assembly under Item 18 (b): International Financial System and Development and Item 18 (c): External Debt Sustainability and Development

2012/10/24

Mr. Chairman,

The Chinese delegation associates itself with the statement made by Algeria on behalf of the G-77 and China.

At present, the profound impact of the international financial crisis is becoming more manifest; economic growth of countries is almost invariably slowing down; the sovereign debt crisis of some countries keeps growing; fluctuations of the international financial market and the market of bulk commodities are becoming more violent; the growth rate of international trade is at a slump; global unemployment rate remains high; market predictions for the future are somber; and there is a marked rise of risks for a downturn of the world economy. In this complex international economic and financial situation, it is of urgent necessity for the international community to safeguard growth, promote stability and seek development. The United Nations should prompt the international community to take decisive steps in the following aspects in order to create favorable conditions for promoting development throughout the world.

First, strengthen macro economic policy coordination to push for a stable recovery of the world economy. Countries should strengthen cooperation and coordination to promote trade and investment liberalization and facilitation. They should take practical and effective measures based on their own economic conditions to carry out comprehensive and deep-going structural reform and promote growth and employment. The European sovereign debt crisis and ever increasing financial deficit of some developed economies represent a major potential threat to the world economic recovery. Major developed economies should maintain the momentum of economic recovery and financial stability, strike a proper balance between short term economic growth and medium term fiscal consolidation, and resist trade protectionism so as to minimize negative spill-over effects of their policies on developing countries.

Secondly, improve international financial and monetary system in order to effectively manage financial risks. Against the backdrop of the current tenuous international financial situation, the IMF should step up monitoring and analysis of various risk factors, strengthen supervision over developed economies hosting important financial centers and their macroeconomic policies, and strengthen regulation over cross-border capital flow and commodity derivatives. At the same time, the reserve currency insurance regulatory mechanism should be improved to maintain relative stability of major reserve currencies.

Thirdly, deepen the reform of international financial institutions and increase the voice and representation of developing countries. We are concerned that the IMF has failed to complete its 2010 quota and governance reform as scheduled. We urge the countries concerned to complete their domestic approval process as soon as possible. In the medium and long term, the IMF should establish a mechanism for automatic adjustment of quotas for timely reflection of changes of the economic weight of countries. We support the IMF in carrying out even broader governance reform, which includes reinforcing the duties and responsibilities of the Executive Board and reforming the system for selecting director general in accordance with the principles of openness, competitiveness and meritocracy.

Fourthly, enhance the functions of international financial institutions in development and poverty reduction to speed up the implementation of the MDGs. We welcome the reform package of the IMF regarding financing instruments and mechanisms for low income countries, and we find it gratifying that the Global Development Report issued by the World Bank this year highlighted the role of employment in promoting growth and eradicating poverty. We hope that the Bretton Woods Institutions and the UN will strengthen policy dialogue and coordination and establish more effective mechanisms to tackle the problem of inadequate development financing so as to facilitate capital flow to developing countries, especially to the area of infrastructure, in order to increase their growth potentials. We encourage the World Bank and the IMF to engage actively in the discussions on the post-2015 development agenda and contribute to the implementation of the outcome of the UN Conference on Sustainable Development.

Mr. Chairman,

Since the beginning of this year, China’s economic growth has shown the tendency of stabilizing in its slow down. China is working hard to transform its mode of growth to one driven by domestic demand, which has led to a more even balance of international payment. In view of the uncertainties of the global economy, China will continue to take effective measures to strive for stable economic growth and expedite the transformation of its mode of economic growth. In the medium and long term, the Chinese economy will maintain a strong impetus for growth. In October this year, the Chinese government signed an agreement with the IMF on contributing $43 billion to the IMF recapitalization, which made China among the first member states to sign such agreements with the Fund. While focusing on its own development, China will continue to contribute to the promotion of strong, sustainable and balanced global economic growth.

Mr. Chairman,

External debt is one of the major obstacles to the economic growth of developing countries and the international financial crisis has further jeopardized the sustainability of the developing countries’ external debts. From 2010 to 2011, the debt burden of developing countries increased by about 12% to a total of $4.5 trillion. The international community should create better conditions for debt reduction for developing countries and promote the establishment of international debt restructuring and workout mechanisms which are fair, effective and development oriented. Developed countries are called upon to implement their debt reduction commitments, increase and broaden financial support. The international financial institutions should scale up financial support, technical assistance and capacity building for developing countries. Relevant assistance and debt reduction initiatives should respect the national ownership of recipient countries and be carried out in conjunction with the latter’s development strategies.

Since 2000, China has announced for six times consecutively its unconditional cancellation of interest-free governmental debt owed by highly indebted poor countries and LDCs. Till the end of 2011, the total sum of cancelled debts reached near 30 billion RMB. China is willing to continue to strengthen exchange and cooperation with other countries on reducing the debt burden of developing countries with a view to promoting their economic and social development.

Thank you, Mr. Chairman.

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