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Statement by Ms. BAI Yongjie, Counselor of the Chinese Delegation at the 60th UN General Assembly Second Committee Under Agenda Item 50 Macroeconomic Policy Questions (b) International Financial System and Development, (c) External Debt Crisis and Development
2005/10/10

2005/10/10


Mr. Chairman,

The Chinese Delegation associates itself with the statement by the distinguished delegate of Jamaica on behalf of the Group of 77 and China and wishes to make the following points concerning the macroeconomic policies, in particular the international financial system and external debt.

One, since 2005, the global economic growth has decelerated measurably, but managed to maintain a sound momentum of growth, with significant growth of major economies and heartening economic growth rate of quite a number of developing countries. At the same time, the uncertainty of geopolitics, the rising oil price and the outflow of international capital to the developed countries pose new challenges to the world economic development. Some developing countries, in particular the least developed countries are confronted with many difficulties such as lack of financial resources, deterioration of terms of trade and domestic conflicts. As the gap between the world's rich and poor further widens, we have to face squarely the risks and contradictions for the world economic growth.

Two, at present, the economic fundamentals and capacity of developing countries to ward off risks are still weak, coupled with their inadequate voice and representation in international financial institutions. In an increasingly globalized economy, financial crisis may easily break out in these countries and make them the biggest victims. The international financial architecture established 60 years ago can no longer meet the current needs, thus has to undergo necessary reforms. The Chinese delegation believes that the international community should push for the reform of the international financial system from an inter-dependent perspective. To this end, efforts should be make on 2 fronts:

--The decision-making mechanisms of the system should be improved. The major industrial countries should strengthen their policy coordination and set greater score by conducting dialogues with emerging market and developing countries. At the same time, the voice and representation of the rapidly-growing emerging market countries and the vast number of developing countries in the World Bank, International Monetary Fund and other financial fora should be enhanced so as to better reflect the economic power of those emerging market countries and developing countries as well as to advance the cause of democratization of international economic relations.

--In terms of international exchange rate regime, the industrial countries have the responsibility to step up coordination to ensure the relative stability of the exchange rates of the three main currencies. The World Bank and