|Statement by Mr. Li Kexin, Counselor of the Permanent Mission of China to the United Nations, at the Second Committee of the 64th Session of UNGA on Agenda Items 51 (b): International Financial System and Development, 51(c): External Debt and Development, and 51(d): Commodities|
(12 October 2009, New York)
At the outset, I would like to welcome the reports submitted by the Secretary General and UNCTAD under this agenda item. The Chinese delegation aligns itself with the statement made by the representative of the Sudan on behalf of G77 and China.
Item 51(b): International Financial System and Development
Over the past year or so, with the united efforts of the international community, the negative impact of the financial crisis has been somewhat abated and the world economy has seen some positive changes. However, the basis for world economic recovery is not solid and uncertainties still abound. Achieving a comprehensive recovery will be a slow and torturous process. The primary task of the international community continues to be to respond to the international financial crisis and promote a healthy world economic recovery while firmly pushing for the reform of the international financial system in order to redress global development imbalances.
The outbreak of the international financial crisis shows that the existing international financial architecture has fundamental flaws and requires in-depth reform. The Secretary General mentioned in his report that the international financial system and structure are in need of reform including in areas related to mandate, scope, governance, response, and development directions. We believe that in the reform of the international financial system, the primary focus should be on enhancing the representation and voice of developing countries in international financial institutions. At the Pittsburgh Summit held last month, the G20 leaders made the commitment to increase the voting power and the quota share of developing countries in the World Bank and IMF by at least 3% and 5% respectively. These are important and timely decisions. We hope that the relevant institutions will implement them in earnest, so that the reform will lead to substantive progress. Last week, during their annual meeting in Istanbul, the World Bank and IMF made positive responses in this regard, which we welcome. The selection of the leaders of the World Bank and IMF should follow the principle of openness, transparency and merit and the relevant procedures should be set down as soon as possible. The two institutions should also take concrete measures to increase the ratio of their staff from developing countries, especially at the middle and senior management levels. As an important multilateral development institution, the World Bank should lay emphasis on its purposes of poverty reduction and development, increase the capital replenishment rate, and provide more funding for the mid and long term development of developing countries. The IMF should continue to improve its governing structure to ensure its legitimacy and representation and establish mid and long term automatic quota adjusting mechanisms to reflect, in a timely manner, the changes in the world economic pattern. The IMF should also start the study and discussion on how to reform and improve the international monetary system in a bid to fundamentally rectify its inherent shortcomings so as to provide a stable monetary environment for global economic growth and financial stability. At the same time, efforts should made to continue to push for reform of the international financial regulatory system and such reform should cover the most fundamental principles and purposes of regulation. The future financial regulatory system should be simple, viable and accountable. It is necessary to strengthen cooperation in financial regulation and control, expand coverage, formulate as soon as possible universally acceptable standards and implement effectively various reform measures.
In June this year, the UN held successfully the High Level Conference on the World Financial and Economic Crisis and Its Impact on Development. The Conference sent a positive signal to the international community that all countries are joining hands to cope with the financial crisis and made an important contribution to bolstering market confidence and promoting world economic recovery. The conference also showed that the UN can play an important role in tackling the financial crisis. China will actively participate in the work of the ad hoc working group of the General Assembly on the follow up to the UN High Level Conference and implement the consensus reached at the Conference.
Item 51 (c): External Debt and Development
The debt problem has long plagued the economic and social development of developing countries. As a result of the financial crisis, the majority of developing countries have experienced severe economic downturn, drastic export reduction, frequent fluctuations in exchange rates, and rising costs of financing, all of which have led to the erosion of their capacity to service debt. The Secretary General pointed out in his report that in 2008 the total volume of external debt of developing countries reached 3.6 trillion dollars with an increase of 176 billion dollars. A proper solution to the debt problem and a relief of the debt burden of developing countries are an important prerequisite for helping developing countries, in particular the LDCs, eliminate poverty and achieve the MDGs.
The debt problem of developing countries has deep-rooted historical and political causes. The international community should provide genuine help to developing countries in order for them to break the vicious debt circle and achieve economic development. As major creditors, developed countries, in particular, should honor their commitments, expand the scope of assistance, increase debt relief and improve net capital in-flow to developing countries. The relevant international and regional financial institutions should adhere to the principle of non-politicization, increase financial and technical assistance to developing countries and help them with capacity building. Assistance and debt relief initiatives should respect the ownership of the recipient countries and should be implemented in conjunction with their development strategies.
Item 51 (d): Commodities
Commodity trade is a major source of funding for many developing countries and the question of commodities is of critical importance for their sustainable development. However, it is disturbing to see that, in the past year, prices of many international commodities have experienced huge ups and downs on an unprecedented scale. Within the short period of six months, the most representative oil price dropped from its highest point of 150 dollars a barrel to below 40 dollars. Such wild short term price fluctuations have imposed a formidable challenge to the overall economic growth of developing countries, whether commodity exporters or importers.
Regarding this question, we should fully recognize that fluctuations in commodity prices are a result of many converging factors. Simply attributing these fluctuations to the changing needs of developing countries is neither factual, nor constructive, still less sufficient to explain the drastic fluctuations in commodity prices within such a short period of time. As the report of UNCTAD pointed out, the surge of commodity prices in the first half of 2008 cannot be explained by general factors, and the intense speculations in the commodity market could be an important cause of acute price fluctuations. The international community should reinforce policy coordination as well as financial monitoring and control on commodities, combat commodity market speculation, avoid acute fluctuations in commodity prices, and establish at an early date a fair and equitable international order for commodity trade. China appreciates the work carried out by UNCTAD on commodities and supports UNCTAD and other international institutions in further enhancing policy analysis and research on commodities.
Thank you, Mr. Chairman.