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Statement by the Chinese Delegation on Item 92 (e): Financing of Development, Including Net Transfer of Resources Between Developing And Developed Countries
(6 October 2000)

2000/10/06
Mr. Chairman:

Over the past year, it is encouraging to see the world economy has moved out of the shadow of financial crises and the overall situation has been improving. However, it is necessary not to overlook a harsh reality, that is, the growing development gap between the North and the South, as pointed out by many countries during the general debate at the Second Committee this year. A large number of developing countries are beset by worsening poverty and are being increasingly marginalized in the process of globalization. In the view of the Chinese delegation, how to integrate developing countries into the world economy to enable them to join globalization, so as to achieve development and eliminate poverty, will be a serious challenge confronting us in the new century. One of the most important means of dealing with this challenge is to raise sufficient resources for development.

The Chinese delegation would like to express its gratitude to the secretary-general for his report on this sub-item. As can be seen in this report, the current situation in the field of financing of development is far from satisfactory. In 1999, net financial flows to developing countries continued to decline. In Southeast Asia, which was severely affected by financial crises, net financial outflows represented a large increase over 1998. The situation was basically stable in Africa, but the overall level was too low, far from meeting its needs. All this is in sharp contrast to the thriving situation of the world economy as a whole, and also clearly points out the direction of our efforts.

Mr. Chairman,

The United Nations has been considering the issue of financing of development for many consecutive years. The Chinese delegation holds the view that in order to achieve progress in the field of financing of development, it is the most fundamental and urgent to reform and strengthen the existing international financial system. Globalization has led to rapid changes in the international economic environment. To adapt to the new situation, the financial system must be responsive in terms of the challenges confronting the developing countries as well as in relation to the objectives set by the major global conferences in the 1990s and the Millennium Summit. In the previous two years, the Second Committee of the General Assembly adopted two very important resolutions, " financial crises and its impact on growth and development, especially in the developing countries" and "toward a stable international financial system, responsive to challenges of development, especially in the developing countries." The resolutions reflected the consensus of the international community in this regard. In the process of reforming the financial system, it is important to increase transparency and information flows, to enhance financial regulation and supervision, to adopt appropriate exchange rates and capital account regimes, and to promote the private sector's participation in the resolution of crises, but, having developing countries participate in the decision-making process of financial institutions on an equal and effective basis is of critical importance to realize the goal of establishing " an open, equitable, rule-based, predictable, and nondiscriminatory  multilateral trading and financial system", as provide by the Millennium Declaration. The United Nations, as the most universal and most representative organization in the world, should play an important role in this process on the basis of its comparative advantages. At the same time, the United Nations should also improve its cooperation with Bretton Woods Institutions, the World Trade Organization and other multilateral agencies and promote their policy coordination.

Official development assistance (ODA) remains the main source of external finance for many low-income countries, and is also an important form of international development cooperation. ODA plays an important irreplaceable role in helping developing countries achieve comprehensive economic and social development and improve people's living standards. We express our appreciation to Norway and other countries for their active efforts to provide ODA. However, for many years, the overall level of ODA has been continually declining, a situation which is unsuited for expanding and intensifying international development cooperation and incapable of meeting the requirements raised by the effort to achieve the series of development objectives set by the major global conferences in the 1990s. We again appeal to the developed countries to show political far-sightedness and determination and adopt effective measures, so as to stop the decline of ODA and to push it up to 0.7% of their GNP as promised.

Because of the development of globalization, private capital is playing an increasingly important role in financing for developing countries. However, because of its profit-driven character, private capital bypasses many countries and fields that are the most in need. As facts have shown, the speculative character and uncertainty of private capital often brings disastrous consequences to the relevant countries and the world economy as a whole. Therefore, it is necessary to establish appropriate mechanisms at the international level to encourage and direct private capital to enter the fields of development, while minimizing its negative impacts. The private sector should be made to shoulder some responsibilities and to actively participate in the work of preventing and resolving financial crises.

It is not possible to avoid the issue external debt in a discussion of financing for development. For a long time, heavy debt burdens have seriously constrained developing countries, especially African countries and the least developed countries, in their efforts to achieve economic and social development and poverty eradication. In recent years, the international community has formulated some measures to tackle this problem and achieved some results. However, the implementation of the HIPC initiative and the enhanced HIPC initiative has not yielded satisfactory results, and the above-mentioned countries still suffer from heavy external debt burdens. During the general debate in this Committee this year, many developing countries called on the international community to adopt more decisive and far-sighted measures and to cancel all unsustainable external debts. The Chinese delegation supports this sound proposal.

To help developing countries mobilize financial resources for development, it is necessary to provide developing countries with aids, but it is even more important to enhance their ability to raise funds on their own efforts. In this regard, an important means is to enhance developing countries' ability to raise funds through trade. However, the current reality is that some developed countries, while urging developing countries to further open up their markets, have used such barriers as anti-dumping measures, labor standards, and quotas to prevent developing countries' low-price, good quality products from entering their own markets. According to the Secretary-General's Millennium report, economic losses of developing countries from trade protectionism alone are about $20 billion each year. This has doubtless significantly limited developing countries' ability to raise funds. To resolve this problem, the developed countries must truly open their markets to goods and services from developing countries and apply differential and preferential treatments, so as to ensure market access for developing countries, especially the least developed countries.

The high-level inter-governmental event on financing for development will be held in 2001. This event will constitute important progress achieved by the United Nations in this field and will also provide an important opportunity for tackling various issues in the field of financing for development. We hope that the event will be completely successful, so as to bring new vigor to international development cooperation, especially cooperation in the field of financing for development.

Thank you, Mr. Chairman.
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