Work in Unity for the Future
Remarks by H. E. Hu Jintao
Toronto, 27 June 2010
Prime Minister Stephen Harper,
It gives me great pleasure to attend the fourth G20 Summit in Toronto and discuss with you the important subject of promoting full recovery of the world economy. Let me begin by thanking Prime Minister Harper and the Canadian government for their active efforts and thoughtful arrangements for this meeting. I also wish to take this opportunity to express thanks to all of you for giving valuable support and assistance to Expo 2010 Shanghai.
With the concerted efforts of G20 members and the entire international community, the world economy is gradually recovering. But the recovery is neither firmly established nor balanced and there are still quite many uncertainties down the road. Sovereign debt risks continue to rise in some countries. A host of problems have been exposed in some systemically-important financial institutions. Exchange rates of major currencies fluctuate drastically and international financial markets suffer from persistent volatility. Commodity prices hover at a high level and protectionism of various forms is notably growing. All this shows that the deeper impact of the international financial crisis is yet to be overcome and systemic and structural risks in the world economy remain very serious. We must fully recognize the gravity and complexity of the deep impact of the international financial crisis and continue to work in a spirit of unity and win-win progress.
The Framework for Strong, Sustainable and Balanced Growth launched at the Pittsburgh Summit is of great importance to the long-term healthy growth of the world economy. I wish to offer the following proposals concerning the efforts required for bringing about strong, sustainable and balanced world economic growth at an early date.
First, we need to turn the G20 from an effective mechanism to counter the international financial crisis to a premier platform for advancing international economic cooperation. The complex world economic situation makes it necessary for the G20 to play a guiding role. We need to take a longer-term perspective and shift the focus of the G20 from coordinating stimulus measures to coordinating growth, from addressing short-term contingencies to promoting long-term governance and from passive response to proactive planning. We should strengthen coordination of macroeconomic policies among G20 members, keep the right intensity of our policies and support countries hit by the sovereign debt crisis in overcoming the current difficulties. We must act in a cautious and appropriate way concerning the timing, pace and intensity of an exit from the economic stimulus packages and consolidate the momentum of recovery of the world economy. We must follow through on the decisions and consensus of the previous G20 summits and uphold together the credibility and effectiveness of the G20. We must advance the G20's institutional-building under the principle of seeking gradual progress and win-win outcomes, and properly handle various problems and differences in order to ensure the sound development of the G20 summit mechanism. We need to well manage the G20's relationship with other international organizations and multilateral mechanisms and ensure that the G20 plays a core role in promoting international economic cooperation and global economic governance.
Second, we need to accelerate the establishment of a new international financial order that is fair, equitable, inclusive and well-managed. We must learn the hard lessons of the international financial crisis, take effective measures to address the root causes of the crisis, and push forward reform to ensure that the future international financial supervisory and regulatory regime is easy to operate and highly accountable. It is important to establish an international financial system that is good for the growth of the real economy. We need to establish and enforce strict capital and leverage ratio requirements, bring the shadow banking system under supervision and regulation and formulate globally consistent accounting rules. We need to make greater efforts to strengthen supervision and regulation of systemically-important financial institutions and take necessary precautionary measures to forestall excessive risks and speculation. We need to stress the consistency of core principles and standards of international supervision and regulation and, at the same time, take into full consideration the differences between financial markets of individual countries to make financial supervision and regulation more focused and effective. We need to strengthen regulation of credit rating agencies, reduce dependence on these agencies and improve their code of conduct and accountability system. It is particularly important to establish objective, fair, reasonable and uniform methodologies and standards for sovereign credit rating so that the rating results can accurately reflect the state of a country's economy and credit worthiness. We need to continue to push forward the reform of international financial institutions, complete the adjustment of IMF quotas at a faster pace, enable more people from emerging markets and developing countries to assume senior management posts at international financial institutions, and increase the representation and voice of developing countries. We need to enhance the IMF's capacity-building and surveillance reform, and we need to strengthen supervision over macroeconomic policies of various parties, particularly major reserve currency issuing economies.
Third, we need to advance the building of an open and free global trading regime. We must take concrete actions to reject all forms of protectionism, and unequivocally advocate and support free trade. We must renew our commitment not to impose new restrictions on goods, investment and services, and earnestly follow through on this commitment. Developed countries should promote international trade with greater openness. It is important to address trade frictions appropriately through dialogue and consultation and under the principle of mutual benefit and common development. We should work for comprehensive and balanced outcomes from the Doha round negotiations and attain the goals of this development round at an early date. And we should do so by upholding the Doha mandate, locking up the existing achievements, and working on the basis of the existing negotiating text.
We must recognize that "strong, sustainable and balanced growth" is an integral concept. To ensure strong growth is the top priority in today's world economic development; to enable sustainable growth is our long-term objective; and to achieve balanced growth through the transformation of the economic development pattern is necessitated by the calling of our times. We need to take proactive steps to ensure strong growth, make great efforts to develop the real economy, create jobs for the people and step up international cooperation in emerging industries. We should overcome difficulties in the course of progress and tackle challenges through growth. We should value sustainable growth, which includes sustainability of the environment as well as sustainability of fiscal, monetary, trade and industrial policies, and reduce macroeconomic fluctuations and risks. We should strive for balanced growth, including balanced growth both among different parts and industries of a country and among different countries and regions. It will take a long and complex process to achieve strong, sustainable and balanced growth of the world economy. It cannot be done overnight. We must make persistent efforts to push forward this process. And in doing so, we must also take into account specific circumstances of individual countries and respect their diverse development paths and models.
In its pursuit of economic development, China has all along worked hard to promote strong economic growth. Between 1978 and 2008, the Chinese economy grew at an average annual rate of 9.8%. Since the outbreak of the international financial crisis, China has comprehensively implemented and continuously enriched and improved its package plan and other policy measures in response. As a result, the Chinese economy grew by 8.7% in 2009 and contributed its part to regional and global economic recovery. Since the start of 2010, the Chinese economy has maintained steady and relatively fast growth. In the first quarter, the economy grew by 11.9%. China has always valued sustainable growth, as evidenced by its efforts to keep budget deficit under 3% of GDP. Since the beginning of this year, as we work to maintain the consistency and stability of our macroeconomic policies, we have also stressed the need to make our policies more responsive and flexible in the light of evolving circumstances, strike the right balance between ensuring steady and relatively fast economic growth, restructuring the economy and managing inflation expectations, and put in greater efforts to make economic growth more sustainable. China has always attached great importance to balanced growth. In countering the international financial crisis, the various policies China has adopted to boost domestic demand have shown notable results. In 2009, while China's total exports in goods dropped by 16%, its retail sales were up by nearly 17% in real terms, fixed asset investment increased by about 30%, and current account surplus relative to GDP fell to 6.1%. Since the start of this year, China's trade surplus has continued to drop by a big margin. The trend towards current account balance has picked up speed. And balanced economic development has gathered even stronger momentum.
We are soberly aware of the difficulties and challenges that China faces, including a large population, a weak economic foundation, lack of balance in the development between urban and rural areas and among different regions, and serious environmental and resource constraints. Each year, 24 million urban residents enter the job market and a huge number of surplus rural workers need to find non-agricultural jobs. And a considerable number of people are yet to be lifted out of poverty. To address these difficulties and challenges, we have been following a scientific outlook on development that puts people first and seeks comprehensive, balanced and sustainable development. A key objective and strategic move in our endeavor to implement this scientific outlook is to accelerate the transformation of economic development pattern. We are focusing our efforts on readjusting at a faster pace national income distribution pattern, urban-rural development structure, regional development structure and industrial structure. We are speeding up efforts to encourage scientific and technological innovation, and expediting the development of modern agriculture, conservation culture, cultural industries and the social security system. Our goal is to promote balanced economic and social progress. These adjustments and transformations will not only contribute to the comprehensive, balanced and sustainable growth of the Chinese economy, but also benefit the world economy. To transform the pattern of economic growth is a long-term and complex process that requires tremendous efforts. China stands ready to work with other parties to draw on each others' strength, pursue cooperation on the basis of equality and common development, and bring about a more rational division of international labor, a more balanced financial and trade structure, a more scientific pattern for resource allocation and a more equitable system for interest sharing so as to put the world economy on the track of sustained and balanced growth.
To achieve genuine long-term and sustainable growth of the world economy, it is imperative to help developing countries achieve full development and narrow the development gap between the North and the South. Developing countries have been hit hard by the financial crisis and they find it a daunting task to overcome the difficulties caused by the crisis. The G20 is primarily composed of developed countries, emerging markets and developing nations with a relatively higher level of industrialization. The combined GDP of G20 members accounts for 85% of the world's total. However, we should not neglect the development aspirations of other developing countries, which take up over 85% of countries in the world. It is incumbent upon the G20 to provide stronger political drive, greater economic resources and better institutional guarantee for development.
The international financial crisis has made it more difficult to attain the UN Millennium Development Goals (MDGs). It will be an uphill battle to achieve the set objectives by 2015. We must take more credible actions to address the issue of development. We must secure development resources, improve development institutions and promote development cooperation to ensure that the UN MDGs will be met on schedule. Developed countries should honor in good faith their commitments on official development assistance, market opening, and debt reduction and cancellation. They should scale up financial and technological support for developing countries and help them build stronger capacity for self development. The World Bank, the IMF and other international financial institutions should use their resources to help, on a priority basis, developing countries, the least developed countries in particular.
Since the outbreak of the international financial crisis, China has provided assistance to developing countries through multiple means and channels. We contributed US$50 billion to IMF's resource increase with an explicit request that the resources be used, first and foremost, to help the least developed countries. We signed bilateral currency swap agreements worth RMB650 billion yuan with relevant countries and regions in a joint response to the financial crisis. To maintain regional economic and financial stability, we have established a US$10 billion China-ASEAN Investment Fund, provided US$15 billion of credit support to ASEAN countries, and actively engaged in and pushed forward East Asian financial cooperation focusing mainly on Chiang Mai Initiative Multilateralization and the Asian Bond Market initiative. We have provided US$10 billion of credit support to other member states of the Shanghai Cooperation Organization. We made the decision to provide US$10 billion in concessional loans to African countries and cancel the debts owed by heavily indebted poor countries and least developed countries in Africa and we will phase in zero-tariff treatment to 95% of the products from the least developed African countries having diplomatic ties with China. On behalf of the Chinese government, I would like to make the solemn commitment that China will continue to offer assistance to other developing countries as its ability permits within the framework of South-South cooperation, and do its utmost to help other developing countries achieve development.
It is up to all of us to work together to shape the future of the G20 and the world as a whole. Let us unite as one and work side by side to plan for and build an even better future for the world economy.