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Statement by Yuan Yuan of the Chinese Delegation at the 61st UNGA Session on Agenda Item 51: Macroeconomic Policy Questions: (b) International Financial System and Development; (c) External Debt Crisis and Development;(d) Commodities

2006-10-09 00:00

Madame Chairperson,

The Chinese delegation supports the statement of South Africa on behalf of G77 and China and wishes to stress the following points concerning questions of international financial system, external debt and commodities:

Financial stability and security are essential for the stable development of world economy. In recent years, while no systemic financial crisis occurred in the world, financial risks have not decreased. The worsening imbalances in global development, the fragility of the financial systems of the developing countries and changes in international economic landscape have posed new challenges to the international financial system. Members of the international community, in light of their interdependence and with a view to maintaining global financial stability, should strengthen dialogue and cooperation in order to reform the international financial system to enable it both to respond to financial crisis more effectively and to prevent financial instability in a timely fashion.

Firstly, the decision making mechanisms of the international financial system should be improved. Developed countries should take seriously and indeed strengthen dialogue and consultations with developing countries in order to set up, on the basis of equality and mutual benefit, a policy framework characterized by coordination and mutual trust so as to implement various policies in a flexible manner and maintain the stability of the international financial market. Meanwhile, the voice and representation of developing countries should be increased in the World Bank, IMF and other financial fora as a response to the requirements of the democratization of international economic relations.

Not long ago, at the Annual Meeting of the IMF and the World Bank held in Singapore, the IMF Executive Board adopted a resolution on IMF Quota and Voice Reform, which decided to grant ad hoc quota increases for a group of the most clearly underrepresented counties and carry out as soon as possible the second stage of the reform concerning issues like quota formula, basic votes, etc.

China welcomes this decision and hopes that countries demonstrate further political will, adopt a flexible and practical approach, continue with the efforts to reform the international financial system, increase the voice of developing countries and enhance their representation. In addition, relevant parties should pay attention to the cooperation on human resources development and capacity building in the financial area. In this respect, special attention should be given to helping developing countries build up financial capacity so as to strengthen their capabilities to withstand financial risks.

Secondly, international financial policy coordination mechanisms should be improved. Countries concerned, major industrialized countries in particular, should shoulder their responsibilities, strengthen coordination, stabilize market expectations via prudent and orderly adjustment, ensure the relative stability of exchange rates amongst major reserve currencies, and promote an orderly correction of global imbalances. Besides, international financial institutions should strengthen oversight on the fiscal policies of countries whose currencies are major reserve currencies, focus attention on the monitoring and control of short-term capital flow with a view to guiding such flow in a rational manner, refine regulations of large financial corporations, promote and strengthen the coordination of international financial oversight efforts, and guard against systemic financial risks.

Madame Chairperson,

The debt problem has long plagued the economic and social development of developing countries. Since the 1990s, with constantly growing external debt, these countries have been besieged with ever increasing debt burdens. An appropriate solution of this problem resulting in a relief of the debt burden is an important prerequisite for poverty eradication and economic development of many developing countries, especially the LDCs.

The debt problem of developing countries has far-reaching historical and political causes and is directly related to the unjust and irrational international economic order. It should be tackled by addressing not only the symptoms, but more importantly, the root causes. The international community should provide substantive help to the developing countries to extricate them from the vicious debt circle once and for all.

Firstly, developed countries, as major creditors, should actively fulfill their commitments on ODA as contained in the Monterrey Consensus and 2005 World Summit Outcome Document, increase assistance and enhance its efficiency. With the Multilateral Debt Relief Initiative launched by G8 last year moving ahead smoothly, countries concerned should intensify efforts and take viable measures to guarantee the additionality of debt relief funds in a continued endeavor to really reduce the debt burden of relevant countries.

Secondly, the international and regional institutions concerned should adhere to the principle of non-politicization, focus truly on poverty reduction and development, employ various means to help developing countries enhance capacity building and realize debt alleviation and economic and social development. When providing policy advice and financial assistance, multilateral institutions should respect the special needs and delivery capabilities of developing countries and come up with feasible development proposals based on local conditions. It is important not to simply copy models of developed countries, still less to only emphasize governance and fight against corruption at the expense of poverty reduction, development and other more urgent issues because that would be like "stop eating for fear of choking".

Madame Chairperson,

As a developing country, China has always attached importance to the debt problem, and has, within the framework of South-South cooperation, provided assistance to some other developing countries to the best of its capabilities.

China's assistance to other developing countries is based on full respect for the needs and ownership of the recipient countries. Its main purpose is to supplement development funds of those countries, promote local economic and social development, and enhance their own development capacity. While providing new funds, China also endeavors to offer large scale debt relief to the recipient countries. Up till now, China has canceled a total of 208 government debts owed to it by 46 developing countries, which amounts to 17 billion RMB yuan. At the High-level Meeting on Financing for Development of the Summit last year, President Hu Jintao of China announced a series of new measures to help other developing countries speed up development. They included such offers as zero tariff treatment, debt reduction and cancellation, consessional loans, public health cooperation and human resources training. We are ready to explore together with other countries effective ways to reduce the debt burden of developing countries in an effort to help their economic and social development.

Madame Chairperson,

As to the issue of commodities, the Chinese delegation wishes to thank UNCTAD for its report about World Commodity Trends and Prospects. We agree to the analysis contained therein, namely, the rebound of commodity prices since 2003 is beneficial to the economic growth of developing countries, the LDCs in particular. Many developing countries rely heavily on the export of primary commodities as both the main source of foreign income and an important driver for increasing investment and boosting economic growth and social development. Their concerns on commodity issues deserve the attention of the international community. On July 24 of this year, the Doha Round of the WTO negations was suspended, which put on hold many issues of concern to the developing countries such as the reduction of domestic agricultural subsidies by the developed countries. We feel deeply worried about this impasse. We hope that all members of the WTO demonstrate political good faith, that developed countries in particular take the lead in making substantive efforts so that the Doha Round would be resumed and a balanced multilateral trade agreement in line with the Doha Development Agenda spirit eventually reached.

Madame Chairperson,

Since 1992, China has been gradually cutting the average tariff rate for agricultural products. It was reduced to 15.35% in 2005, which represented a reduction range of 72%. This is a major contribution of China to the promotion of world trade. China will continue to actively promote South-South trade, increase trade and exchanges with other developing countries and support their endeavor to expand trade as a means to achieve economic development and rise from poverty.

Thank you, Madame Chairperson.

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