Statement
by Mr. Zhou Xiaochuan,
Governor
of the People´s Bank of China,
at the
Joint Annual Meeting of the IMF and the World Bank
October 3, 2004
Mr. Chairman, Governors,
Ladies and Gentlemen:
We are very pleased to see
increasing evidence of the global recovery, with growth rates in most regions
exceeding original expectations. While this is apparent in the world's major
economies！the United
States,
Europe, and Japan！economic growth
rates in the developing countries and many regions have also been remarkable.
Undoubtedly, countries can take advantage of these developments to resolve
inconsistencies and imbalance problems in their economic operations by making
structural adjustments, while at the same time creating sound conditions for
the developed countries to carry out their obligations in promoting global
sustainable development.
However, we cannot ignore
the risks and challenges to sustained growth of the global economy. Complex
geopolitical issues and terrorism pose threats to global peace and development.
The economic structural problems of the major developed countries are having a
potentially negative impact on global economic development, exchange rates, and
even financial market stability. Affected by the geopolitical situation and the
dynamics of supply and demand, the rise in international oil prices has
triggered widespread concern, with a marked correlation between financial
market volatility and changes in oil prices. The new round of interest rate
increases not only will narrow the long- and short-term interest rate spread
and squeeze the profitability of financial institutions, but will also increase
the financing costs of developing countries. Emerging markets´ resilience to
external shocks is still weak, and the many low-income and developing countries
have a formidable task in revitalizing their economies through structural
reform. In addition, the unfair trade system and lack of external financial assistance
are seriously hindering development in these countries.
Over the past year, China´s economy has
maintained the momentum of rapid growth. In the first half of 2004, GDP growth
was 9.7 percent y-o-y, 0.9 percentage points higher than the growth rate last
year. Foreign trade continued to grow, with total imports and exports for the
first eight months of 2004 reaching US$722.1 billion. Fiscal revenue increased
significantly to RMB1.4307 trillion yuan in the first half of 2004, up 30.6
percent y-o-y.
Since 2003, China has introduced a
series of macroeconomic management measures in response to over-investment in
certain sectors of the economy with the result that the unstable and unhealthy
factors in the economy have been curbed. Based on updated statistics, the
growth of money supply slowed in August, with all intermediate targets for monetary
policy lower than expected at the beginning of the year. The consumer price index
rose by 5.3 percent, due mainly to rising food prices compared with the same period
last year. Inflation, which excludes food and oil prices, remains relatively
low, demonstrating that China´s macroeconomic management measures have
played an important role in lowering credit and investment growth, leading to
brighter prospects for a soft landing. The Chinese government is firmly
resolved to curb over-investment in certain economic sectors and to promote
economic and financial reform. We will pay close attention to macroeconomic
developments and remain prepared to take the necessary steps to consolidate the
gains in macroeconomic management.
In 2004, we have taken
important steps to reform state-owned commercial banks and capital markets.
Learning from international practice, we have begun to restructure two state-owned
commercial banks as share holding companies, which are scheduled to be listed
in 2005. Furthermore, reforms are also underway at banks and non-bank financial
institutions！ including the two other state-owned commercial banks, joint stock
commercial banks, urban commercial banks, and rural credit cooperatives. We
have also introduced the Qualified Foreign Institutional Investors scheme,
allowing the investment of foreign capital in China's security
markets. Through these reforms, we will build a strong financial system able to
support the sustained, stable, and rapid growth of China´s economy.
The recovery of the Hong
Kong SAR economy continues. For the first half of 2004, real GDP registered
robust growth of 9.5 percent. Growth was broadly based, supported by further
implementation of the Closer Economic Partnership Arrangement between Hong Kong
SAR and the Mainland and gradual expansion of travel deregulation to more mainland
cities and provinces. Consumer confidence continued to recover, putting an end to
almost six years of deflation.
Driven by service exports,
real GDP in Macao SAR grew by 36.0 percent for the first half of 2004, and the
unemployment rate dropped to 4.9 percent. The further strengthening of economic
cooperation between the Mainland and Macao SAR contributed not only to the continued
growth momentum in the tourism industry and strengthening the role of its trade
platform, but also to the development of the financial sector and new
industries.
We believe that the global
recovery combined with the stable growth of the Mainland！ with the full support
of the central government！will help the economies of Hong Kong SAR and Macao
SAR maintain the momentum of strong growth.
We appreciate the Fund´s
efforts to promote global economic and financial stability by strengthening
surveillance. Nevertheless, we believe that the Fund should place greater focus
on surveillance of the major developed countries that have a significant impact
on the global economy. These countries should be encouraged to better
coordinate their economic policies, maintain exchange rate stability for the
major currencies, increase financial aid to the developing countries, and open
their markets to them.
While we support the efforts
of the international multilateral institutions to develop standards and codes
and introduce them to facilitate global economic and financial development on a
voluntary basis, we suggest that the Fund and the World Bank should fully
consider countries´ different stages of development and their specific
circumstances. In developing and introducing these standards and codes, the
Fund and the World Bank should listen more to the voice of the developing
countries while adhering to the voluntary principle and the gradual approach.
As the number of international standards and codes increases, the Fund and the
World Bank should be more selective, focusing on those that are closely related
to their core areas of expertise, avoiding those areas that are not.
After many years of effort,
the international community has made considerable progress in development
matters; however, the developing countries still face serious bottleneck constraints.
Many developing countries lack development funds and can hardly achieve sustained
and effective structural reform. Therefore, we hope that the developed
countries can implement the Monterrey Consensus as soon as possible, increase
their development aid funds, and reach at an early time the ODA level of 0.7
percent to GNP, set by the United Nations. Promoting fair trade will not only
help the developing countries, but will also benefit the developed countries.
The developing countries have long faced an unfair trade environment. We are
pleased that the Fund and the World Bank are promoting the Doha Round of trade
negotiations and advocating an open and fair multilateral trade mechanism. At
present, the Doha Round of trade negotiations has made some progress. We hope
the international community will continue their efforts. We urge the developed countries
to lower their trade barriers and reduce their subsidies on agricultural
products, so that the Doha Round of trade negotiations can achieve substantive
progress.
