Remarks by H.E. Hu Jintao

President of the People's Republic of China

At the Summit on Financial Markets and World Economy

Washington D.C., 15 November 2008

President Bush,

Dear colleagues,

I am glad to meet you in Washington. Let me begin by thanking President Bush for his kind invitation and thoughtful arrangements.

The international financial crisis has now spread from some parts of the world to the entire globe, from developed countries to emerging markets, and from the financial sector to the real economy. It has seriously affected the economic growth and people's livelihood of all countries. It is therefore highly significant that we gather here at this crucial moment to explore ways to maintain international financial stability and promote world economic growth.

An international financial crisis of this magnitude has been rarely seen since the 1930s in terms of its breadth, depth and severity. There are many reasons behind the crisis, including both inappropriate macroeconomic policies of the economies and deficiencies in financial regulation. Without a correct understanding of this, it will be difficult to draw lessons and avoid similar crises in the future. The international community went immediately into action after the crisis broke out and adopted a series of measures at different levels. We hope these measures will produce the desired results soon. To effectively deal with the financial crisis, all countries should strengthen confidence and intensify coordination and cooperation.

The urgent task now is for the international community to continue to take all necessary measures to promptly restore market confidence and stop the spread and development of the crisis. Major developed economies should undertake their due responsibilities and obligations, implement macroeconomic policies that are conducive to economic and financial stability and growth both at home and internationally, take active steps to stabilize their own and the international financial markets and safeguard investors' interests. Meanwhile, we should all enhance macroeconomic policy coordination, expand economic and financial information sharing, and deepen cooperation in international financial regulation so as to create necessary conditions for stability in both domestic and international financial markets.

The whole world is now experiencing an economic slowdown with rising destabilizing factors and uncertainties, putting us in a grim and complex situation. Maintaining economic growth is an important foundation for dealing with the financial crisis. We should adjust macroeconomic policies and adopt fiscal and monetary measures necessary to stimulate economic growth and avoid a global economic recession. We should take concerted actions to stabilize the world energy and food markets, contain speculation, and create favorable conditions for world economic development. It is particularly important for the international community to guard against all forms of trade and investment protectionism and work for early progress in the Doha Round negotiations.

The international community should earnestly draw lessons from the ongoing financial crisis and, based on full consultations among all stakeholders, undertake necessary reform of the international financial system. Reform of the international financial system should aim at establishing a new international financial order that is fair, just, inclusive and orderly and fostering an institutional environment conducive to sound global economic development. It should be conducted in a comprehensive, balanced, incremental and result-oriented manner. A comprehensive reform is one that has a general design and includes measures to improve not only the international financial system, monetary system and financial institutions but also international financial rules and procedures. It should both reflect the general law and principles of financial regulation and accommodate the specific development phase and unique features of different economies. A balanced reform is one that is based on overall consideration and seeks a balance among the interests of all parties. Efforts should be made to form a decision-making and management mechanism that will facilitate more extensive and effective engagement of all parties and reflect, in particular, the interests of emerging markets and developing countries. An incremental reform is one that seeks gradual progress. It should, on the basis of maintaining the stability of the international financial markets, proceed in a phased manner, starting with the easier issues, and achieve the final objectives of reform through sustained efforts. A result-oriented reform is one that lays emphasis on practical results. All reform measures should contribute to international financial stability and global economic growth as well as the wellbeing of people in all countries.

Based on these considerations, we believe that priority should be given to the following reform measures. First, step up international cooperation in financial regulation, improve the international regulatory system, establish codes of conduct for rating agencies, enhance monitoring of global capital flows and regulation of financial institutions and intermediaries of various types, and improve the transparency of financial markets and products. Second, advance reform of international financial institutions (IFIs). Efforts should be made to reform the mechanisms for the formation of their decision-making bodies, increase the representation and say of developing countries, expeditiously establish an early warning system that covers the entire world, especially major international financial centers, improve the internal governance structures of IFIs, put in place a mechanism of swift and efficient crisis response and relief, and enhance the ability of IFIs to fulfill their responsibilities. Third, encourage regional financial cooperation, enhance the capacity of mutual support in liquidity, develop regional financial infrastructures and bring into full play the role of regional liquidity assistance mechanisms. Fourth, improve the international currency system by steadily promoting its diversification and making joint efforts to support its stability.

Dear colleagues,

As economic globalization gains momentum, countries have built closer economic and financial links. We must be fully aware that the current financial crisis has not only dealt a heavy blow to the financial markets in developed countries but also affected developing countries to varying degrees, and its impact is likely to grow. The economies of developing countries are at a low level and lack structural diversity. Their financial systems are not strong enough to withstand risks. When coping with the financial crisis, the international community should pay particular attention to the damage of the crisis on developing countries, especially the least developed countries (LDCs), and do all it can to minimize the damage. It is necessary to take effective measures in the following three aspects:

First, help developing countries maintain financial stability and economic growth. The international community, developed countries in particular, should assume due responsibilities and obligations and take concrete steps to help developing countries, especially African countries, get over the tough times. In particular, they should pay attention to the impact of their macroeconomic policies on developing countries and avoid aggravating the latter's difficult situation. International financial institutions should relax their lending terms to make funding more easily accessible and provide prompt aid to the developing countries that are seriously affected by the financial crisis. They should support the emerging markets in their efforts to sustain steady economic growth.

Second, sustain and increase assistance to developing countries. Developing countries face severe challenges in the course of development, and the financial crisis has added to their difficulties. The world shares the responsibility of finding a way to both resolve the financial crisis and attain the Millennium Development Goals. In this connection, developed countries should continue to meet their assistance commitments to developing countries and push forward the global agenda of poverty reduction. On top of that, they should reduce or cancel the debts of the LDCs, cut or exempt tariffs on their exports and increase technology transfer. Meanwhile, every effort should be made to help the LDCs with infrastructure construction to strengthen their capacity for self-development.

Third, maintain economic and financial stability in developing countries. Developing countries should adopt right macroeconomic policies and improve their financial systems in light of their own conditions so as to increase their capacity for preventing financial crisis. At the same time, they should try to transform their pattern of economic development, adjust their economic structures and maintain steady economic growth.

Dear colleagues,

China suffered successive natural disasters earlier this year. The international financial crisis has also had an impact on our economic development. In response to the changing situation, we have made timely adjustment to our policies and strengthened macroeconomic regulation. Our economy has maintained steady and relatively fast growth, and its fundamentals have not changed. Steady and relatively fast growth in China is in itself an important contribution to international financial stability and world economic growth. The Chinese Government will continue to take effective measures to make macroeconomic regulation more proactive, focused and effective, vigorously expand domestic demand, especially consumer demand, make great efforts to transform the pattern of economic development and adjust the economic structure, strengthen agriculture as the foundation of the economy and increase farmers' income. We will deepen reform and open wider to the outside world, deliver steady and relatively fast economic growth, and play a constructive role in ensuring global economic stability.

The Chinese Government has adopted measures to boost economic development, including lowering the required reserve ratio, cutting the deposit and lending rates, and easing the corporate tax burdens. We have recently adopted even stronger measures to expand domestic demand. The Central Government has decided to invest an additional 100 billion RMB yuan this year to accelerate projects related to people's livelihood, infrastructure, the eco-environment and post-disaster reconstruction. This is expected to generate a total of 400 billion RMB yuan of investment nationwide. Between the fourth quarter this year and the end of 2010, investment in these projects alone will reach nearly 4 trillion RMB yuan. Implementation of these measures will give a strong impetus to China's economic development and contribute to world economic growth.

As a responsible member of the international community, China has taken an active part in the international cooperation to deal with the financial crisis and played a positive role in maintaining international financial stability and promoting the development of the world economy. We will continue to follow a responsible attitude and join international efforts to maintain international financial stability and boost world economic growth. We support IFIs in increasing financing capability in light of changes in international financial markets and providing greater support to the developing countries affected by the financial crisis. We are ready to actively participate in International Finance Corporation's Global Trade Finance Program.

Dear colleagues,

East Asian leaders held in-depth discussions on ways to strengthen regional financial and economic cooperation on the sidelines of the recent Seventh Asia-Europe Meeting (ASEM). They agreed to give priority to strengthening financial cooperation and preventing and defusing financial crisis in regional cooperation, and carry out diverse forms of regional financial and economic cooperation. They highlighted the importance of making full use of existing bilateral currency swap agreements, actively and steadily promoting the development of Asian capital markets, moving forward the process of establishing an East Asia free trade area, supporting ASEAN integration, and opposing and guarding against trade protectionism. Leaders from Asia and Europe held in-depth discussions on the current international financial and economic situation, and agreed to make good use of ASEM and other regional cooperation mechanisms to increase cooperation on information sharing, policy exchange and regulation and management in the financial sector, effectively monitor, prevent and address financial risks and ensure sustained, steady and sound growth of the world economy.

Dear colleagues,

Stability of the international financial markets and sustained development of the global economy are crucial to the wellbeing of all countries and people. Let us tide over the difficulties through concerted efforts and contribute our share to maintaining international financial stability and promoting global economic growth.

Thank you.