G20 Must Look Beyond the Needs Of the Top 20 -- Beijing Review

After the financial crisis broke out, China was quick to put in place a decisive plan to boost domestic demand, advance economic restructuring and improve people's well being. These measures have started to produce results. At present, the Chinese economy still faces severe challenges.

We have to meet the demanding goal of maintaining economic growth by boosting domestic demand, ensuring employment and readjusting the economic structure. We also have to cope with shrinking external demand caused by the global economic downturn and trade and investment protectionism.

Since the G20 summit in Washington, D.C., last year, China, as a responsible member of the international community, has provided a lot of assistance and support through a variety of means to a number of countries and regions. We signed bilateral currency swap agreements worth 580 billion yuan (about £58.5 billion or $83 billion) with various countries and regions.

We played a part in the creation of significant Asian and global economic and trade initiatives, such as the Chian Mai initiative and the International Finance Corporation's global trade finance program. We initiated an interagency cooperation and liaison mechanism for affairs related to the Inter-American Development Bank. The Export-Import Banks of China and the United States signed a trade finance agreement worth $20 billion in December 2008. The Chinese Government sent Chinese companies on procurement missions to Europe and made purchases worth $13.6 billion. We will continue to provide assistance to other developing countries, particularly in Africa and Asia, within the framework of "South-South" cooperation.

To overcome the current difficulties, the international community should enhance coordination on macroeconomic policies. Efforts should be made to expand trade and investment cooperation to bolster economic growth, step up cooperation among small and medium-sized businesses to ensure employment stability, and strengthen cooperation in energy conservation and emissions reduction, environmental protection and development of new energy technologies to nurture growth points for the world economy.

The international community should recognize that the trend toward economic globalization is irreversible and should take credible steps to reject all forms of trade and investment protectionism.

It should also press ahead with the reform of the international financial system, with the focus on readjusting the governance structure of international financial institutions and increasing the representation and voice of developing countries. The summit should set a clear goal, timetable and roadmap for such reform. Prudent regulation of all financial markets and institutions involved should be tightened and regulatory coordination and cooperation at both the regional and international levels should be increased to prevent a crisis of this kind from happening again.

On increasing financial resources for the International Monetary Fund (IMF), an issue that has drawn widespread attention, we are of the following views: China supports increasing IMF resources on the basis of ensuring safety and reasonable returns. China is ready to play an active part in exploring ways to raise resources and will contribute to this effort within its ability. We hold that the IMF should mobilize resources through the quota-based system as well as voluntary contributions, striking a balance between the rights and obligations of the contributing countries.

The scale of increase should be determined in light of the vast differences among countries in terms of stage of development, per-capita GDP, the nature, composition and build-up of foreign exchange reserves and the level of dependency of a country's economic security on foreign exchange reserves. It is neither realistic nor fair to set the scale of contribution simply by the size of foreign exchange reserves.

On the ways to increase IMF resources, top priority should be given to a quota increase. If this cannot be done in the short term, contributions should be determined by the current quotas. If quota-based contributions fall short of immediate needs, the IMF can issue bonds, and China will be a buyer of the bonds. China will carefully study the "new arrangements to borrow" proposed by the United States. Bilateral borrowing arrangements should be discussed separately between the countries concerned and the IMF, as multilateral conferences are not the right place to discuss or decide upon such bilateral issues. In short, the increase of resources should be achieved within the IMF framework and in flexible and different ways.

On the use of the resources, the IMF must enhance capacity-building, reform governance structure and ensure that the resources play a significant role in easing the international financial crisis and countering the global economic downturn. The use of resources should be subject to scientific assessment, proper planning and rigorous oversight to ensure that it is fair, just, transparent and effective. We hope that the resources are used mainly to help developing countries seriously affected by the crisis.