24 directors representing 185 member countries of the International Monetary Fund (IMF) as well as representatives from the IMF, the World Bank, the Financial Stability Forum and other international institutions attended the 18th ministerial meeting of the International Monetary and Financial Committee (IMFC) of the IMF in Washington on October 11, 2008. The meeting mainly discussed the situation in the global economy and financial market, their risks and corresponding measures as well as IMF surveillance and lending instruments and governance structure reform.
YI Gang, Deputy Governor of the People s Bank of China and head of the Chinese delegation, addressed the meeting. He pointed out in his speech that, with the US financial crisis deteriorating and the global economy markedly slowing down, China expected that stabilizing measures recently put forward by developed economies could be quickly implemented and take effect to restore market confidence.
China stood ready to strengthen its coordination and cooperation with other countries and hoped countries around the world would safeguard the global financial stability through joint efforts. The IMF should carry out its mandate to maintain global monetary and financial stability, timely monitor and assess the developments and impact of the crisis, and help stricken countries design bailout packages to overcome the crisis as soon as possible, YI said.
YI Gang stressed that, as the real economy had been more severely hit by the financial crisis than expected, deflation risks in some economies had increased significantly due to the credit crunch. Therefore, major governments and central banks should strengthen policy coordination and remain vigilant against possible deflation while starving off the resurgence of inflationary pressures.
When talking about China s economy, YI Gang noted that, since the beginning of this year, China had made great efforts to overcome the shocks of natural disasters and ride out the adverse international economic and financial environments, and had been able to maintain a stable and rapid economic growth.
China had further improved its economic growth structure, and its domestic demand, household consumption demand in particular, had played a greater role in driving the country s economic growth. China had seen substantial improvements in its balance of payments and further upgrade in its industrial structure, and had been committed to energy conservation and emission reduction with greater vigor.
As the global economy slowed down in general and the macro control began taking effect, inflationary pressure in China had eased to some extent. The RMB exchange rate had reached a more adaptive level with greater flexibility, and the real effective exchange rate of the RMB has appreciated far faster than major world currencies since 1994.
YI Gang said that the fundamentals of China s economy remained unchanged, and maintaining stability in the economy as well as financial and capital markets was the current priority for China to deal with the crisis. China would accelerate the shift of its economic growth pattern and vigorously expand domestic demand, especially the consumption demand, to keep its economy growing in a sound and rapid manner.
With stronger financial institutions and generally sufficient liquidity in the market, China s financial system was safe and sound, and China had full confidence in its future economic growth and financial stability, YI said, adding that China s long-term sound and rapid growth would prove to be the most important contribution to the world.
The Deputy Governor emphasized in particular that the IMF should strengthen its surveillance, e.g. over major currency issuing countries and their financial sectors, over the risks in financial sectors and their link with the macro economy, over the private capital flows and the spillover effect of the financial crisis.
The IMF s monitoring function should be more effective, YI said, adding that the institution should mainly focus on the deteriorating US financial crisis at present. He urged the Fund to quickly launch temporary consultations with affected countries to display its effort in fulfilling its responsibilities.
YI said China welcomes assessment on the role of IMF credit financing and IMF s efforts to reform its governance structure, and expected progress to be made in these areas. China also welcomed suggestions from all parties concerned and their flexible and pragmatic attitudes so as to advance reforms through close cooperation.
