By Celine Chen
China.org.cn staff reporter

Confidence, cooperation and responsibility are the keys to overcoming the current global financial crisis, Chinese Premier Wen Jiabao said on Saturday.
7th Asia-Europe Meeting Press Conference

Chinese Premier Wen Jiabao speaks at a press conference at the end of the 7th Asia-Europe Meeting (ASEM) in Beijing, Oct. 25, 2008.  [Xinhua]

Wen, who was attending the seventh Asia-Europe Meeting (ASEM) in Beijing, made the remarks at a press conference in response to a question from a French reporter.

To restore confidence, all countries, especially developed ones, need to speedily take decisive measures to stabilize the financial system, Wen said. "We are happy that many countries have adopted measures which have already had some initial effect. However, from what we see today, the measures are not enough. We need to continue to work to achieve our goals. The stability of the financial markets is crucial for overall economic stability. At our meeting here today, the most important message we need to send is that of confidence. Confidence is what is needed to overcome the difficulties we are passing through. "

"To cope with this once-in-a-century mega financial crisis, we need to strengthen cooperation among countries, make concerted efforts to help each other ride out the difficulties together, because only through cooperation, will we have the strength to overcome the difficulties. " Wen added that the forthcoming Washington summit demonstrated the positive attitude towards cooperation among world leaders.

The Chinese premier also said that the responsibilities of governments, companies and regulators need to be clarified, and that the world needs to draw lessons from the crisis.

He said the world needs to correctly handle the relationship between financial innovation and regulation; there is a need for financial innovation to serve the economy, but there is an even greater need for financial regulation to ensure financial security.

Wen said the relationship between the virtual economy and real economy must be properly managed. We need a healthy virtual economy to facilitate growth in the real economy. But the virtual economy needs to be coordinated with the real economy.

He said it is important to manage the relationship between between savings and consumption and accumulation and consumption. We need to keep savings and consumption in a normal, balanced and coordinated relationship with each other to maintain economy stability.

Premier Wen said the first task for world leaders is to work together to stabilize financial order as fast as possible, so as to contain financial risk. Second, every means must be employed to prevent the financial crisis from having an impact on the growth of the real economy. That will call for governments around the globe to show courage resolution and responsibility in carrying out their duties.

China has for many years been following the principle of stable and orderly opening up of the financial sector, but because the relationship between the domestic and international financial sectors is not yet that extensive, the direct effect on China's financial sector has not been that significant.

However, the financial crisis, due to its impact on world economy in particular in slowing world economic growth, will inevitable have an impact on China's economy. In the first 3 quarters, China's GDP, grew at 9.9%. This is the first time China has experienced single-digit growth rate in 6 years. This was partly due to China's deliberate macroeconomic control measures but it cannot be denied that the changed international financial situation has had an effect on China's economy.

In June China adjusted its macroeconomic policies and began to follow flexible but stable macroeconomic policies. To deal with problems in the economy China has been implementing targeted macroeconomic controls – with maintaining stable economic growth as the top priority.

"We are also paying attention to inflation and to the balance of payments," Premier Wen added. "We have adopted a series of measures including expanding domestic demand. Some of these measures have taken effect already, others will take time".

"China has a vast rural area; and a vast western region. The gap between rural and urban development and the differences in term of development among regions are very large, so the potential to expand domestic demand is very great. As long as we continue follow appropriate policies we will be able to maintain stable and fast economic growth".

Against the backdrop of the accelerated expansion of the financial crisis, continued fast and stable growth is the biggest contribution China can make to the global economy. Wen said China will take an active part in the Nov 15 summit in Washington D.C. "We will take a cooperative and pragmatic approach in working with other countries to find a solution to the financial crisis", he concluded.

The press conference was attended by leaders of the four coordinators of the ASEM meeting, China, the European Commission, Brunei and France.

The seventh ASEM summit, the first gathering for leaders and representatives of ASEM member states since the body was enlarged in 2006, opened Friday afternoon in Beijing. Launched in 1996 as an informal dialogue mechanism, the ASEM now includes 45 members, representing more than 50 percent of the world's gross domestic product.

The European side is represented by the 27 nations of the European Union, and the European Commission. The Asian members include the 10 countries of the Association of Southeast Asian Nations (ASEAN), China, Japan, the Republic of Korea, India, Pakistan, Mongolia, and the ASEAN Secretariat.

(China.org.cn October 25, 2008)