Governor of the People's Bank of China Zhou Xiaochuan Sunday called on all sides involved to strengthen negotiation to promote the resolution of international and regional disputes, and create a stable international environment to ensure energy security.

 

Speaking at the 14th meeting of International Monetary and Financial Committee of the Board of Governors of IMF held in Singapore Sunday, Zhou said that the global economy is expected to remain robust growth in 2007, but there are downside risks, including the high oil and raw material prices, high pressure of inflation.

 

Besides, he said that protectionism has emerged again in some areas and trade disputes have extended from commodity trade to the sector of service trade and investment.

 

Zhou called for all countries involved to take their responsibilities to facilitate an early resumption of the negotiations with stronger political will.

 

In his speech, he also urged developed countries to pace up their aid to low-income countries, and bring their official development aid to poor countries to 0.7 percent of their GNP, as set by the United Nations, as soon as possible.

 

He noted that China will continue to provide assistance to other low-income developing countries commensurate with its capacity in the framework of South-South cooperation.

 

Zhou also introduced China's economic situation in his speech, saying that China maintained a stable and rapid economic growth, while admitting some problems, such as unreasonable structure, and high environment and labor pressure.

 

To control the overheating of investment, Chinese government has adopted a series of measures on land use and credit control. The central bank has raised the benchmark interest rates and deposit reserve ratio twice on the run, said Zhou.

 

As for the inflation pressure, Zhou said China's economy has been developing in a rapid, smooth and sustainable way, but is likely to face greater inflation pressure in the future.

 

Zhou said that the global economy is exposed to downside risks since major economies resort to tight monetary policies when expanding economy, some countries show a slowdown economic growth, and the prices of oil and raw materials fluctuate at a high level.

 

Meanwhile, there are rising voices for trade protectionism with trade friction extending from commodity trade area to service trade and investment areas, which have a bad impact on the fair and mutually beneficial international economic environment, said Zhou.

 

He noted that China's policy of expanding domestic consumption began to take effect. And the Chinese currency exchange rate mechanism is much more flexible with market forces playing a bigger role.

 

Zhou said China is still faced with problems of unreasonable economic structure, environmental pollution, employment pressure and challenging tasks of building corporate governance in the financial sector.

 

He called for strengthening consultation and dialogue mechanisms between nations to achieve energy security and ward off global financial crisis.

 

Zhou said the IMF should enhance the supervision of macro economic policies of the world's major currency nations to prevent major currencies from fluctuating too violently and urge those nations to well manage their hedge funds.

 

Zhou also reiterated that China will reform its foreign exchange regime in a "gradual, effective, and controllable" way.

 

When interviewed by reporters, Zhou said that China is a big country and have to consider many aspects in its policymaking.

 

"But the direction of China's foreign exchange regime is fixed, there will be no way back," said Zhou.

 

On the IMF's voting rights reform, Zhou said China welcomes IMF's reform. Some developing countries, which had different views on the voting rights reform of the IMF, are not against China, but holding viewpoint that the IMF should set up a complete mechanism on voting rights, said Zhou.

 

He continued to say China has adopted effective measures to curb its overheating economy and that these measures are beginning to take effects. The central bank has raised the benchmark interest rates and deposit reserve ratio twice on the run, said Zhou.

 

"But monetary policy will have a time lag, so you could not expect it to take effect tomorrow, when you adopt a measure today," said Zhou.

 

Zhou is now in Singapore for the IMF and World Bank annual meetings which are expected to open this week.

 

(Xinhua News Agency September 18, 2006)