IMF urges China to check growth

Washington: China should take steps to rein in runaway economic growth or face the possibility of a "boom-bust cycle," the International Monetary Fund said.
In its annual assessment of the Chinese economy, the IMF also said that many of its analysts consider it "appropriate" for Beijing to stick with a policy of promoting "gradual and controlled" exchange rate movements.
The IMF report said that despite some calls for an acceleration of exchange rate flexibility, many IMF officials share Beijing's concern that such a move could have "an adverse impact on macroeconomic stability."
IMF directors "commended the authorities for sustaining high economic growth and noted that China's prospects for the future remain favorable, provided that the risks and challenges faced by the country are addressed," the report said.
The report also "endorsed the governments medium-term economic reform strategy, particularly the need to rebalance the economy away from heavy dependence on investment and exports for growth towards consumption."
IMF staff are projecting economic growth in China to remain "around 10 percent" in 2006, but only if authorities take steps to check investment.
"Unless these policy actions are taken, GDP growth could easily exceed the 10 percent forecast," the report said.
"In the near term, a significant risk remains that macroeconomic policies will not be sufficiently tight to contain investment growth. In particular, there is a need for monetary policy to prevent a surge in credit growth from tipping off a boom-bust cycle and an associated rise in banks' nonperforming loans."
The Chinese economy grew at a blistering 10.9 percent pace in the first six months of 2006, well above the government's full-year target of about eight percent.
Chinese vice premier Zeng Peiyan said Sunday the government would continue to improve its macroeconomic controls but would focus on "economic and legal measures," to restrain growth.
In the currency area, since China de-linked its currency from a decade-long peg to the dollar in favor of a basket of currencies, the yuan has strengthened by about two percent.
Washington, who put blames of its soaring trade deficit on Beijing's Yuan policy, has pressed China for more Yuan reforms and threatened to impose punitive duties.
China meanwhile promised a gradual reform and argued that the country's fragile financial system cannot yet handle the volatility of a freely floating exchange rate.
"Many (IMF) directors found it appropriate for China to continue to allow greater flexibility in its exchange rate in a gradual and controlled manner," the report said.
"They shared the authorities' concern that accelerating exchange rate flexibility could have an adverse impact on macroeconomic stability. Some of these directors also viewed that exchange rate adjustment alone would have a limited impact on external balances.
"A number of other directors, however, stressed that the flexibility afforded by the current exchange rate system should be used more extensively."
The IMF officials "noted that greater exchange rate flexibility, along with other policy changes and reforms in China, will aid in rebalancing the economy over the medium term, and will contribute to the orderly resolution of the global current account imbalance."
The issue has become tied up with debate about reform of the IMF, which holds its annual meeting with the World Bank in Singapore on September 19-20.
With US support, IMF members are expected to adopt an interim voting reform to give a greater say to four countries, including China.
The IMF report appeared to back Beijing's position on this, although there was some internal debate about the role of the yuan in global trade imbalances.

—The Daily Mail-China Daily news exchange item

Position on major issues expounded

Beijing (China)—Chinese Premier Wen Jiabao on Monday expounded China's position on various international issues in a keynote speech delivered at the end of the sixth summit of the Asia-Europe Meeting (ASEM) summit.
China's stand on issues of multilateralism, sustained development, energy security, globalization, the future of ASEM, as well as other major international issues was mentioned in the speech.
Addressing the closing ceremony of the summit, Wen said China was striving to build an environmentally-friendly society, pointing out that energy and environment were the two big issues the country faced in its economic development.
Properly handling the issues of energy and environment was not only a necessity for China, but also would make a contribution to the globe at large, Wen stressed.
China had actively participated in the international cooperation mechanism on climate change, and it had honored its commitments, Wen said.
The premier said the Chinese government had adopted measures to save energy and increase energy utilization efficiency in a bid to build an energy-saving and environmentally-friendly society.
Regarding to the function of the United Nations, Wen called for the enhancement of the UN ability in tackling threats and challenges.
Wen said China insisted that international disputes should be solved through dialogue and negotiations, instead of the apply of force or threat of force.
China agreed to deepen anti-terrorism cooperation, root out the causes of terrorism, but opposed the apply of double-standards in fighting terrorism.
The Chinese premier called on the international community to safeguard the authority and effectiveness of the exiting multilateral agreement on nuclear non-proliferation by formulating comprehensive export control systems.
Wen said globalization not only brought valuable opportunities, but also caused great challenges for Asian and European countries.
He said Asia and European countries should strengthen their coordination and cooperation to raise their competitiveness and ability to prevent risks.
The developed countries should help the developing ones with debt-relief, finance, technology and aid, to increase their ability to face the wave of globalization, he said.
The developed countries should show their political will and more flexibility in reducing agricultural compensation and tariffs in a bid to pave the way for resuming the Doha Round trade talks under the World Trade Organization, he added.
Wen mapped out the blueprint for the next ASEM summit to be held in Beijing.
"China is to host the 7th ASEM summit in October 2008 in Beijing. I'm looking forward to joining hands with all leaders here to make concerted efforts to deepen the strategic dialogue between Asia and Europe," Wen said.
At the Beijing summit, China would work together with ASEM partners to promote trade and economic cooperation between Asia and Europe, and conduct more cultural exchanges and dialogues between different civilizations, to make more contributions in deepening the Asia-Europe partnership, he said.
Over the past two days, the leaders from Asia and Europe had summarized the experience and achievements over the past 10 years after the founding of the ASEM mechanism, and they had also mapped out blueprint for the future development of the ASEM, Wen said.
Wen also urged ASEM members to cooperate in preventing and controlling infectious diseases, especially bird flu.
As for the nuclear issue of the Korean Peninsula, Wen said the most important task now was to resume the six-party talks as soon as possible.
He suggested that all parties involved should exercise self-restraint.
Meanwhile, Wen said diplomatic negotiations was the best way to solve the Iranian nuclear issue, adding that Iran should pay enough attention to the world's concerns and take constructive measures.
Turning to the issue of the Israeli-Palestinian conflict, the Chinese premier said disputes should be settled through political negotiations under the guideline of "land for peace."
At the conclusion of the summit, Asian and European leaders formally accepted India, Pakistan, Mongolia, Bulgaria and Romania as well as the Association of Southeast Asian Nations (ASEAN) Secretariat into ASEM.
The two-day summit, which started on Sunday, brought together leaders and top officials from the European Union's 25 members and 13 Asian countries.

—The Daily Mail-China Daily news exchange item

China, S. Korea will regret rejecting summit: Koizumi

Beijing (China)—Japanese Prime Minister Junichiro Koizumi said Chinese and South Korean leaders will regret refusing to hold bilateral meetings with him at the 38-nation Asia-Europe summit.
The two countries snubbed Koizumi at the two-day meeting that ended Monday in Helsinki, Finland, because they are angry about his visits to the Yasukuni shrine in Tokyo. The shrine honors Japan's war dead, including convicted war criminals.
Koizumi has insisted that his visits to the shrine are a personal matter that should not involve other countries. He has also said that mourns all Japan's wartime victims and that China and Japan should not allow a single issue to block summits between the nations.
"I'm sure they will regret in the days ahead that they chose the wrong way," Koizumi said at a news conference after the Helsinki meeting.
Koizumi steps down on September 30 and his successor has not been chosen yet. It is not known whether the next prime minister will continue visiting the shrine.
Chinese officials have repeatedly said that Koizumi's visits have severely hurt the feelings of those victimized by Japan's military aggression. China and South Korea were both colonized by Japan in the first half of the last century.
South Korea has said the shrine glorifies Japan's militarist past and that Koizumi's trips are a sign Japan has not truly repented.

—The Daily Mail-China Daily news exchange item

Hu Jintao concludes inspection to Xinjiang

BEIJING—Chinese President Hu Jintao concluded his six-day inspection to Xinjiang Uygur Autonomous Region Monday, and urged local officials to effectively improve the living standard of all ethnic people in the region.
Hu started his journey to Xinjiang last Wednesday. He visited enterprises, villages, schools, urban communities, armed force units and the Xinjiang production and construction corps of the army in a number of cities including Karamay, Hotian, IIi and Urumqi.
During the inspection, he urged local governments to transform their economic growth pattern by sticking to a scientific way to industrialization and promoting readjustment of economic structure and technological innovation.
Hu called on local governments to step up the improvement of infrastructure construction in energy, hydropower, traffic and telecommunications, and to prioritise projects which will directly benefit the public.
He stressed the balance between construction and environmental protection.
Xinjiang, rich in farming resources, has great potential to further develop its agriculture and rural areas, he said, adding that how to improve incomes for farmers should always be treated as the central task in the local rural work.
He hoped that Xinjiang would grasp the opportunities brought about by the country's strategy of developing the western areas to achieve new progress in regional stability, unity and development.

—People’s Daily, Daily Mail news exchange item

China symbolizes hope for Africa

Beijing—This year marks the 50th anniversary of the Sino-African diplomatic relations. No matter how the international situation has changed, Sino-African friendly relations have stood the test of time and seen steady development in political, economic, cultural and many other fields. As Ethiopian Ambassador to China, Hailekiros Gessese says, "Sino-African relations have become the good model of relations between developing countries".
The ambassador says in his article published in People's Daily that China provided great support to African people's national independence from the colonial rules. African countries also gave China support in resumption of China's status in the United Nations. Over the past decade, China and African countries have supported each other and maintained the common interest of the developing countries in the UN and other international forums. In recent years, China has also begun to encourage enterprises to invest in Africa and speed up the educational, medical and cultural exchanges between the two sides. The mutual visits of Chinese and African leaders also help improve bilateral cooperation. China has provided assistance to African countries without any preconditions.
The Ethiopian Ambassador says in the 21st century, the two sides should make new policies to improve mutual cooperation and unity in order to upgrade bilateral friendly relations to a new level. It's well-known that in October 2000, China-African Forum was held in Beijing which marked an important turning point in bilateral relations.
The Beijing Declaration and the Sino-African Economic and Social Development and Cooperation Program became a guideline for Sino-African cooperation.
And the second ministerial meeting of Sino-African Forum was fortunately held in Addis Ababa in Ethiopian in December 2003. Since that meeting, great progress has been made in Sino-African cooperation. For example, China has exempted tariffs for 190 products from 29 least developed African countries. Sino-African trade volume reached 40 billion US dollars in 2005. About 800 Chinese enterprises are investing in the 49 countries in Africa with a total investment of 1.2 billion US dollars.
The Addis Ababa Action Program has effectively implemented the Beijing Declaration in 2000 and Sino-African Cooperation Program.
The ambassador believes that the forthcoming third ministerial meeting of The Sino-African Forum to be held in Beijing will be another grand meeting in the history of the Sino-African relations.
The ambassador says he hopes that the Beijing meeting will make more strategic documents to further promote Sino-African relations.
"I like to stress that China has forever been Ethiopia's good friend. The friendly bilateral relations have proved this. For African people, China symbolizes the beacon of hope. African people will learn from China's successful experience according to their own reality. African countries need to establish equal, mutually beneficial, sincerely cooperative and all dimensional friendly relations with China in order to promote sustainable development in African economy, " says the ambassador.

—People’s Daily, Daily Mail news exchange item