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Remarks by H.E. Ambassador Song ZheAt the EUROFI Financial Forum 2010
2010/09/30
 

Mr. President,

Ladies and Gentlemen,

I am very pleased to join this morning session and share with you my views on the future of G20 and its possible impacts on the EU. I believe that our discussions on G20 and financial regulation, which involve experts, officials, and scholars from around the world, will provide valuable insights for the financial sector in future policy deliberations.

Two years ago, G20 was established in the spirit of cooperation to effectively address the international financial crisis. In less than two years time, four summits have been held and a series of important agreements have been reached. G20 has played an important role in containing the financial crisis and promoting world economic recovery.

Today, as the crisis is fading away, people begin to debate the future of G20 mechanism. People have questions. How could we empower G20 for a greater role in the global economic and financial cooperation? How could we balance the interests between G20 members and non-members? What relations should G20 have with other international and multilateral regimes? These questions deserve serious thinking and analysis because they are closely related to the prospect of G20, the world economy, and global governance. Here, I would like to make four points

First, we should carefully manage the future direction of the G20 mechanism. G20 members represent a fair share of the international community in terms of population, GDP and trade volume. It is commonly agreed that G20 should become a major platform for international economic cooperation. Today, the world economy still faces pronounced systematic and structural risks. It has yet resumed the cycle of steady growth. Under such context, G20 should continue to play a leading role in promoting a coordinated shift of our economies from stimulus to growth, from crisis management to effective long-term governance, and from passive response to active planning. And we should work together to ensure that G20 will play a key role in international economic cooperation and global economic governance.

Second, we should strike a good balance between the interests of G20 members and non-members. Although the representativeness of the group is recognized by the international community, 90% of countries and regions and 1/3 of the population worldwide are still left outside. Many countries have strong hope to be included. Accordingly, while facilitating cooperation among its members, G20 should also find a way to ensure that the requests of non-members are fully accommodated in an effort to build with them a more harmonious and trust-worthy relations. G20 should strengthen its dialogue with other countries, listen to their voices, and respect their interests through comprehensive and patient consultation and coordination.

Third, we should work for a sound relationship between G20 and other international organizations and multilateral regimes. The UN, WTO, and IMF are important global political and economic organizations. We cannot preclude their overlapping function and competing jurisdiction with G20. What is necessary is to work out a proper mandate for each of these institutions and mechanisms so that they will all run smoothly, in concord and reinforce each other. In principle, G20 should not spread itself too thin into complicated and sensitive issues. Rather, it should focus the attention on the reform and improvement of global economic governance, and mainly discuss macro economic and financial issues.

Fourth, we should push forward the institutional building of G20. A complete and integrated structure ensures long-term and healthy development of a mechanism. As for the G20, it is either we make it an effective global economic governance organization or we leave it a loosely structured body. There are already proposals on the table to institutionalize G20 by setting up a secretariat. However, G20's institutional building is still in its infancy. In the next phase, the international community should take concrete measures to earnestly deliver the commitments made during previous summits, effectively uphold the authority of the group, and provide sustained driving force for cooperation under G20 framework.

Ladies and Gentlemen,

The financial crisis made us see clearly the importance of financial regulation to economic stability and crisis prevention. Although we have covered lots of grounds over the past several months thanks to G20 contribution, what we need at this moment is a sense of urgency instead of complacency. We should continue our effort for stronger and more effective regulation.

When we reform our financial system, we should bear in mind the principle of gradualism and accountability. The financial sector should be able to support rather than undercut the real economy. When it comes to standard, we should work for international supervisory consistency, set up and implement strict capital and leverage ratio requirement, and use necessary means to curb excessive speculative risks. By doing so, we will be able to bring about more effective and targeted measures.

Credit rating is another area deserving careful supervision. In order to ensure that the result published by rating agencies could give a trustworthy reflection of the economic and credit standing of a country, we need to strengthen the code of conduct and accountability for these institutions, and formulate objective, just, reasonable and universal standards and guidelines for sovereign credit rating.

Ladies and Gentlemen,

In the wake of the financial and sovereign debt crisis, the EU has taken active measures to strengthen supervision and uphold stability in the financial sector, contributing its own share to crisis management and economic recovery in Europe and beyond. The idea of effective multilateralism advocated by the EU highly accords with the multilateral economic governance, an approach followed by G20. As an important member of the group, the European Union, together with the UK, France, Germany, and Italy, hold a quarter of the total twenty seats, playing an important and unique role in the G20 mechanism. In this connection, the future of G20 will also to a large extent shape the international standing of the European Union.

However, we cannot expect that G20 will grow naturally to a bright future. As comprehensive strategic partners, China and the EU share the same goal and interests in stronger financial regulation and a stronger G20 in global economic governance. I hope that China and Europe could deepen cooperation under the G20 framework, strengthen exchanges on economic and financial matters, and make greater contribution to strong, sustainable, and balanced world economic growth.

Thank you!

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