Interview: China Should Pay More Attention to Capital Market Construction

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Last updated at: (Beijing Time) Monday, May 27, 2002

Interview: China Should Pay More Attention to Capital Market Construction

Immediately after their inspection of the World Bank-aided project in southwest China's Sichuan Province on May 26, World Bank President James Wolfensohn and his party flew to Beijing to attend the annual forum of the First Asia-Pacific Economic Cooperation (APEC) Finance and Development Program (AFDP) held in Diaoyutai State Guest-house. "International Finance Daily" staff reporters had an interview with Wolfensohn on related topic for conversation.

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Following is the text of an interview with James Wolfensohn, president of World Bank, by reporters Li Weiling and Ma Shiling.

Immediately after their inspection of the World Bank-aided project in southwest China's Sichuan Province on May 26, World Bank President James Wolfensohn and his party flew to Beijing to attend the annual forum of the First Asia-Pacific Economic Cooperation (APEC) Finance and Development Program (AFDP) held in Diaoyutai State Guest-house. "International Finance Daily" staff reporters had an interview with Wolfensohn on related topic for conversation.

Reporter: How do you and the World Bank look upon the China-initiated AFDP?

Wolfensohn: The World Bank feels greatly honored to be able to co-sponsor this forum with the Chinese government. Our chief economist Nicholas H. Stem will represent the World Bank to participate in today's discussion. I'm very pleased with this because it proves our attention to this proposal.

Reporter: Five years have passed since the eruption of the Asian financial crisis, but some people say the fundamental problem of the Asian financial crisis remains. What's your comment about this?

Wolfensohn: Over the past few years, the Asia-Pacific region has spent quite a lot of energy on reforming the financial system and solving headache-causing problems emerged over the past five years, it has also achieved tremendous progress in the aspects of handling the root causes of the Asian financial crisis, i.e., heavy debts, excessive foreign currency debts, improper management of enterprises and financial departments, as well as ineffective formal supervision and control of the financial system.

The aft-crisis economic recovery is out of the expectations of most people, but we shouldn't feel complacent and rest content with establishing a steady State financial system. The financial problem of any country may possibly spread and weaken the region's other economic entities, this makes the present forum appear to be vitally important. It is very important to incorporate the region's financial system into a reliable network and to have a full understanding of the inter-dependent relationship between various economies.

We have only one world, the big Asian family as well as members of the world's other regions will continue to live in one and the same world. You may probably be clearer than any other people about the fact that setting up a perfect and stable financial system constitutes an important base for promoting economic growth, reducing poverty, creating job opportunities and maintaining economic stability. A good financial system can promote the realization of these goals, while a weak financial system will threaten the achievement of these objectives.

Reporter: According to China's promises, five years after its WTO accession, it will fully open its capital market. In your opinion, what problems needing prompt solutions are confronting China's financial departments?

Wolfensohn: In the process when the economies of various countries are being incessantly integrated with the world economy, we should push the development of the financial departments, help establish diversified and competitive financial service industries, so as to advance the development and innovation of the national economy. Economic integration itself has brought important opportunities for the APEC members to expand financial products and services. I believe that along with China's accession to the WTO, one of the challenges to be coped with by the Chinese government through its efforts is how to make full use of the advantages brought about by integration.

We should not only see the bank's role in mobilizing savings deposits, in this regard, China and other Asian countries have done exceedingly well; we should also see the bank's financial intermediary role in seeking productive investment opportunity for the national economy. We should especially need to make a better evaluation of the performance and tremendous development potential of medium and small enterprises, because such enterprises in many countries are currently enjoying far short of financial services. Here, I would like to once again extend my congratulations to the Chinese government on its fixing this challenge as an AFDP key field of research.

We should not regard the challenge to the financial sector as the establishment of a stable banking system, but should pay more attention to the establishment of a capital market, provide enterprises with new tools, help them enrich and intensify the financial structure, reduce financial cost and guard against financial and other risks more effectively. According to my personal experience, the preconditions for guaranteeing the prosperity and development of the capital market is to set up a deep and fluid government bond market.

Reporter: The World Bank has made great contribution in helping the Asia-Pacific region solve the problem of poverty, what problems do you think are more crucial in the process of extending assistance?

Wolfensohn: We have reaffirmed time and again at the Monterrey Conference and the Washington Financial Ministers Conference that before carrying out international aid and regional poverty relief, the World Bank must help establish a perfect financial structure and a practical financial system, otherwise, the projects related to people's education and culture in the poverty-stricken areas will be affected, it is the poor people that are the most affected, social justice of the globe cannot be effectively realized.

The present AFDP Forum is not merely an academic conference of experts, it involves the question concerning the peace and development of humanity. What facing the challenge concerns not only the bank, but also the healthy development of the capital market and the fund-raising of medium and small enterprises and the rural issue. We are not a charitable institution, what we are doing is not an alms-giving act.

Our fundamental goal is to create an opportunity for the development of the poor people through establishing a system in the aid-recipient region. Here lies our genuine motivating force, and only by doing so can we have the future under our control. If something goes wrong with the system, corruption erodes the legal system and the structure is destroyed, it will be impossible to achieve our goals and people of various countries and world peace will thus be affected.

By People's Daily Online

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