Former Chinese Vice Premier proposes global mechanism for stabilizing energy, resources market

08:53, July 12, 2011      

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A Global Mechanism for Stabilizing Energy and Resources Market (GMSERM) within the G20 framework should be established in an early date, Zeng Peiyan, former Vice Premier of China's State Council said at a meeting Monday in Perth.

Zeng, also the Vice Chairman of the Boao Forum for Asia (BFA) at the Energy, Resources and Sustainable Development Conference in Perth of Australia, made the remarks at two-day conference held in Perth.

Zeng said the establishment of GMSERM would contribute to a more secure, stable and sustainable global supply of resources and energy.

Disputes over resources have frequently contributed to national and regional turmoil with increasing politicization of international energy and resource issues. On the other hand with more financial speculation, prices of some commodities have deviated from the fundamentals of supply and demand and undergone dramatic volatility, said Zeng.

He further pointed out that the interaction between consumer and supplier countries should be one of win-win interdependence. Soaring commodity prices have not only hurt the emerging markets and other developing economies, but also posed a serious threat to the recovery and stabilization of the global economy.

Zeng said with global resource supply and demand in a vulnerable position, the danger of a new round of global crisis would become greater.

Zeng proposed the establishment of GMSERM and its inclusion into the G20 agenda alongside the reform of the global financial architecture.

He said within the G20 framework, the GMSERM is expected, through full consultations involving all interested parties, to lead to the formulation of a set of needed rules and to a fair, reasonable and binding multilateral coordination mechanism, so as to make global supply of resources and energy more secure, stable and sustainable.

According to Zeng, the GMSERM will be brought into synergy with the international financial system and free trade system for the implementation of global economic governance and the prevention of another global economic crisis.

Zeng further suggested that BFA be leveraged as a platform for dialogue between commodity producer and consumer countries. He noted that such a platform will be inclusive, drawing upon participation by national regulators of the resource and energy sector, industry and academia, and covering a wide range of topics such as energy and resource policies, market building, pricing mechanisms, safe and secure delivery routes, capital flows, financial regulation innovation as well as the application of new sources of energy.

He said through dialogue, the information asymmetry between producers and consumers will be diminished, leading to greater consensus building between supply and demand sides while providing intellectual support to the GMSERM.

The BFA Energy, Resources and Sustainable Development Conference takes up an extensive array of topics including the transformation of Asian economies, global energy supply, resource pricing, nuclear power, the steel industry, development of infrastructure, low-carbon economy and China-Australia cooperation, attended by over 200 business leaders, experts and government officials.

Source: Xinhua
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