China's development changes global economic landscape

08:30, June 23, 2011      

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Editor's notes: China has fully displayed its increasingly prominent roles in global economic affairs during the Asian financial crisis in 1997 and the international financial crisis in 2008. China has again offered assistance to some European countries that are trapped in a sovereign debt crisis. As the vice president of the Asian Development Bank, Zhao Xiaoyu has personally experienced China's active participation in global economic governance and is aware of the increasingly significant roles China has played on the international economic stage.

International economic cooperation has accelerated the pace of China’s economic development and enhanced the quality of its development

Reporter: What is your view about China's contributions to the world economy?

Zhao: In my view, adhering to the independent foreign exchange rate policy and providing crisis-ridden counties and regions with assistance through multilateral financial institutions and bilateral market operations amid the global economic development are both the manifestation of China assuming its obligation as a major developing country and an emerging economic power in the large international family. China has seized development opportunities during the course of economic globalization and accomplished remarkable development achievements.

China has succeeded in making its development more sustainable and tolerant when assisting in the development of other countries. China's contributions to global economic development as well as human civilization and progress should be regarded as a major chapter of the history of human social development in the late 20th century and in the early 21st century. As a major player among developing countries, China and other emerging market economies are playing increasingly prominent roles in international economic affairs. The G20 group is just a product of the major adjustments to the global economic landscape.

Reporter: How has China developed itself with help from world economic organizations?

Zhao: China has not only made efforts to learn western countries' successful experiences in developing the market economy since the start of its reform and opening-up, but also endeavored to improve the investment environment and attracted a huge amount of foreign direct investments through economic means. Thus, China has grasped advanced management experience and cultivated a large number of management experts during the process of introducing foreign investment and techniques. It could be said that the outcomes of building knowledge and capacity including the capacity of government organs are major conditions to assure China's several decades of high-speed development.

International financial institutions such as the World Bank, IMF, and Asian Development Bank have played an important role in boosting China's economic development, especially the buildup of management and capacity. These institutions have helped to greatly improve China’s soft power, a power far more important than the direct economic benefits any infrastructure project can produce. International economic cooperation has quickened the speed and improved the quality of China's economic development, and China’s economic achievements have in turn changed the global economic pattern.

The World Bank and the Asian Development Bank are able to maintain their AAA credit rating because they have quality members such as China.

Reporter: What support have international financial institutions obtained from China?

Zhao: China received its first loan from the World Bank for university development projects in 1983. Technically, it was an interest-free soft loan from the International Development Association, an affiliate of the World Bank, with a loan term of 50 years. Afterward, China applied for a considerable amount of soft loans for social development projects in agriculture, medicine and other fields. However, the Chinese government later took the initiative in announcing that it would stop applying for soft loans from international financial institutions so more developing countries that are in urgent need of funds could take advantage of the limited funds from these institutions. The announcement was highly commended by the international community, particularly by developing countries.

Thanks to its rapid economic growth, China became a donor member of the Asian Development Fund, the Asian Development Bank’s soft loan window, in 2002. Afterwards, China, as a donor country, participated in several rounds of negotiations led by developed countries and expressed its opinions about the development and policy direction of international financial institutions. China has evolved from a mere recipient country to an important donor country in the world financial system.

China is a responsible shareholder and an excellent borrower of the World Bank and the Asian Development Bank (constructing high-quality projects on schedule and repaying capital with interest on time), and both of the two institutions are able to maintain their "AAA" credit rating because of members such as China. If China’s foreign aid and "going out" strategy can form mutual echoes and complementary advantages with funds and resources of international financial institutions in the future, China will certainly play an irreplaceable positive role in Asia and the entire world just like other regional bilateral and multilateral aid agencies.

Promoting sound international rules to meet the needs of China and other developing countries while participating in the international competition

Reporter: What shortcomings should China overcome if it wants to further participate in the international economic competition?

Zhao: I think China should focus more on building capacity, especially the institutional capacity and personnel training, to play its role more effectively in international affairs in the future. The competition has become fierce and cruel under the environment of increasing globalization. Developed countries first formulated many international standards, guidelines and rules based on their own experiences to maintain their competitive advantage, and emerging economies have to accept the rules to participate in the game. As a result, they survive in cracks and find their own way out into the competition.

We should see that the lack of experts, who have the knowledge of international rules, master professional knowledge and know how to use international practices to apply international tools, such as accounting, consulting, lawyers, financial services, international arbitration and other intermediary and media, is one of the important reasons that restrict developing countries to cross the middle-income threshold.

China should promote sound international rules to meet the needs of itself and other developing countries while participating in the international competition, and establish new international standards and guidelines. This should become China’s goal in international cooperation in the future. Only in this way, China can run in front of others and not always follow behind, and turn the irrational and passive into things that are rational and positive. Cultivating international talent and strengthening the institutional capacity should become an important topic of China's future development.

By Ji Peijuan, People's Daily reporter, translated by People's Daily Online
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