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China's multifaceted financial diplomacy benefits all


18:24, May 06, 2013

BEIJING, May 6 (Xinhua) -- China's budding multi-dimensional financial diplomacy is not only helping promote its own economic transformation, regional development, but also propelling reforms of the global economic governance favorable for sustainable development.

The 2008 financial crisis has rattled the old economic order dominated by developed countries, as emerging markets and developing countries have played an increasingly important role in tackling the crisis and become a driving engine for global economic growth.

The turmoil also forced emerging economies to seek bilateral and multi-lateral cooperation, reduce over-dependence on the U.S. dollar and pursue reforms in global economic governance system to better reflect the profound changes in the global economic landscape, to create a fairer and more balanced, reasonable and efficient economic order.

Over the past five years, the Chinese government has been pushing a financial diplomacy simultaneously at bilateral, regional and multilateral levels.

China has signed bilateral currency swap agreements with over 20 countries and regions across the world, with total capital amounting to over 1.6 trillion RMB yuan (255.8 billion U.S. dollars) to reduce over-reliance on the U.S. dollar and to expand the use of Chinese currency yuan.

Meanwhile, China has gradually set up inter-governmental dialogue mechanisms with the world's leading economies such as the United States, Britain and Japan to bridge gaps, collaborate stances and reduce misjudgments.

Initiated by China, a landmark regional foreign exchange reserves pool under the ASEAN Plus Three (China, Japan, South Korea) framework has been established as China not only became the biggest fund contributor to the pool along with Japan, but also better represented.

At the same time, China has increased its capital injections into the African Development Bank and Inter-America Development Bank to expand its financial assistance to Asia, Africa and Latin America countries.

On multilateral arena, China has pressed ahead with currency diversity in international monetary system within the framework of G20 and the BRICS, increased limits on privilege of countries that issue the global reserve currency while working with other emerging economies to push for reforms in the International Monetary Fund and the World Bank to raise the representation and voice of the developing countries.

With the efforts, Justin Yifu Lin become the first WB chief economist to come from a developing country in 2008 while Zhu Min was appointed Deputy Managing Director of the IMF in 2011.

Ken Miller, a member of the U.S. State Department's Advisory Committee on International Economic Policy, has said "China's responsible management of its reserves to date has allowed Beijing to form valuable relationships with the leading financial managers across the global economy."

Just as what Miller has concluded, China's financial diplomacy is helpful to other countries.

Firstly, China called for reforms in international financial system to reflect the strength of developing countries. However, it is moderate and practical in pushing forward such reforms, bearing in mind safeguarding the financial system's stability and its orderly evolution.

Secondly, China has laid emphasis on neighboring countries and emerging economies, committed to helping them recover from the global financial crisis with financial aid and expanding cooperation among emerging markets.

Thirdly, China stressed "inclusive gains" and that the emerging economies and vested interests are not necessarily antagonistic to each other.

China and other economies promoted reforms in the international financial system, trying to remove institutional basis of the global economic imbalance so that all can benefit.

Miller has said that China's role in realizing the international financial stability totally served the interests of the United States, adding that Washington should encourage Beijing's involvement in international financial affairs.

Therefore, China's financial diplomacy is bound to both facilitate its own financial innovation and economic transformation and improve the global governance structure. What's more important, the achievements generated by such policies will in push further forward the world's economic rebalance and sustainable development.

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