At the invitation of general manager of Bank of International Settlements (BIS), Dai Xianglong, governor of People's Bank of China, attended the BIS 71st Share-holders Conference held on June 11 in Basel, Switzerland.
Speaking at the conference, Dai said that the slow economic growth in some leading industrial countries has greatly impacted the economic development of some Asian countries. US economic slowdown has caused a substantial decrease in global needs for electronic products, resulting in the export reduction for many Asian countries and regions.
Appreciation of US dollar and depreciation of Japanese yen have also entailed currency devaluation of some Asian countries and enormous reduction in the inflow of foreign capital, this has increased difficulty in their handling of non-performing assets.
This year, the five Asian countries which were hit by the 1997 financial crisis would experience a remarkable economic decrease compared with that of last year.
However, Dai stressed that the macro-economic situation in Asian countries has greatly improved, the exchange rate system has become more flexible, the tool of interest rate has been efficiently used, the balance of payment has witnessed marked improvement, and there has been a dramatic increase in foreign exchange reserve. Given this, financial crisis similar to that of 1997 will not occur in Asian countries, the Asian region's economic growth will remain higher than the world's average growth level.
Dai said that the US economic slowdown would have a negative impact on China's economic growth. The Chinese government will continue to carry out the policy of expanding domestic demands, so as to promote the sustained and rapid development of the national economy.
In recent years, America has taken up only 8 percent of direct foreign investment. The US Federal Reserve's move to cut interest rate has lowered China's cost in overseas fund-raising; reduced the profit gap between Chinese yuan and American dollar, this is conducive to reduce capital outflow.
Products exported from China to major industrial countries are mainly garments and other daily necessities, China will not reduce its exports to those countries just because of the slowdown of their economic growth. From January to March this year, China's exports increased by 15 percent with trade surplus reaching US$4.7 billion. By the end of this May, China's foreign exchange reserve hit US$179 billion, an increase of US$13.4 billion over that early this year.
RMB currency continues to remain stable. As is predicted that China's economy will grow 7.5 percent, consumption price will increase within 1.5 percent.
Dai said that bad loans in inter-banks assume a downward trend, China will further reform its financial sectors to enhance its ability in resisting financial crisis.
According to reports, governors and presidents from 112 countries' central banks attended the conference.
(People's Daily 06/14/2001)
