Press Release: IMF Managing Director Horst Köhler Statement at the Conclusion of a Visit to the People's Republic of China

September 2, 2003

"Thank you for joining me this morning. I am very happy to meet with you as I conclude my fourth visit to China as Managing Director of the IMF. I come away from this visit greatly impressed with the progress that China has continued to make with economic reform and in its integration into the world economy. The rapid economic growth that has resulted has brought dramatic change to China, lifting many out of poverty. At the same time, China's recent strong economic performance has helped to sustain regional and global growth during a difficult period for the world economy. And, with the SARS outbreak overcome through decisive action by the government, it is good to see that Beijing has returned to normal and that the economy is recovering rapidly.

"During my visit, I have had a very productive exchange of views with Premier Wen Jiabao and other senior members of the Chinese government, including People's Bank of China Governor Zhou Xiaochuan, Minister of Finance Jin Renqing, and China Banking Regulatory Commission Chairman Liu Mingkang. I greatly appreciate the close and cordial working relationship the IMF enjoys with Chinese officials.

"In our discussions, Premier Wen stressed that the government is firmly committed to continuing with China's transformation and its integration into the world economy. I was particularly impressed by his understanding of the challenges that lie ahead and his clear vision of the priorities for economic reform. A key challenge is to further strengthen the banking system and reduce non-performing loans, including through improving supervision and regulation. We also agreed that deepening reform of state-owned enterprises would be crucial for raising productivity and economic efficiency. In addition, Premier Wen strongly emphasized the need to tackle the problems of unemployment and the growing disparity between urban and rural incomes.

"As on my previous visits, I raised the issue of exchange rate policy. The IMF has for some time believed that it would be in China's best interests to move gradually toward a more flexible exchange rate system. Such a move would improve the central bank's ability to control money and credit growth, and also help cushion China's economy from domestic and external shocks. The authorities continue to see exchange rate flexibility as a desirable goal as China integrates further into the global economy. However, they feel that the time is not yet right to move in that direction. As regards capital account liberalization, I fully support the authorities' cautious and deliberate approach.

"China's impressive economic progress demonstrates that participation in globalization through well-considered reforms can pay handsome dividends, both domestically and for the world economy. By continuing steadfastly down this road, China has the potential for a bright and increasingly prosperous future."


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