Press Release: IMF Managing Director Rodrigo de Rato's Statement at the Conclusion of His Visit to the People's Republic of China
June 24, 2004
International Monetary Fund (IMF) Managing Director Rodrigo de Rato made the following statement in Beijing today:
"China has become an important force in the world economy, and it has been a great pleasure to visit Beijing for the first time as Managing Director of the International Monetary Fund. During this visit, I have had the privilege of meeting with Premier Wen Jiabao. I also had productive discussions with Finance Minister Jin Renqing, Governor Zhou Xiaochuan and Chairman Liu Mingkang.
"I am greatly impressed by the tremendous progress that China has made in securing a higher standard of living for its people and in reducing poverty. I am also glad to see the authorities' emphasis on maintaining balanced and sustainable growth.
"Although growth remains robust in China, senior officials are keenly aware of the policy challenges ahead, particularly the need to reduce overinvestment—especially in certain sectors—and to slow growth to a more sustainable pace. The authorities have demonstrated their determination to tackle these challenges by taking measures to tighten the flow of credit and curb investment growth. Continued vigilance will be needed to ensure that further policy tightening is undertaken in a timely manner to facilitate a soft landing.
"I welcomed the opportunity to discuss exchange rate issues and was pleased to hear the authorities reiterate their view that greater exchange rate flexibility is a desirable goal for China. Indeed, the IMF has for some time believed that this would be in China's best interest as it would provide more room for the country to pursue an independent monetary policy and facilitate adjustment to structural changes. The authorities, however, want to make sure that conditions are suitable before introducing greater flexibility. I emphasized the advantages of making such a move from a position of strength, with circumstances in the period ahead likely to be favorable.
"Maintaining the stability of the financial system is crucial as China continues to integrate into the global economy. Hence, I am encouraged by the progress that has been made in reforming the banking sector, and by the authorities' plans for tackling the important challenges that remain. The IMF stands ready to assist in any way possible in China's reform efforts, including in further strengthening the financial sector.
"During my visit, I appreciated the opportunity to exchange views with senior officials on the challenges facing the regional and the global economy, and priorities for the IMF. We agreed that the outlook for the world economy is positive, though we must be vigilant about potential risks. We also agreed on the importance of ongoing efforts to promote regional financial integration in Asia, in which China is playing an active part. I also emphasized that Asia should have a voice in deliberations on international financial issues commensurate with its increasing economic size and importance.
"As China continues to become increasingly prominent in the global economy, its continued economic success and stability have become more important for other countries—in the region and worldwide. With the vision of its leadership and their resolute actions to tackle the challenges the country faces, I am confident that China will fulfill its potential for a bright and increasingly prosperous future."