The current crisis has inflicted a rather big impact on China's economy. We are facing severe challenges, including shrinking external demand, overcapacity in some sectors, difficult business conditions for enterprises, rising unemployment in urban areas and greater downward pressure on economic growth.

How is China tackling the global financial crisis?

As a big responsible country, China has acted in an active and responsible way during this crisis. We mainly are relying on expanding effective domestic demand, particularly consumer demand, to boost economic growth.

First, we are substantially increasing government spending and implementing a structural tax cut. The Chinese Government has rolled out a two-year program involving a total investment of 4 trillion yuan ($586 billion). The wide-range tax cuts are expected to bring about total savings of 500 billion yuan ($73 billion) for businesses and households each year.

Second, we have slashed interest rates and increased liquidity in the banking system. The central bank has cut the deposit and lending rates of financial institutions five times in a row, with the one-year benchmark deposit and lending rates lowered by 1.89 percentage points and 2.16 percentage points, respectively.

Third, we are implementing an industrial restructuring and rejuvenation program on a large scale. We have taken strong measures to facilitate the merger and reorganization of enterprises, phase out backward production capacity, promote advanced productive forces, and improve industry concentration and the efficiency of resource allocation.

Fourth, we are actively encouraging innovation and upgrading in science and technology.

Fifth, we are substantially raising the level of social security. Governments at all levels will invest 850 billion yuan ($124 billion) for sound medical and health system.

China's economy is in good shape on the whole. When China, a large developing country, runs its affairs well, it can help restore confidence in global economic growth and curb the spread of the international financial crisis.

Where does China's confidence come from?

Will China's economy continue to grow fast and steadily? Yes, it will. We are full of confidence. Our confidence comes from the fact that the fundamentals of China's economy remain unchanged. We have a large well-trained and relatively low-cost labor force. We have a healthy fiscal balance, a sound financial system and adequate funds. Our system enables us to mobilize the necessary resources for big undertakings. There is harmony and stability in our society.

At the same time, there is no fundamental change in the external environment for China's economic growth. The pursuit of peace, development and cooperation is the irreversible trend in today's world. We have the confidence, conditions and ability to maintain steady and fast economic growth and continue to contribute to world economic growth.

How should a new world economic order be built?

We should also push for the establishment of a new world economic order that is just, equitable, sound and stable. To this end, I would like to share with you the following ideas.

First, we should deepen international economic cooperation and promote a sound multilateral trading regime. Trade protectionism (could) only worsen and prolong the crisis. China firmly supports efforts to reach balanced results in the Doha Round negotiations at an early date and the establishment of a fair and open multilateral trading regime.

Second, we should advance the reform of the international financial system and accelerate the establishment of a new international financial order. It is important to speed up the reform of the governance structures of major international financial institutions and establish a sound global financial rescue mechanism. Developing countries should have greater say and representation in international financial institutions, and their role in maintaining international and regional financial stability should be brought into full play.

Third, we should strengthen international cooperation in financial supervision and regulation and guard against the build-up and spread of financial risks. Financial authorities around the world should step up information sharing and the monitoring of global capital flows to avoid the cross-border transmission of financial risks.

Fourth, we should effectively protect the interests of developing countries and promote the economic development of the whole world. The international community, developed countries in particular, should assume due responsibilities and obligations to minimize the damage caused by the international financial crisis on developing countries and help them maintain financial stability and economic growth. International financial institutions should act promptly to assist those developing countries in need through such measures as relaxing lending conditions.

Fifth, we should jointly tackle global challenges and build a better home for mankind. Issues such as climate change, environmental degradation, diseases, natural disasters, energy, resources and food security as well as the spread of terrorism bear on the very survival and development of mankind.

China is ready to work with other members of the international community to maintain international financial stability, promote world economic growth and contribute its share to world harmony and sustainable development. n