President Alan Garcia,

Dear colleagues,

It is a great pleasure to meet you again and exchange views with you on international and regional issues of common interest. I wish to thank President Garcia and the Government of Peru for the thoughtful arrangements they have made for the meeting.

We live at a time when economic globalization is gaining momentum and regional and sub-regional cooperation in the Asia-Pacific region is picking up speed. Our region is becoming a main driving force for world economic growth. At the same time, however, both the world and the Asia-Pacific region are facing various destabilizing factors and uncertainties. International financial markets are experiencing deep turmoil. The negative impact of the financial crisis on the real economy of the world is more apparent. Global economic growth is slowing down and problems of food and energy security are acute. The Doha Round negotiations have stalled and trade protectionism is resurfacing. Moreover, environmental pollution, severe natural disasters, major communicable diseases and other non-traditional security issues remain prominent. All these problems have posed severe challenges to the sound and steady growth of the world economy.

In this world of growing interdependence, it is hardly possible for anyone to stay away from the challenges. To address these problems, we must all work together. We believe that in the face of the new and complex situation, all parties should adhere to the principle of opening up and cooperation to turn challenges into opportunities and seek win-win progress.

Dear colleagues,

The rapidly-spreading international financial crisis, with its extensive impact, constitutes the most severe challenge confronting world economic growth. It is a major and urgent task for all countries and regions to deal effectively with financial risks, maintain international financial stability and promote world economic development. The international community must strengthen confidence and step up coordination and cooperation. The G20 Summit on Financial Markets and the World Economy held last week produced positive results in this regard. Here, the Chinese side wishes to propose the following:

First, to curb the worsening financial crisis, all countries should take prompt and effective measures, enhance macroeconomic policy coordination, improve information sharing, help each other as much as possible, and employ all necessary fiscal and monetary means to stop the spread and development of the financial crisis, bring stability to global financial markets, stimulate economic growth, minimize the damage of the financial crisis on the real economy and avoid a global economic recession.

Second, the international community should earnestly draw lessons from the ongoing financial crisis and, based on full consultations among all stakeholders, undertake necessary reform of the international financial system in a comprehensive, balanced, incremental and result-oriented way with a view to establishing a new international financial order that is fair, just, inclusive and orderly and fostering an institutional environment conducive to sound global economic development. The reform of the international financial system should both reflect the general law and principles of financial regulation and take into account the specific development stage and unique features of different economies. It should seek a balance among the interests of all parties and reflect, in particular, the interests of emerging markets and developing countries. It is necessary to strengthen cooperation in international financial regulation and improve the international regulatory system, press ahead with reform of international financial institutions and enhance their capability of performing responsibilities, encourage regional financial cooperation and give full play to the role of regional liquidity assistance mechanisms, move the international monetary system steadily toward diversification and work together to bolster its stability. Financial institutions and intermediaries of various types should improve risk management, increase transparency, and make great efforts to enhance supervision and early-warning of short-term capital flows and financial innovation risks.