Dr. Marcus Lee, President of Durham Advisory Group

Your Excellency Mr. Dominique de Villepin, former Prime Minister of France, respectable Mr. Huang Xiaoxiang, Vice Governor of Sichuan Province, respectable Mr. Ge Honglin, Mayor of Chengdu Municipality.

Everyone is talking about the financial crisis, and the most pressing task is how to make use of strategies to ensure financial safety and stability, and contribute to the global economic recovery. According to the estimation of IMF, the economic growth rate in 2009 might be zero or even negative. Currently, there are mainly three uncertainties: 1) how will the U.S. market go; 2) how will the banks respond to challenges and 3) what countermeasures should we adopt if the worst situation has come. Let’s make an in-depth analysis of this problem.

We all know about the U.S. real estate crisis. It took 3 years to recover from the crisis in 1979 and 5 years from the crisis in 1990. The sub prime mortgage crisis this time is the worst in history. Many economies are suffering from high inflation, the USD depreciating, people selling out USD in big quantities, capital flow reversed and the capital market fluctuating. How will the economy of China respond? It is doubtful whether China can maintain a growth rate of 8% in 2009 and even 7.8% as expected by the World Bank. China’s export will be negatively affected by the global economic crisis. For example, 65% of household appliances, 47% of fur and leather products, 46% of furniture, and 26% of garments will be affected.

We can see that food and commodity prices will remain high despite recent moderate declines. Meanwhile, we also see the second round of risks in pricing and salaries. In addition to the impact on economy, our consumption capability and notion are also affected. What strategies should we adopt to cope with the financial crisis so as to realize financial stability? Specially how should we make use of the changed domestic policies such as tax cuts and stimulus plans to help private companies to get credit? These are the questions that governments need to think of. We need more free trades, trade dialogues and remove more trade barriers, which have been discussed in G-20 Summit and is also the theme of this Summit. Therefore, more government expenditure is a major solution. Governments should provide more social security systems instead of relying solely on cheap labor force to seek development.

At a microlevel, we need build up confidence to revive our economy, boost consumption, and prevent more companies from bankruptcy. Many financial institutions in America have folded up, which poses a serious problem to the government. It is no long a luxury for the government to take measures. Besides, we need a preemptive measure as well as a precautious measure. The Asia-Pacific region and Asia in particular, should make use of their experiences and lessons learnt from the financial crisis in 1997 to help recover the banking industry.

In terms of financial supervision, we must minimize the impact of the financial crisis. We must take control of the national and international financial markets, as well as the operations of financial institutions. Next year, the Central Bank of China will extensively supervise the local financial institutions. The Asia-pacific region is also in need of a mechanism that can deal with financial emergencies.

Finally, I'd like to extend my gratitude once again to APCEO, the government of Sichuan Province and the government of Chengdu City for kindly inviting me to the summit!