Highlights

Davos forum is good to show China's stance

By Sun Lijian (chinadaily.com.cn)
Updated: 2010-01-29 13:24

The World Economic Forum (WEF), also best known for its annual meeting in Davos in Switzerland, opened on Jan 27th with an opportunity for the Chinese government to grab this special occasion to clearly express its stance and view on two big issues, trade protectionism and global supervision model.

The international community showed its great concern over the global economic imbalance and some western countries condemned China for deliberately curbing the RMB's exchange rate in a low level. They even deemed the trade imbalance among Euro-America and China as the root of world economic imbalance.

Fueled by the economic depression, China's case numbers and cost of trade frictions hit a new record high in 2009. According to the statistics of Ministry of Commerce, as of November, 2009, 19 nations and regions have launched 103 trade relief investigations to China, including 67 anti-dumping investigations, 13 anti-subsidies cases, 16 cases about safeguard measure and seven special protection investigations. Additionally, China has received American "337" investigations six times. All of these cases were worth $1.2 billion. I personally think that is a very dangerous signal which will make the world economy go backward.

China should deal with Euro-American anti-dumping investigations an eye for an eye. Of course, we should restrain the opposition in a proper extent and endeavor to reform its own system to stimulate its domestic demand.

Meanwhile, maintaining the value of foreign exchange reserve and keeping a safe operation are still two of our priorities that should not be ignored; China should vigorously join the construction of the international financial supervision system advocated by Europe to defend the value of US dollar assets.

China should actively join the recently promoted agreement of international supervision cooperation, which is characterized by sharing information and prior handling of the crisis. It also needs to recommend its own talents to participate in the International Supervision Steering Committee to joining the construction of international supervision. China should promote the setup of a general standard of international supervision, preventing the international speculative capital to seek rent and arbitrage in the process of the financial globalization. And China needs to express developing countries’ self-defense standpoints in front of developed nations. It should also pay attention to the construction of the public international information platform and fully understand and join the operating system and management measures. The establishment of an international financial supervision system is good for clarifying countries' responsibilities and avoiding some nations to shift their duties.

Thankfully, the global financial supervision model against the misuse of financial innovation is being discussed gradually in the supervisory system of the mature market in Euro-American. It has been continuously improved under the International Cooperation Frame Work like the current "Davos Forum".

In conclusion, the Chinese government should fully emphasize the win-win cooperative notion of "international free trade" and "global financial supervision strengthening" at the current "Davos Forum", in order to play an active role to create a new direction for the world economy in the post-crisis era.

Sun Lijian, Finance professor and Deputy Dean of School of Economics at Fudan University