On March 23, 2009, the Ministry of Foreign Affairs held a briefing for Chinese and foreign journalists. Vice Foreign Minister He Yafei, Vice Minister for Finance Li Yong and Deputy Governor of the People’s Bank of China (PBOC) Hu Xiaolian introduced President Hu Jintao’s upcoming attendance of the second financial summit of G20 leaders. Director-General of the Information Department of the MFA Ma Zhaoxu hosted the briefing which was attended by more than 100 Chinese and foreign journalists and officials of foreign embassies in China.

He Yafei who is also the Chinese coordinator of the preparations for the G20 London financial summit said that President Hu Jintao, at invitation of British Prime Minister Brown, will attend the second financial summit of G20 leaders to be held in London from April 1 to 2. The international financial crisis is still sprawling, and the global economy faces serious difficulties. To address the economic crisis and difficulties, many countries have launched economic stimulus packages. It takes time to observe the effectiveness of the packages, and it is hard to forecast when the economy will recover. Under such circumstances it is totally necessary for the international community to continue to strengthen coordination and cooperation on the crisis. Therefore, it is the right time to hold the second financial summit. Parties concerned put high expectations on the London summit, and preparations for the event are well underway. In addition to the leaders of G20, leaders of countries and international organizations like the Netherlands, Spain, the United Nations (UN), the International Monetary Fund (IMF), the World Bank and the Financial Stability Forum (FSF) will attend the summit. At the request of the developing countries, the British side has also invited the Ethiopian Prime Minister and Chairman of the African Union (AU) Commission to represent African countries and the Thai Prime Minister and ASEAN Secretary-General to represent the Southeast Asian countries at the meeting.

He noted that leaders at the summit, as arranged by the host country, will mainly exchange opinions on the three aspects: first, to strengthen coordination of the macroeconomic policies; second, to improve the international financial supervision and stabilize the international financial market; third, to reform the international financial institutions. China will actively participate in the discussions during the Summit in a responsible and constructive attitude and urge all the parties concerned to reach positive and pragmatic outcomes on the major issues faced by the international community.

China has five expectations on the summit. First, related parties should strengthen solidarity, build common consensus and seek win-win outcome in a forward-looking spirit in order to stimulate market and consumer confidence. Second, parties concerned should implement economic stimulus plans in line with their own national conditions and enhance macroeconomic policy coordination. Third, tangible progress should be achieved in the reform of international financial institutions, and special efforts should be made to develop the timetable and roadmap of increasing the representativeness and voice of the emerging markets and developing nations. Fourth, trade protectionism should be opposed, the Doha round of talks should be pushed towards comprehensive and balanced outcomes and in particular trade support for the developing countries should be intensified. Fifth, special attention should be paid to the development issues, and it should be especially avoided to reduce assistance to the developing countries due to the financial crisis.

He Yafei added that President Hu will also attend a number of bilateral meetings in addition to the financial summit. His main activities in London are as follows. First, he will attend the reception cocktail party held by the British Queen and the working dinner hosted by Prime Minister Brown on the evening of April 1. Second, he will deliver a speech to the financial summit on April 2 to comprehensively elaborate China’s opinions and proposition. On the same day he will participate in the working breakfast and lunch held by Prime Minister Brown. Third, during the summit he will meet with British Prime Minister Brown, U.S. President Obama, Russian President Medvedev, Brazilian President Lula, South Korean President Lee Myung-bak, Japanese Prime Minister Taro Aso, Australian Prime Minister Kevin and Thai Prime Minister Abhisit in various forms. At present we are communicating and coordinating with related parties on the specific arrangements of those activities.

Li Yong mainly introduced China’s macroeconomic policies and measures to cope with the crisis, efforts of helping the developing countries tackling the crisis and participation in the trade finance by the World Bank.

Li noted that the Chinese government, in an active and responsible attitude, has taken the expansion of domestic demand, especially the consumption demand as the basis of promoting economic growth and resolutely implemented the proactive fiscal policy and moderately loose monetary policy in order to address the international financial crisis. The Chinese government has developed a package plan to promote the stable and relatively fast economic growth by increasing government investment, implementing a two-year investment plan worth RMB4 trillion including RMB1.18 trillion of new investment from the central government, making structural tax reduction and expanding domestic demand; readjusting the industrial rejuvenation plans extensively to increase the competitiveness of the national economy; encouraging scientific and technological innovation to consolidate the basis for further development; improving social security comprehensively, increasing urban and rural employment and stimulating the progress of social undertakings.

He said that the proactive fiscal policy has five focuses: first, to expand government public investment and stimulate consumption demand; second, to move forward the fee-to-tax reform and implement the structural tax reduction; third, to readjust the distribution pattern of national income to increase the income of poor populations; fourth, to further optimize the fiscal expenditure structure to guarantee and improve people’s livelihood; fifth; to extend full support for scientific and technological innovation, energy saving and emission reduction and accelerate the economic restructuring and change of the economic development pattern.

As to the monetary policy, the Chinese government has adopted measures of cutting interest rates several times within a short period of time and increasing liquidity of the banking system and launched a series of financial policies to support economic growth including raising credit amount, optimizing credit structure and strengthening financial support for the farmers, rural area and agriculture as well as small and medium-sized enterprises.

The economic stimulus plan of the Chinese government has shown initial results, and part of the economic indicators has experienced positive changes. The National People’s Congress conference which was just concluded comprehensively deployed China’s economic work in 2009 and formulated new policies on addressing the international financial crisis and promoting economic growth. With appropriate measures and effective implementation, we are fully confident of realizing the major goals of economic and social development this year.

On the efforts of assisting the developing countries to address the crisis, Li noted that the spread of the international financial crisis and its increasing impact on the developing countries have drawn wide attention from the G20 countries. We believe the international community should pay special attention to and try its best to reduce the impact of the crisis on the developing countries, especially the least developed countries.

To that end G20 should focus on the following three areas. First, they should attach importance to the issues of development finance and accelerate the international poverty reduction process. The international community should make efforts to minimize the influence of the crisis on the development issues, enhance the capacity-building of development organizations and ensure the resources for development and the implementation of the Millennium Development Goals. The developed economies should fulfill their promise of earmarking 0.7% of their national income as official development assistance. Their assistance to the developing countries should not be reduced because of the crisis. They should continue to cut or exempt the debts of the developing countries and open markets and transfer technologies to them in order to jointly promote the global poverty reduction and development efforts.

Second, the capacity of such multilateral development banks as the World Bank should be improved to better help the developing countries address the crisis. They should continue to implement their mission of facilitating poverty reduction and sustainable development, increase capital adequacy and counter cycle capacity and help the developing countries better overcome the challenges of capital outflow and difficulties of trade finance by simplifying credit procedures and developing highly pragmatic assistance tools.

Third, continuous efforts should be made to deepen the international trade and economic cooperation and oppose trade protectionism. The rise of trade protectionism will seriously frustrate the recovery of the world economy and slow down poverty alleviation and sustainable development. Therefore, countries in the world should intensify collaboration, share the hard times, minimize the impact of the crisis on international trade and protect its healthy and stable development. We appeal to G20 to send out a clear signal of opposing trade protectionism and urge all countries to maintain the stability of multilateral trade mechanism, make concerted efforts to curb trade protectionism and push forward the Doha round of talks towards comprehensive and balanced outcomes.

With regard to China’s participation in the trade finance of the World Bank, Li noted that the current international financial crisis has made it even harder for trade finance, which influences the trade of the developing countries seriously. Some of them face the severe challenges of capital outflow and difficulties of trade finance. G20 should promote the cooperation and coordination on trade finance, urge the multilateral development banks to expand trade finance and increase support for the developing countries in stimulating exports. China has actively participated in the international cooperation on addressing the financial crisis and promoting the international trade finance. In order to promote efforts of the international financial organizations to improve their financing capacity in response to changes in the international financial markets and enhance support for the developing countries which are seriously influenced by the crisis, President Hu pointed out clearly at the G20 Washington summit on November 15 last year that China would like to actively participate in the trade finance plan of the International Finance Corporation (IFC) of the World Bank. After many rounds of technical consultations China has reached initial agreement with the IFC on buying its private placement bonds for trade finance. Faced with this financial crisis once-in-a-hundred-year, the Chinese government is responsible and working with all the other countries across the world to properly handle risks and challenges and seek mutual benefit and win-win cooperation.

Hu Xiaolian mainly explained China’s efforts of coping with the financial crisis and participation in the assistance cooperation. She said that China is actively joining the efforts of handling the crisis. Faced with the ever deteriorating international financial crisis, the Chinese government is committed to joining hands with the international community to seek global economic and financial stability. As a responsible big power, China, in an active and responsible attitude, focuses on the expansion of domestic effective demand, especially the consumption demand and has readjusted the direction of macroeconomic policy in a timely manner, resolutely implemented the proactive fiscal policy and moderately loose monetary policy and launched the package plan of promoting the stable and relatively fast economic growth. In terms of monetary policy, the PBOC, under the instruction of the Central Party Committee and the state council, has comprehensively applied various policy tools and adopted a series of flexible and effective measures, including five cuts of the benchmark interest rates and four cuts of the deposit reserve ratio, eliminating the hard restrictions on the credit plan of financial institutions, supporting the economic stimulus policies such as expanding domestic demand and strengthening the role of finance in boosting the economic growth.

She noted that China, within its own capacity, has taken an active part in the international cooperation on addressing the crisis while making great efforts of maintaining the stable growth of domestic economy. China has implemented bilateral currency swaps to inject liquidity into the neighboring economies. Since the outbreak of the crisis the PBOC has arranged 3-year bilateral currency swaps worth RMB580 billion with the monetary authorities of neighboring economies, including the bilateral swap framework agreement worth RMB180 billion with the central bank of South Korea signed on December 12, 2008, the RMB swap agreement worth RMB200 billion with the Hong Kong Monetary Authority signed on January 20, 2009, the bilateral currency swap agreement worth RMB80 billion with the central bank of Malaysia signed on February 8 and the bilateral currency swap agreement worth RMB20 billion with the National Bank of the Republic of Belarus signed on March 11. Just this noon we signed the bilateral currency swap agreement worth RMB100 billion with the central bank of Indonesia. To support the emerging markets and developing countries which have needs for currency swaps not only is beneficial to the regional economic and financial stability but also can help them build confidence in jointly addressing the crisis.

The multilateralization of the Chiang Mai Initiative is pushed forward to provide capital support for the regional economic and financial stability. Under the framework of 10+3, parties concerned have signed 17 bilateral currency swap agreements worth a total amount of US$118 billion. The PBOC has entered into 6 bilateral currency swap agreements with the central banks of Japan, South Korea, Indonesia, Malaysia, Thailand and the Philippines in which China promises to appropriate an amount of US$16.5 billion. So far the construction of the foreign exchange pool under the multilateralization of the Chiang Mai Initiative has come to a critical stage. Parties of the 10+3 are making consultations on the major factors of the pool. China is actively pushing forward the building of the foreign exchange pool. It also actively participates in the efforts of the IMF and the multilateral development organizations to cope with the crisis. China has joined in the efforts of the IMF with its subscribed share capital under the capital trade plan of the organization. Some multilateral development organizations proposed to China to buy their bonds or to issue RMB bonds in China, which are under discussions by both sides. China has bought the bonds issued by multilateral development organizations including the World Bank and will continue to participate in their activities of handling the crisis under the precondition of the safety and return of investment.

Concerning the reform of the international financial system supervision, China proposes the following suggestions, according to Hu. First, supervising all the participants of the financial markets, especially strengthening the supervision of financial institutions whose activities have systemic influence. The supervision rules should be consistent in order to avoid “supervision arbitrage”. Second, developing and applying the policy tools easing the pro-cycle trend, encouraging financial institutions to enhance internal rating capacity, reducing dependence on external rating and making timely readjustment of the use of fair-value accounting rules. Third, further increasing the accuracy and far-sightedness of the FSAP and building the assessment system meeting the needs of the emerging markets. Given the different market conditions and financial authorities of emerging economies, the models of the developed countries and mature markets should not be directly copied in the emerging markets. Fourth, accelerating the unification of international settlement systems and bankruptcy laws, considering the establishment of global rules or best practice guide on the bankruptcy settlement of big multilateral financial institutions and treating the domestic and foreign investors equally. Finally, countries should keep alert against various forms of trade and financial protectionism.

Talking about the reform of international financial organizations, she said that we first of all welcome the formal admission of major emerging economies including China to the FSF. The credit of the IMF has grown rapidly since the beginning of the financial crisis. The IMF proposed to increase its capital adequacy and supplement its capital. We support its efforts of solving the problem of inadequate capital through different financing channels in an innovative and pragmatic attitude following the principle of equity of right and duty and strengthening capacity building. We believe that to increase share capital is the fundamental way of raising the capital adequacy and supplementing fund of the IMF. Meanwhile, we think the IMF should improve its governance structure, enhance its legitimacy and strengthen its ability of supervision and risk management. We are studying the proposal of related parties on expanding the new credit arrangement. We actively support and are consulting with the IMF on its innovative financing method which will make its financing easier and offer a safe investment option with reasonable return to the investors.

Besides the major international financial organizations, the regional financial organizations and cooperative mechanisms and the bilateral cooperation should also play a role in tackling the crisis and share the financing burden of the international financial organizations. The G20 ministerial-level meeting which was ended not long ago agreed to speed up the governance reform of the IMF to reflect changes in the world economic power, complete the next examination of share capital before January 2011 and increase the voice and representativeness of the emerging economies and developing countries, which we appreciate and support. In terms of reform of the international financial institutions, we hope to achieve tangible progress through pragmatic cooperation in the future.

The above officials also answered questions raised by the journalists from home and abroad.

Q: President Hu and President Obama will meet at the summit. May I ask whether the two sides will talk about security issues? Will the two sides talk about the Iranian issue and China’s position on this issue? What measures will China take to promote the development of small and medium enterprises (SMEs)? About the reform of international financial institutions, it was suggested that the Bretton Woods system be reformed. What are your comments on that?

A: China and the U.S. have agreed that President Hu Jintao and President Obama will have the first meeting between the two heads of state in London before the summit. The subjects of the meeting will include the China-US relations and how to deal with the current international financial crisis. I believe that the two leaders will exchange views on regional and international issues, including the security issues and the Iranian nuclear issue mentioned by you. With respect to the Iranian nuclear issue, we hope that an appropriate solution could be found out through negotiations. We have noticed President Obama's recent remarks in this regard. We hope that the United States and Iran find an early solution through engagements.

The measures to support SMEs are already included in the adjustment of our macro-economic policies. On the front of fiscal policies, we will expand our investment and take a range of policies to support the development of SMEs in the process of innovation and industrial restructuring, especially tax policies and fiscal interest discount policy to help SME get more loans. On the front of monetary policies, we will increase the total amount of loans and optimize credit structure. In fact, part of the total loan will be transferred to SMEs so that there are more opportunities for SMEs to get loans. The Optimization of credit structure also includes how to make SMEs to get more loans. The related policies are being worked out at a more detailed level. In the process of implementing macroeconomic policies by the Chinese government and in the RMB-4-trillion stimulus package, SMEs accounted for a large proportion.

With regard to the reform of the Bretton Woods system, we believe that the Bretton Woods system, which has been implemented for more than 60 years, should be reformed and adapted to current changes in economic structure. The reform should include the following. First, it is necessary to increase the representation and say of developing countries in the international financial organizations. This is the most important thing. Second, the supervision needs to be improved in the international financial organizations and emphasis should be given to fair, just and equal supervision of all members. In the current situation, we believe that the International Monetary Fund should particular step up supervision on the financial and economic policies of countries that issue main reserve currencies and supervision on countries where major international financial markets are located. Third, the IMF should strengthen its own capacity-building. The IMF should be able to identify risk as early as possible and issue risk warning. At the same time the IMF should enhance the ability to effectively deal with the crisis. The IMF should particularly enhance its ability to deal with the crisis that happens at major global financial markets in major developed countries. Fourth, we think that the IMF's internal governance structure should be reformed and improved and it is necessary for the IMF to improve work efficiency and decision-making process. Fifth, the selection of management personnel of international financial organizations, especially the presidents, should be merit-based and transparent so as to ensure that they have the ability recognized by all.

Q: China is facing increasingly greater risks to buy U.S treasury bonds. The leaders and government officials of China expressed their concerns on various occasions. Will the Chinese government take some remedial measures now? Does China still plan to buy U.S treasury bonds in the future? Will President Hu Jintao re-express such concern at the London financial summit?

A: Investing in the U.S. treasury bonds is an important part of China’s foreign exchange reserves investment. Understandably, we are very concerned of the security and proceeds of U.S. treasury bonds. With respect to the security of treasury bonds, we need to look at the issue from different angles. From the perspective of credit risk, the credit risk of treasury bonds, generally speaking, is relatively low. From the perspective of market risks, the value of assets also fluctuates at different periods. We will continue to buy U.S. treasury bonds as needed in the future. At the same time, we wish to stress that we will pay close attention to the fluctuations in the value of assets.

Q: It’s reported recently that China is holding discussions with other countries to replace the U.S. dollar with other currencies as the world's reserve currency. What is your view?

A: This is a matter of diversifying currency reserve and investment. In fact, if an investor wishes to ensure the security and increase the value of his assets to the maximum extent, he needs to allocate his assets between different currencies. China's foreign exchange reserves are invested in accordance with the principle of diversification. We have different currencies, including U.S. dollar, Euro, and Japanese Yen. This asset allocation is made in light of various factors such as the needs of China's international payment, the proceeds and risks of different currencies in international financial markets, depth and width of different financial markets, and economic and financial policies of different countries. Therefore, such allocation is based on a long-term strategic vision, rather than based upon immediate or short-term fluctuations in currency market.

Q: China provided crisis support to the World Bank and other multilateral agencies. Can you kindly provide some specific figures?

A: At the first G-20 summit on December 15, 2008, President Hu made commitments to the international community to actively participate in the trade finance program of the World Bank Group International Finance Corporation (IFC). Up to now, China and IFC have basically reached a consensus through technical consultations. If possible, we will reach an agreement with IFC and we will have public announcement after the signing of our agreement.

Q: It is reported that China supports Russia in looking for an alternative to replace the U.S. dollar as the major international reserve currency, please confirm this. What is the position of the Chinese side on this issue?

A: We noticed that there are a lot of discussions on the international monetary system reform. Some people hold the view that the current international monetary system is a U.S dollar-dominated currency system. When the U.S. economy or U.S. financial markets have big problems, the US dollar is subject to greater fluctuation. Therefore, we need to build up a more diversified monetary system. In our view, we may study and discuss this issue now. But the U.S. dollar is still the most important currency for international trade settlement, pricing and payment in the international monetary system and the most important investment currency in the financial investment of different countries. Therefore we believe that we may study and discuss the establishment of a diversified monetary system, but from a realistic point of view, we pay more attention to strengthening supervision on the U.S. dollar-dominated monetary system, especially on economic and financial aspects of main reserve currencies.

Q: There are a lot of things that need to be reformed in the international financial system. Will the Chinese side participate in international financial cooperation more in the form of bilateral cooperation?

A: Multilateral and bilateral cooperation are both essential to strengthening financial cooperation. We need to have multilateral cooperation in the international financial organizations, regional financial cooperation, and bilateral financial cooperation. It’s not an issue replacing multilateral cooperation with bilateral cooperation or vise verse. Different cooperation mechanisms support each other and form an integral whole.

Q: A lot of countries, including the United States, have urged the DPRK not to carry out satellite test. Will China and the United State discuss this issue during the meeting between President Hu Jintao and President Obama? Will the Chinese side show its position?

A: At the meeting between President Hu Jintao and President Obama, the two sides will exchange views on regional and international issues of mutual interest, including the nuclear issue on the Korean Peninsula. The Chinese side also paid attention to the launch of satellite by the DPRK. We hold the view that the nuclear issue on the Korean Peninsula should be resolved through the six-party talks. At present we need to create conditions for the six-party talks.

Q: About trade protectionism, Coca-Cola encountered some problems recently in its acquisition of Huiyuan. Why can’t Coca-Cola buy Huiyuan?

A: As we all know, trade protectionism would harm global economic growth. At present, especially in the global financial crisis, the economic and trade growth needs time to recover and trade protectionism will play an opposite role. That’s why at the first G-20 summit and the meeting of G20 Finance Ministers and Central Bank Governors, we all unanimously agreed to oppose trade protectionism.

The Chinese government's rejection of Coca-Cola's bid to buy Huiyuan is an objective judgment based on the Anti-Monopoly Law of China. The reason is to maintain a fair competition environment. This is completely different from the so-called trade and investment protectionism. The Chinese Government has always unswervingly pursued the open-up policy featuring mutual benefits and win-win results. The policies of opening to the outside world and actively utilizing foreign investment have not changed. You may find the products of Coca-Cola everywhere in the Chinese market as well as products from all over the world, including KFC, McDonald's, and Carrefour, and so on. This has fully demonstrated that the Chinese market is an open market. We firmly oppose trade protectionism, financial protectionism, and investment protectionism.

Q: Recently, there were some Hong Kong newspapers saying that China is promoting Renminbi as a trade settlement currency in the process of international trade. May I ask whether there is such a thing? If so, does China wish to promote Renminbi as the regional currency for Asia?

A: RMB, as a settlement currency, has been used for a long time in the border trade. Especially when China has trade with neighboring countries and regions, RMB has been used in relatively large quantity for border trade settlement. To further promote the development of foreign trade, especially in the current extremely difficult international economic and financial circumstances, we think, if more convenient capital payment support can be provided for trade activities, it will be very important support for surrounding countries and regions. Therefore, China is ready to implement the RMB-denominated trade settlement and payment in Hong Kong region. In the trade with the ASEAN region, Guangdong and the Pearl River Delta region are also ready to adopt the RMB-denominated settlement. If this is a mutually beneficial solution that both sides are happy to accept, RMB will certainly play its part in trade activities. Therefore, it is only a manifestation of trade facilitation.

Q: Just now you mentioned the reform of the International Monetary Fund (IMF), in particular the importance of quota mechanism and structure. Of course, it takes time. On what conditions will China increase the contribution to the IMF? Will China increase its funding to the IMF? If the issue of quota can only be resolved in the future, will China still increase its funding to the IMF?

A: We believe that the International Monetary Fund is an international financial institution based upon quotas. Quota increase is the most fundamental way to enable the IMF to better play its role in the future. But quota increase requires some time for assessment and it also relates to legal procedures of various countries. Therefore it may take some time. In the current crisis, the International Monetary Fund is in urgent needs for raising money and we are studying and considering various forms of funding for the IMF. At the same time, we actively support the IMF to issue bonds to raise money because we think this approach will enable the IMF to raise funds in a relatively short time and at a more rapid pace. We need to take into account both long-term and short-term needs.

Q: The United Nations proposes to find an international regulatory body, including the Bank for International Settlements and the International Monetary Fund, to strengthen regulation on international financial institutions. May I ask what is China’s position? China is in favor of using traditional channels such as the International Monetary Fund, or having a new institution, such as the United Nations, to strengthen regulation on these international financial institutions?

A: With regard to the division of responsibilities and cooperation in financial regulation among international financial organizations, we believe that the responsibilities of the IMF and the Financial Stability Forum should be further clarified and cooperation between them should be strengthened. Other international financial organizations, including the Bank for International Settlements, should also play a corresponding role under this framework. There is another view that the Financial Stability Forum should do more work to develop rules and the International Monetary Fund should do more work to supervise the implementation. We also hope that the responsibilities of international financial organizations could be further clarified so as to make the supervision more effective.

Q: China has always stressed that if a country wants to make the best contribution to overcoming the international financial crisis, it is necessary to strengthen its own economic stability and development. I want to know what specific proposals and measures China will have at the G-20 summit to help developing countries?

A: This is a good question. I think you are right. In the face of financial crisis, each country should first of all manage their own affairs well and manage their own economy well so as to achieve quick economic recovery. If we are of one mind to do it well, we have the confidence to overcome the current financial crisis and difficulties. Just now I introduced the proactive fiscal policies and moderately liberal monetary policies implemented by China as well as the timely and decisive introduction of a package of economic programs last year. Some measures included in these programs have achieved some initial success. This certainly does not mean that we don’t have economic difficulties. China's economy still faces great difficulties. We will make assessments in light the changing situation both at home and abroad and based upon the results of policy implementation at this phase and then consider the introduction of new plans. At the same time, we must think of developing countries. It should be said that when the financial crisis comes, developing countries are the worst hit because their economies are vulnerable. We will firmly push forward the Millennium Development Goals (MDGs). We will resolutely deliver our commitments made to African countries and developing countries, including by the commitments made by President Hu Jintao, Premier Wen Jiabao and other state leaders on various occasions.

Q: China supports the International Monetary Fund (IMF) to issue bonds. Does this mean that China will invest in bonds issued by the IMF? It is said that China's foreign exchange reserves declined. Will it bring any problem?

A: China has actively supported the IMF to explore innovative means to raise money. In the current financial crisis, a more efficient and timely way to raise money can make up for the fund shortage of the IMF in the most effective way. If the IMF raises money by issuing bonds, the Chinese side will actively consider purchasing the bonds.

With regard to the question whether China's foreign exchange reserves declined, I wish to say that as the international financial crisis continues to spread throughout the world, there have been some new changes to cross-border capital flows. In many emerging markets and countries, there is a large-scale capital outflow. China haven’t experienced large-scale capital outflow yet, but in the past one to two years, the large capital inflow slowed down. Generally speaking, although the capitals are still flowing into China, the scale and speed of capital inflows have dropped significantly. Now, China is still one of the best performing economies in the world. China remains one of the best markets that the global investors are optimistic about. Under such circumstance, we are fully confident that China's international balance of payments will remain stable.

Q: President Hu Jintao and President Obama will meet during the summit. What concrete results can be achieved at the meeting? Will they discuss a new framework for strategic economic dialogue?

A: China-US relations had a very good start after President Obama took office. China and the United States maintained good cooperation in responding to the international financial crisis and dealing with regional and international issues. The two heads of state will meet in London. We believe that a lot of results will be achieved. The China-U.S. Strategic Economic Dialogue (SED) is a very important high-level dialogue mechanism between the two countries. Through Secretary of State Hillary Clinton's visit to China and Foreign Minister Yang Jiechi's visit to the U.S., the two sides carried out in-depth discussions and agreed on the specific arrangements for the dialogue mechanism. I believe that the two heads of state will reach consensus on this mechanism during the meeting in London.

Q: President Hu Jintao and French President Sarkozy have no plans to meet during the summit. Will there be any breakthrough next week? Under the circumstance that China-France relations encountered difficulties, is it the case that the two sides will not meet?

A: As we all know, the China-France relations did encounter some difficulties not long ago. The causes are also well known. The Chinese side hopes that the French side could take practical actions to respond to China's major concerns explicitly, positively and directly and get the China-France relations back on the right track at an early date so that the two countries can work together to tackle international financial crisis and other global challenges.