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World nations jointly tackle financial crisis

(Xinhua)
Updated: 2009-09-16 14:56

The world economy has survived a year of turbulence after the global financial crisis broke out thanks to efforts of the world community.

During the worst financial crisis since the Great Depression, emerging economies, including China, have explored cooperation and guarded against protectionism. Those countries also have witnessed strong economic growth and have played an increasingly significant role in dealing with the financial upheaval.

G20 plays leading role

On November 15, 2008, G20 leaders met in Washington to try and find solutions to the global crisis. The summit participants pledged strengthened cooperation to support economic growth and called for reforms in the world financial system to prevent a similar crisis from happening again.

After the summit, the major economies adopted a variety of stimulus policies and rescue packages. The central banks of those countries repeatedly cut interest rates and pumped hundreds of billions of US dollars into their financial systems to help ease the credit crunch.

The G20 leaders met again in April in London in the midst of the global recession. There, they pledged a $1.1 trillion salvation deal, including an agreement to treble the International Monetary Fund's (IMF) resources to $750 billion.

The summit participants also advanced a series of reforms such as strengthening regulation and reforming the international financial system.

Thanks to the joint efforts, global trade has shown signs of growth, and the Organization for Economic Cooperation and Development (OECD) said in its latest forecast that the downturn was coming to an end.

US President Barack Obama will meet with the leaders of the world's other major economies later this month in Pittsburgh -- the third G20 summit since the crisis began.

Obama said last week that the world should focus on sustainable economic growth to prevent a repeat of such crisis.

BRIC nations uplift international status

Emerging economies, such as the so-called BRIC countries -- Brazil, Russia, India and China -- achieved relatively decent economic performances amidst the crisis while the developed world struggled.

The BRIC countries have maintained fast growth in recent years with considerable economic expansion to boot. Between 2006 and 2008, the BRIC countries achieved an average growth rate of 10.7 percent, the IMF reported.

In 2008, the BRIC countries accounted for about 15 percent of the world economy and 13 percent of the world's trade volume. They also contributed 50 percent of the world's economic growth. During the next 20 years, investment bank Goldman Sachs predicts, the four nations' economies will exceed that of the G7.

Some economists say the BRIC countries were less affected by the financial crisis than developed countries and are expected to emerge from the trouble first.

Goldman Sachs forecasts that the world economy will contract 1.1 percent this year while the BRIC countries would grow by an average of 4.8 percent. The investment bank also forecasts growth of 3.3 percent for the world economy in 2010 and 8.8 percent for the BRIC countries.

Leaders of the four BRIC countries met in Yekaterinburg, Russia, in June for the first time. They exchanged views on how to tackle the economic crisis and discussed world financial system reforms, food security, climate change and other issues of common concern.

Related readings:  China wants moves on IMF voting at G20: officials  Shanghai Cooperation Organization  Running from the financial crisis to a debt crisis  The Crisis, the BRIC, the Companies

The BRIC finance ministers, meeting during a G20 finance ministers and central bank governors meeting earlier this month, called on the world to strengthen support for the low-income countries so as to narrow the gap between developed and developing nations.

The BRIC ministers also said that in order to build a more fair and reasonable international economic order, the world should take steps to promote financial system reforms and increase the representation and voice of developing countries.

China becomes engine of world economy

Having enjoyed fast growth for years, China has become the world's third largest economy. Despite being affected by the current financial crisis, China's economy is still likely to achieve 8 percent growth this year and is expected to lead the world economy out of the recession.

Alistair Darling, Britain's Chancellor of the Exchequer, told Xinhua after the September 5 G20 finance ministers meeting that Britain and others could benefit from China's sustained growth.

Thanks to a 4 trillion yuan ($586 billion) stimulus plan announced last November, China's economy is now recovering from the global downturn.

Bloomberg said that China's stimulus plan not only boosted its own economy, but also helped the whole world because the plan benefited businesses in China and abroad.

To help other countries escape the economic jam, China has promised to provide $10 billion in loan to members of the Shanghai Cooperation Organization. China also facilitated an agreement on the Asian regional foreign exchange reserve pool with a total size of $120 billion.

In addition, China agreed on September 3 to buy the first IMF bonds for about $50 billion to boost IMF resources.

At the same time, China, together with other emerging economies, has called on the world to protect the interests of developing countries as reforms of the international financial system are being considered. China also has repeatedly reiterated its position against protectionism and support for open trade and investment.