China Innovative Banks'Club holds the 2nd Breakfast Meeting

--Nicholas Stern, the Second Permanent Secretary of the Treasury of the UK and Senior Vice President of the World Bank made a speech entitled “The New Position of the Open China in International Financial Pattern and Prospecting”

On February 22, 2006, China Innovative Banks'Club held the 2 nd Summit Forum of China's Financial Policies and Breakfast Meeting at the State Guest Hotel. Nicholas Stern, the Second Permanent Secretary, the Treasury of the UK and Senior Vice President of the World Bank made a speech entitled “The New Position of the Open China in International Financial Pattern and Prospecting”. The breakfast meeting is presided over by Liu He, deputy director of the Office of the Leading Group of Finance and Economy of the CPC. Gao Xiqing, deputy chairman of the National Council for Social Security Fund and deputy mayor of Guangdong acted as the commentators.

The speech of Nicholas Stern involves five aspects:

Firstly, the foundation for the growth of Chinese economy. Since 1979, China's economic growth is prominent and the annual growth is about 10%. In 2005, China became the No. 4 economic power in the world and the PPP listing ranks No. 2. Millions of Chinese people have shake off poverty. Nicholas Stern thinks that sustainable reform is the main reason backing the rapid growth of the Chinese economy.

Secondly, China's present economic growth mode faces restriction of four aspects, namely, slow export growth, low-efficiency capital allocation; increasing imbalance and environmental restrictions.

Thirdly, the development imbalance. In China, 48% of the GDP comes from saving and China's saving interest rate is the highest in the world. The reform of the financial sector is the key for realizing a balanced growth. The participation of more and more forces is good for solving the constant growing imbalance.

Fourthly, policy summary. The policy measures are good for maintaining China's high-speed development, adjusting the concentrated export and the building of a more fair and harmonious environment. Nicholas Stern expounded policy measures for rebalancing.

Fifthly, China's responsibilities. As a member of the world, China has the responsibility to solve global imbalance, ensure the position of market economy; reduce trade protectionism, promote growth with most favorable services and be at a leading position in environmental issue.

Finally, Nicholas Stern expressed his optimism of the development prospect of China and the expectation of problem solving. He thought that the 11 th Five-Year Plan has set up an objective for the increase of energy efficiency, the rural area shall be connected with a more powerful infrastructure, the reform of the financial sector is good for upgrading the efficiency of capital allocation and the growth balance of domestic demand shall be change and bigger flexibility shall be allowed to the currency.

In combination with the views of Nicholas Stern, the attending guests conducted discussions on “whether cutting down saving and reducing capital output influence U.S economy?”, “how to explain the contradiction between the imbalance of the income and expense of low income group resulting from heightening energy price?”

At the time of comment, Gao Xiqing, deputy chairman of the National Council for Social Security Fund, said that high saving has a root in China. China's social security system is not sound, medical and endowment aspects are especially outstanding and there's a long way to go before the solving of the problems. But he pointed out at the same time that China has advantages in solving these problems: high saving, sufficient labor resources, huge state-owned assets and the socialism under the ruling of the Chinese Communist Party.

 

An introduction to Nicholas Stern

Nicholas Stern is the Second Permanent Secretary of the Treasury of the UK. Since 2003, he acted as head of economic business sector of Blair administration.

During 2000-2003, Nicholas Stern served as the chief economist and vice president of the World Bank. During 1994-1999, he was the chief economist and special advisors to the president of European Bank for Reconstruction and Development.

Before entering International Financial Organization, Nicholas Stern already has prominent achievement in academic study and teaching. He was appointed to a Chair (subsequently the Sir John Hicks Chair in Economics) at the London School of Economics for over 10 years. He has taught and carried out research at many places including Oxford and Warwick Universities, the Massachusetts Institute of Technology, the Ecole Polytechnique in Paris, the Indian Statistical Institute in Bangalore and Delhi, and the People's University of China in Beijing. He also ever worked in Oxford Committee for Famine Relief, Official Development Assistant and UN. He is also a member of the British Academy and a foreign honorary member of American Academy of Arts and Sciences.

As an economist of macro economy, Nicholas Stern's study interest is wide. Generally his work has focused on economic growth, economic theory, tax reform, public policy, the role of the state, and economies in transition. His early works include Kenya's Transportation Equity Act, The Economy of an Indian Village. He also wrote some books on criminal, criminal statistics, public finance and social development, including, “Tax Theory of the Developing Countries” in 1987, “Development Strategy: World Bank” in 2002. His recent book “Growth and the Growing Power: Boosting the Arrival of Development” will be published in March.

Nicholas Stern has three children, he is also a faithful fan on Wimbledon soccer team.