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  2. About BFA

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Vice Chairman Zhou’s Keynote Speech at the Launch of the BFA 2020 Flagship Report & Symposium on Asian Development Prospects and Challenges under the Pandemic (Full Text)
Origin:Boao Forum for Asia      Time:2020-05-11 17:21:17    Views:615

(May 8, 2020)

 

Thank you, Mr. Li Baodong.

Distinguished guests,

Dear friends,

Ladies and gentlemen,

Good morning! Thank you for joining today’s online event amid the outbreak of the coronavirus, to discuss the prospects and challenges of Asian development. The pandemic has widened the social distance among people, yet during the hard times, mutual understanding and helps from each other, between countries and across regions are more imperative, to bring together wisdom and to find solutions. All the BFA family members, as well as all guests online today are called in to this mission in human history.

A few days ago, the BFA Board of Directors made the decision not to hold the BFA Annual Conference in 2020, to support and contribute to the global fight against the pandemic. However, the Forum will still launch a series of annual flagship reports, in order to lead more extensive and in-depth discussions on cutting-edge issues within and out of Asia. The report to be launched today, is the most traditional flagship report of the BFA. We look forward to listening to the analysis and judgments from the writing team. I also hope to hear the valuable insights from the distinguished guests.

Taking the opportunity today, I would like to discuss with you some economic policy options under the pandemic.

Currently, governments across the world are doing everything they can to fight against the pandemic. Health emergency and social distancing have been declared, resources widely mobilized by the governments, patients intensively cured, and medicines and vaccines under development. At the same time, unprecedented, swift and large-scale economic policies have been implemented to save the economy, including rescuing lifeline industries, supporting small and medium-sized enterprises, relieving the unemployed and the most vulnerable, and investing in infrastructure. The G20 Leaders have promised to inject over $5 trillion into the global economy. Across the world, fiscal measures have totaled about 8 trillion US dollars, and central banks have injected liquidity over 6 trillion US dollars.

In Asia, the relief and stimulus policies have also been intensively put in place. In Singapore and Malaysia, the policy scale exceeds 20% of their GDP. Nevertheless, some developing economies are constrained by insufficient financial resources and lack of infrastructure, particularly in the health system. The Asian Development Bank and the Asian Infrastructure Investment Bank have also announced large-scale relief arrangements for the region.

The key to the economic policy under the pandemic is to provide basic social security and mitigate the debt burden. Some special policy arrangements can be made in this pursuit. The pandemic is a sudden shock to both supply and demand. Faced with “Great Lockdown” and “Great Shutdown”, the priority is to provide direct support to the most vulnerable and to those that have lost economic resources. This can include providing unemployment relief or universal basic income. Due to resource constraints, the relief measures need to be well-targeted.

At the same time, under the Great Lockdown, work and production have been suspended and contracts are unable to be completed. Some special policies for suspending debt repayment and debt collection can be considered. For example, rents and mortgages can be suspended. Contract periods, such as agreed in those large-scale trade contracts, can be extended. These "put-on-hold” policies are like the “pause” button on the music box: when the social distancing measures are implemented, press the button, and once the measures are lifted, press the button again to resume the music. If simultaneous pause can be applied on both sides of the balance sheet of the entities or individuals, the losses finally passed on to the public finance can be significantly reduced. After the pandemic, this kind of “putting on hold” policy can be withdrawn, to gradually restart the normal economic activities.

As to policies at the international level, special arrangements can also be considered, with a focus on developing countries and emerging economies. After the outbreak of the pandemic, many developing countries and emerging economies have been overwhelmed by the health crisis and economic crisis, with some of them also threatened by the currency and debt crisis. Up to now, over 100 countries in the world have applied for assistance from the IMF, which has adopted a package of liquidity provision measures. The World Bank and other multilateral development banks have also provided sizable funding to fight the pandemic and prevent severe economic contraction.

The G20 meeting of finance ministers and central bank governors in mid-April agreed to suspend the debt repayment by the world’s poorest countries from the first of May to the end of 2020, and called on private bondholders to join the initiative. At the same time, the IMF announced a debt relief facility for 25 poorest and most vulnerable countries. The above measures are typical “putting-on-hold” policies. In addition, as we all know, during the financial crisis of 2009, the IMF approved the allocation of $250 billion of new Special Drawing Rights. Amid the pandemic, a new round of SDR allocation can provide countries with the most urgently needed liquidity support.

Facing the challenges, Asia is making an important contribution to the global battle against the pandemic and the restoration of growth. Before the pandemic, Asia has already been exposed to increasing major risks such as geopolitical conflicts, global trade frictions, technology transfer barriers and natural disasters. Under the raging pandemic, many Asian economies need to fight the virus from the very beginning towards the end, and also tackles with significant economic shocks. Some of them have been suffering plunge of commodities and agricultural product export, interrupted industrial chains, tourism industry crisis, massive capital outflows and a significant reduction in remittances. As an important part of global trade, production and investment, Asia in turn has a major repercussion on the rest of the world.

However, Asian economies have strong resilience, with a huge market and rapidly growing middle class, improved balance of payment and fiscal conditions, continuous human capital investment and booming digital economy. As beneficiaries and supporters of the trade and investment liberalization, Asian economies will continue to play the roles as a global growth engine during and after the pandemic. We applaud the strong signals sent out by the Special ASEAN+3 Summit in April, and relevant countries would take measures to enhance regional economic stability and resilience, promote regional trade development, and make good use of Regional Financial Arrangement.

China has made arduous efforts and huge sacrifices in this fight against the pandemic, and been actively participating in international cooperation in the global battle. Facing the grave challenges brought by the pandemic, the Chinese government has topped up its measures to safeguard jobs, livelihood, market entities, food and energy security, the stability of industrial and supply chains and the smooth running of communities. Most recently, the Chinese government announced to improve the market-based allocation mechanism of production factors. This sent out an important signal that, China persists in deepening market-oriented reforms, expanding high-level opening up, and tearing down institutional barriers for free flow of factors. Under the current situation, it is also of great practical significance to mitigate the impact of the pandemic, stimulate the potential and vitality of the economy, and promote regional and global economic recovery.

Ladies and Gentlemen,

the global curve of the coronavirus infection has begun to flatten, many countries have taken steps to reopen their economy. But, there are still mounting uncertainties about the time and intensity of the Pandemic and its impact on the economy, society and the post-pandemic world. Some people have begun to worry that, after the pandemic, some countries may be more inward oriented and isolated, the global industrial chains and value chains be restructured, and global trade conflicts escalate again.

We need to be vigilant against these development and bear in mind that, under the pandemic, no country can manage it alone and the destiny of all countries is bounded together. I believe that,as long as the international community overcomes fear and fight together, we will eventually win the battle. Globalization and regional economic cohesion, though on a bumpy road, cannot be stopped, owing to the hyper-linkage in technology and infrastructure, in economy and market, and the utmost importantly, in people’s heart.

Thank you all!

 

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