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G20 recognizes Europe's progress in resolving debt crisis: Chinese official

Source:Xinhua Published: 2012-11-7 9:28:05

G20 finance ministers and central bankers had recognized the eurozone's progress in tackling its chronic debt crisis and urged the US to address its fiscal cliff, a senior Chinese finance official said Monday.

During an interview with Chinese media, Chinese Vice Finance Minister Zhu Guangyao said the troika -- the European Central Bank (ECB), the International Monetary Fund (IMF) and the European Commission -- was negotiating with Greece over the payment of the next tranche of aid to the country.

Although Greece had made some headway in resolving its debt problem, uncertainties remained, he said.

"November is a crucial month for Greece, as the eurozone finance ministers will meet on Nov. 12 to decide on the release of the next tranche to the debt-wrecked country to avert a disorderly default and exit from the eurozone," he said.

On the growing concerns that Spain would become the next Greece, Zhu said Spain had indeed made great efforts and progress in its domestic structural reforms, but the crux of the issue is whether Madrid decides to apply for a bailout from the European Stability Mechanism (ESM), which is a precondition for the ECB to aid Spain's secondary bond market.

"This issue has heavily featured in the discussions of the G20 meeting. Close consultations are also underway among Spain and other major eurozone countries. We hope that some progress can be achieved as soon as possible," Zhu said.

Besides the European debt crisis, the US fiscal cliff was also a major concern for this meeting.

Zhu said the US had assured the other G20 members that, after the presidential election, the White House would take active measures in consultation with the Congress to solve the "fiscal cliff" problem.

The IMF has warned the US economy will drop 3 percent if "fiscal cliff" occurs, meaning the US economy will fall into recession.

As the US was the world's largest economy, its recession was bound to drag on the global economy, making it more unstable and a global recovery more difficult, so the meeting urged the US to take effective measures to control their debt cliff risk, Zhu said.

Regarding emerging economies, IMF Managing Director Christine Lagarde and World Bank President Jim Yong Kim stressed China's economy had significantly improved in the third quarter.

"China has enjoyed a growth of 7.7 percent in the first three quarters of this year, of which domestic consumption contributes 55.5 percent, investment 50 percent, while the contribution from net exports is -5.5 percent," Zhu said.

The proportion of China's current account surplus of gross domestic product (GDP) in the third quarter had dropped to 2.1 percent, meaning China is improving its economic structure, he said.

During the two-day meeting, officials from the BRICS countries including Brazil, Russia, India, China and South Africa also held a gathering to coordinate an economic policy response to the current world economic downturn, Zhu said.

He said leaders of the BRICS countries decided to carry out a feasibility study for the establishment of a BRICS development bank.

"It is a very visionary, very important decision on the future of South-South cooperation, which certainly will help boost infrastructure construction in developing countries. From a far-reaching historical viewpoint, it will also play an important role in promoting the reform of the world economic structure and governance mechanisms," he said

When talking about the implementation of the 2010 G20 summit initiative to reform the governance structure of the IMF, Zhu said this issue had so far made considerable progress, but a certain major country hadn't yet completed its domestic ratification procedure, and the other participating countries had urged it to complete this process as soon as possible.

The G20 finance ministers' and central bankers' meeting ended Monday. It was the last major event chaired by Mexico before it hands over the rotating G20 presidency to Russia for 2013.
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