Demand for professional advice

Alexander Lukashenko meets the Director of the Financial Market Department of the People’s Bank of China, Xie Duo

By Kirill Slavinsky

Talks with the authoritative Beijing official tackled the complex situation facing the Belarusian currency-financial market. Minsk is currently analysing the experience of various countries in hope of overcoming its crisis, listening to advice from sources such as the IMF and famous economists. Belarus is also ready to take China’s position into consideration.

“A month ago, when difficulties emerged on the consumer and currency markets, I listened not only to our Government and National Bank representatives on how to stabilise the situation, but also worked with the Russians and the world’s leading banks — listening to their views and suggestions,” stresses Mr. Lukashenko. “The most important, strategic issue for me was working with Chinese specialists — representatives of the People’s Bank of China. Back then, with the help of our friend, the Ambassador of China to Belarus, I addressed my friend, the President of China, Hu Jintao, the Government and the executives of the People’s Bank of China. I asked them to send specialists to Belarus to advise us on the financial management system applied in China.”

Last year, China became the second largest economy in the world, boasting a GDP of $6 trillion. The country is strongly built into the global market economy, occupying a manufacturing niche (China accounts for about 20 percent of the world’s industrial production). Moreover, the Government controls the Yuan’s exchange rate. With this in mind, talks between Washington and Beijing in recent years have focused on a key topic: the Americans believe that the Chinese are undervaluing the Yuan’s exchange rate to allow exports to be more competitive. The USA, as a major consumer of Chinese made products, is witnessing a huge negative trade balance as a result. Beijing has not made any serious concessions, simply loosening the rate a little and preferring to control the situation.

The Chinese are protecting their national interests. For example, they seriously regulate the access of foreign capital to the financial system, which is under strict state control. There are even restrictions imposed on how banks can handle foreign capital.

According to Mr. Lukashenko, Chinese experts were asked to assess the situation in Belarus and suggest solutions to the crisis. “We wanted Chinese specialists to make recommendations from their own point of view, offering a further strategy of action on the currency market and, in particular, for the National Bank. I’ve been told that the Chinese have suggestions for all these spheres,” the President notes.

Within just a few minutes, Mr. Lukashenko several times thanked the Chinese Ambassador and the country’s heads for ‘their operative response to my request’. “We’ve never met such decent and responsible people,” he asserted.

Xie Duo, in turn, expressed confidence that Belarus will overcome the crisis, restoring its stable economic growth. “Our positions coincide on many issues. Among them are the importance of stabilisation on the currency market, a reasonable pace of growth for credit, structural corrections and restraint of inflation to stabilise consumer prices and people’s income. On the whole, we support the general direction taken by the Belarusian National Bank and Government,” he said.

After fully assessing the Belarusian situation, the Chinese will propose practical recommendations in the field of monetary-credit and budget-tax policy.

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