VZCZCXRO0931
RR RUEHCN RUEHGH RUEHVC
DE RUEHBJ #1263 1310937
ZNR UUUUU ZZH
R 110937Z MAY 09
FM AMEMBASSY BEIJING
TO RUEHC/SECSTATE WASHDC 3926
INFO RUEHOO/CHINA POSTS COLLECTIVE
RHMFIUU/CDR USPACOM HONOLULU HI

UNCLAS BEIJING 001263 
 
DEPARTMENT FOR INR/R/MR, EAP/CM, EAP/PA, EAP/PD, C 
HQ PACOM FOR PUBLIC DIPLOMACY ADVISOR (J007) 
SIPDIS 
 
E.O. 12958:  N/A 
TAGS: OPRC KMDR CH PREL ECON
 
SUBJECT: MEDIA REACTION: RMB INTERNATIONALIZATION, CHINA'S FINANCE 
AND BUDGET REFORM, U.S. ECONOMY 
 
-------------------- 
  Editorial Quotes 
-------------------- 
 
¶1. RMB INTERNATIONALIZATION 
 
"Editorial: We should be cautious about the internationalization of 
the RMB" 
 
The independent Chinese weekly business newspaper distributed in 
major cities throughout China, Economic Observer (Jingji Guanchabao) 
(05/11) "A currency's internationalization should be the choice of 
the market, not the behavior of the government.  The government 
should do its own things well, but not too aggressively focus on 
results.  When market conditions mature, the government should grasp 
their chance trend accordingly.  China should first begin to use the 
RMB when trading with border countries.  It is already in the 
process of doing this.  Then the RMB should be 'Asianized.'  The 
ultimate goal of the internationalization of the RMB is making the 
RMB the main currency in pricing, settlement and reserve. The RMB is 
still not freely convertible and its exchange rate mechanism is 
still in the process of reform.  The internationalization of the RMB 
depends not only on the changes in demand in external markets but 
also on the reform of its own financial system and China's 
currency." 
 
¶2. CHINA'S FINANCE AND BUDGET REFORM 
 
"Democracy is needed for budgeting reform" 
 
Global Times English (English-language daily published by the 
People's Daily): "China's administrative organizations have critical 
power in deciding budgets, while the People's Congress has little 
authority to supervise them. The annual budget introduced in the 
People's Congress is usually vague and inaccurate. Under these 
conditions, the right-to-know is but an empty principle and national 
assets are easily co-opted as personal property by some bureaucrats. 
 A modern nation must have proper finance regulations. The main task 
of governments in modern nations is to serve tax-payers with their 
money. Public budgeting reform can be implemented through three 
approaches. The first approach is a technical reform of the 
governmental bureaucracy. The second approach focuses on openness 
and transparency in government budgeting. The third approach is the 
regularization of public budgeting to reinforce People's Congress 
auditors. The first approach to reform is easier than the others, 
but its effect will be limited without the other two. Public 
budgeting reform cannot be successful without prodding from the 
People's Congress. That body must show its willingness and power to 
handle the issue, pushing budgeting reform in order to realize 
finance democracy." 
 
¶3. U.S. ECONOMY 
 
"It is too early to be optimistic about the U.S. economy" 
 
The China Radio International sponsored newspaper World News Journal 
(Shijie Xinwenbao)(05/11): "Federal Reserve President Ben Bernanke 
recently said that in this year, the American recession may end. 
This is a positive signal for China. However, China should be 
reserved and exhibit a neutral point of view.  China should treat 
the crisis as an opportunity to rationally observe the possible 
results given this development.  Currently the U.S. economy is 
experiencing the worst crisis in history.  China could use the 
situation as a chance to predict the possible destruction, influence 
and length of a similar crisis.  The assets market will experience a 
profound and lengthy fall during the crisis. Real estate prices will 
experience a 6-year drop.  Even if economic growth stabilizes after 
the crisis, economic recovery will take a long time.  The process by 
which the global economy will step out of this recession is a long 
one. There is the possibility of another downturn.  It is still too 
early to conclude that the positive trend of the U.S. economy will 
directly influence the Chinese economy." 
 
PICCUTA