unemployment rate was 5. 4 percent. the underlying consumer price inflation eased to 1. 2 percent in the second quarter over a year ago. for 2009 as a whole, real gdp is projected to contract by 3. 5 - 4. 5 percent and cpi inflation is projected at 0. 5 percent. hit by the global recession, the economy of macao sar contracted 12. 8 percent in the first half of 2009, with pronounced declines in both exports and investment. however, labor market performance remained stable, with the latest unemployment rate remaining at 3. 7 percent. inflationary pressures were quickly alleviated. as the tourism industry income stabilizes, economic activity is gradually improving, and the decline in gdp is expected to moderate gradually in the second half of the year. iii. reform and future mandate of the fund the current financial crisis, which originated in developed countries, has resulted in substantial losses for the countries of the world. the failure of major international financial institutions to issue timely early warnings highlights the consequences of its misfocused surveillance. only through the acceleration of fundamental reforms will the major international financial institutions be able to discharge the mandate assigned to it by its member countries. the persistently misaligned quota shares and underrepresentation of emerging market and developing countries hamper fund governance and even - handed surveillance. it undermines fund legitimacy and effectiveness. the traditional unreasonable quota allocation and adjustment method have intensified the misalignment. it is critical that the fund complete in a timely manner the reform objective announced by the g - 20 leaders, namely a shift of at least five percentage points of the quota shares in favor of the emerging market and developing country members. we support increasing fund resources through a variety of means. however, the fund is a quota - based institution and quotas should be its primary resource. from the long - term perspective, the fund should introduce a reasonable automatic quota adjustment process in order to reflect changes in the relative economic positions of its members and avoid serious quota share misalignment. we join in the call for prompt approval of the 2008 quota reforms. building on the quota reform, we support the broader reform of fund governance, which will result in a strengthened role of the executive board, better oversight over the management, and a transparent, competitive, and merit - based process of management selection. emerging market and developing countries should also have greater participation in management and staff. even - handed surveillance is an important condition for fund legitimacy and effectiveness. the fund needs to strengthen

by 1. 2 percent in the same period year - on - year, the august cpi registered a 0. 5 percent increase from the previous month. money growth accelerated in the first eight months, with m2 and m1 up 28. 5 percent and 27. 7 percent respectively, resulting in a credit growth of 34. 1 percent. the renminbi exchange rate remained stable. the domestic demand has become the dominant source of growth. the package of macroeconomic measures in response to the global financial crisis – suited to the chinese circumstances – has proven to be timely, forceful, and effective, and has helped reverse the sharp decline in growth. the projected growth target for this year is within reach. efforts are also being made to contain fiscal and financial risks. the government intends to limit the fiscal deficit and public debt to around 3 percent and 20 percent of gdp, respectively. the banking system has improved its asset quality and resilience to shocks. the nonperforming loan ratio of the banking sector declined by 0. 64 percentage points in the first six month to 1. 8 percent at end - june. and their capital adequacy stood at 11. 1 percent. the chinese government is faced with an uncertain global environment. in the first eight months, exports dropped by 22. 2 percent while imports, by 22. 7 percent. the task for structural adjustment remains formidable. while the effect of the supportive policies is expected to phase out, the measures aimed at addressing longer - term issues will take time to yield results. the government is committed to maintain stable and consistent macroeconomic policies while accelerating structural adjustment. promotion of domestic demand, particularly consumption, will remain a top priority. in this regard, the government is committed to maintain a reasonable investment growth, improve investment structure, and enhance efficiency by eliminating inefficient capacity and encouraging merger and restructuring. it will continue to restructure and revitalize key industries, encourage innovation, and improve the people ’ s livelihood. it will monitor closely the developments in the domestic as well as the global economy and stand ready to take contingent actions, as necessary. china will also remain vigilant against various potential risks, including the risk of inflation, and sustain strong economic growth. against the economic rebound in mainland china and easing of the downside risks in the global economy, the hong kong sar economy in the second quarter recorded a 3. 3 percent rebound over the previous quarter, and the decline in exports moderated. total employment stabilized and the