a couple of decades now, but the nature of its impact is gradually changing. for some years, it was too small to notice – even a country with a lot of people is small economically if their per capita incomes and productivity are very low. then, some time in the 1990s, china became quantitatively important enough for the rest of the world to enjoy the disinflationary effects of added chinese production capacity, as millions of low - cost workers turned out manufactures, in the process lowering global prices. more recently, we have been experiencing a new effect of that growth, namely the effect of higher chinese living standards on the price of energy and natural resources. f course, this is not confined to china – it is happening around the developing world to a greater or lesser extent. but china is the biggest example. commodity prices are coming off their peaks at present, though key prices for australia are still very high. even if this marks a cyclical turn for such prices, in the longer term this new claim on energy and other resources will not go away. other countries are having to adapt to that. the rise in prices for energy and raw materials has made it harder for those countries to combine the steady growth and low inflation that had characterised the period from the early 1990s until about the middle of this decade. at the same time, this extraordinary increase in the demand for natural resources and energy has raised australia ’ s terms of trade by close to two - thirds in the space of five years – the largest shock of its kind for five decades. so the economics of this for australia are therefore a bit different from those for the “ average ” industrial country. like others, in the energy - using parts of the economy, we find it more difficult to combine steady growth and low inflation. but in addition, we have had to absorb a massive income boost. 1 of course, there are worse problems to have! nonetheless, significant adjustments are occurring – to the structure of the economy, to where the population lives and how the national income is earned and distributed. unless resource prices reverse a long way, these trends will continue. china ’ s emergence is surely far from complete. china, like all economies, will have cycles. but its average growth rate is likely to be pretty high for years ahead, even if not as high as it has been recently. this is an opportunity and a challenge for australian business and policymakers, and not just in the resource sector. economics of full employment over recent years

financial sector reform has taken place in many parts of asia. in many economies, the rules have become more conservative. for instance, many jurisdictions here in asia have strict loan - to - value ratios in mortgage loans and provisioning requirements. there is therefore less need for asia to have to make drastic changes to meet the new norms. in fact, asia ’ s bigger challenge lies less in having more stringent regulations, but more in development and innovation of financial services to complement its economic development. saving rates in asia are high, but these have to be efficiently intermediated to support productive investments. in most parts of asia, the banking system dominates the intermediation channel. developing a stronger second channel through the capital markets, venture funds and private equity to support a range of entrepreneurial activities can raise the efficiency and resilience of the system. this will also provide a wider range of asset classes to meet the investment needs of a rising middle class. similarly, the insurance and risk management markets will have to be developed further to meet corporate and individual needs. there is already a momentum, with capital markets in china, india and asean economies developing well. in bigger economies, micro - finance, mobile finance and rural finance are also being developed. cross - border financial activities within asia are also showing signs of increase. these are positive changes, as the development of a deep and integrated financial system provides a vital support for structural adjustments in the region. economic and financial linkages between france and singapore let me now say a few words on how singapore is responding to these challenges, and how the french business and financial community can collaborate with those in singapore to promote growth in asia. the singapore government has set up an economic strategies committee to identify policy changes to strengthen singapore ’ s value as a vibrant global economic node in the heart of asia. singapore ’ s connectivity enables it to facilitate the flow of goods, services, capital and ideas. the value of singapore as a stable, trusted hub that respects the rule of law, and its value as a consistent regulatory regime are our core strengths. but these will need to be enhanced with new capabilities in knowledge creation and innovation, as well as the development of deeper talent pool, in order for the business community to seize new opportunities. the connectivity and ease of doing business is well acknowledged by global businesses. today, over 26, 000 international companies use singapore as a base for their operations. between france and singapore, economic and trade ties are deep and growing. in 2008, total