China Anticipates Successfully Weathering Economic Storm
In the midst of global financial turmoil, and in the wake of the G-20 summit in Washington in which China took part, the deputy central bank governor for China, Yi Gang has expressed his confidence that the country’s financial system is strong enough to ride out the tumultuous economic storm. In an article in the Communist Party’s journal ‘Seeking Truth’ (Qiushi), Yi noted that China’s banks had limited outside exposure and have, therefore, experienced minimal losses,
Another factor in China’s favor is that debt levels of Chinese businesses, households and even the public sector are quite low. Moreover, liquidity in the banking system is at a high level. Nonetheless, some fallout from the global financial crisis is inevitable and the country needs to be fully prepared for this. Yi Gang estimates that every 1 percentage point fall in United States and Europe growth, has the effect of depressing China’s export growth by between 6 and 8 percentage points and he anticipates 2009 being even gloomier. Increasing nervousness with regard to money market trading, along with sharp declines in real estate business and share prices, point to a growing sense of uncertainty in China’s investor circles.
Yi notes that attention must be paid to latent risks and these must be dealt with through ‘vigorous measures’. To further counteract possible fallout from the global financial crisis, China’s authorities are promoting domestic demand as well as reforming taxes. It is anticipated that the combination of these, and other, measures will result in China’s economy enjoying stable growth in 2009.
China’s President Hu Jintao attended the G-20 summit in Washington on 15-16 November 2008 where common ground was found on factors which precipitated the crisis and agreement was reached on measure for moving ahead to solve the crisis and ensure something of this nature would not occur again. In separate meetings with Russian President Dmitry Medvedev, British Prime Minister Gordon Brown, and Brazil’s President Luiz Inacio Lula da Silva, Hu expressed his country’s willingness to cooperate with other nations in order to cope with the crisis.President Hu Jintao is currently on a five-nation tour and following his visit to the United States he will be traveling to Costa Rica, Cuba, Peru and Greece. While in Peru, Hu will attend the Economic Leaders’ Informal Meeting of the Asia-Pacific Economic Cooperation forum to be held in Lima.