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Chinese economy provides 'slow cooking' for thought

By Diao Ying (China Daily)
Updated: 2008-09-29 09:11

The $700 billion rescue plan initiated by US Treasury Secretary Henry Paulson can be thought of as "fast food" compared with China's long-standing cautious regulatory policy being "slow cooking", Liu Mingkang, chairman of the China Banking Regulatory Commission, has said.

Speaking to business leaders at the 2008 Summer Davos meeting in Tianjin on Saturday, Liu said the current financial crisis that has pushed major Wall Street players into bankruptcy meant that leaders from the business world also called upon all countries to help improve matters. "No one is an island," Liu said. "What we need is international cooperation."

Liu said China's stable economic development is all the more important given the global financial turmoil.

He estimated that the Chinese economy will increase at 9 to 9.5 percent, lower than last year's 11.9 percent growth but still at a relatively fast speed given the global financial crisis and recession.

"In general, China's economy is fine, because we have a big room to maneuver," Liu said, adding the growth rate, though slightly lower than before, is good because China does not need speed, but quality.

There are various reasons for China's sustained growth, Liu said. With a population of 1.3 billion, the domestic consumption is increasing, which will make up for export slowdown caused by slackening demand in developed markets.

China's rapid economic development has long been driven by huge exports and investment, but now the government aims to encourage the Chinese to consume more. Furthermore, the country is experiencing large-scale urbanization and industrialization, creating huge demand for infrastructure and construction.

Liu said China would work together with financial regulatory agencies worldwide and is ready to absorb the laid off financial talent from Wall Street. His suggestion was echoed by major bankers at the forum.

"We need to stress that the US financial market is not just the US market itself, it is the world financial market," said Guo Shuqing, chairman of China Construction Bank.

"What is good for the US is also good for every country, including China."

Guo called for closer coordination among central bankers from the major economies.

William Rhodes, senior vice-chairman of Citigroup Inc, said some Chinese authorities, including the People's Bank of China, were already in consultations with the Federal Reserve on measures to alleviate the crisis.