Annan: China's economy still solid

SINGAPORE - Kofi Annan, former Secretary-General of the United Nations, said on Thursday evening that he believes China's economy is still solid, and he doesn't agree that the financial crisis is just around the corner.

Annan made such remarks when he was giving a keynote speech on "Challenging Business to Become Leaders in Sustainable Development " at the Midas Touch Asia, an annual platform which aims to gather all local and overseas dignitaries, entrepreneurs to meet and exchange views.

Repeated sharp declines in China's stock market recently have made global headlines, and many western analysts have attributed the recent international stock market volatility to China's stock market rout, or China's adjustment of its foreign exchange rate formation mechanism, which led to the yuan's depreciation.

Some even say that a new round of financial crisis is just around the corner as they foresee further slowdown of the Chinese economy. However, Annan, who had a BA degree in economics and first joined the UN system as administrative and budget officer, said that he thinks China's economy is still solid.

"I believe Chinese economic situation is having difficulty but is much more solid than that...I don't agree we're going to see the type of financial crisis we saw during the Asian crisis, or the last international crisis in 2008 and 2009, which we have just come out of," he said, adding that the market should not panic, but be given time to work itself out.

The drop in prices of commodities has become another major concern for global economy, with analysts saying that the slowdown of China's economy will further cast shadow on the commodity market.

"Obviously, with the end of the super cycle for commodities, oil, copper...it has affected many countries. With the drop in oil prices, oil-producing countries are hedging, they don't have the money to import as much as they did. But I think it is a situation which will work itself out," he stressed.

The US central bank, eyeing an improving domestic economy, could raise short term interest rates from near zero as soon as a policy meeting in mid-September, which was also seen as a factor that has led to the recent global market volatility, and Annan said he is inclined to the view that the Fed's move to raise interest rates "may be delayed".

"If the Fed raises the interest rate, then it has decided that the conditions are at such (a stage) that it could be sustained... But I'm inclined to think it may be delayed," he said.