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China warns US financial mess will have domino effect globally
The US financial crisis will crimp consumption and spill over to the rest of the world including China, according to bankers and government officials meeting at the World Economic Forum in eastern China's Tianjin city.
- Bloomberg
- Published: 00:02 September 28, 2008
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Beijing: The US financial crisis will crimp consumption and spill over to the rest of the world including China, according to bankers and government officials meeting at the World Economic Forum in eastern China's Tianjin city.
"We are in the worst crisis since the Great Depression,'' said William Rhodes, Citigroup's Senior Vice Chairman. "We are in a period of a tremendous lack of confidence'' where fin-ancial institutions require fresh funds to restore consumer trust, he said.
The unprecedented US financial bailout has raised concern in China, prompting officials including bank regulator Liu Mingkang to slow the introduction of new financial products such as derivatives and futures contracts.
China's annual economic growth may slow to between nine per cent and 9.5 per cent, Liu said without specifying the period, as the US financial crisis may crimp consumption, affecting global growth.
China's 2007 economy expanded 11.9 per cent.
"This is good for China, China doesn't need speed, it needs quality,'' Liu said.
"When the US had its zero down payment scheme and reverse mortgage loans, we thought it was ridiculous.'' China's "first duty is to maintain financial stability.''
Bankers, corporate executives and officials are almost equally divided on whether central banks should use taxpayers' money to bail out failed financial institutions.
Chinese officials may be collaborating with US officials to contain the impact of the crisis, Rhodes said.
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