A senior Chinese official has urged the international community
in Washington on Saturday to analyze the root causes of the recent
financial turmoil and to make efforts to safeguard global financial
"Activities in the major advanced economies slowed during the
second quarter of 2007, posing significant downside risks to global
growth," Wu Xiaoling, deputy governor of People's Bank of China
said at the 16th meeting of the International Monetary and
Credit market retrenchment in the US may further dampen the
housing market, suppressing consumption and investment. This would
give rise to the potential risks of recession with a spillover
effect on other countries, she warned.
"It is even an more urgent priority to strengthen surveillance
of the systematically important advanced economies in order to
safeguard global financial stability and economic prosperity," said
the Chinese official.
"This round of adjustment has not yet come to an end," Wu said.
“Despite the major central banks' liquidity injection, credit
conditions are unlikely to be restored within a short period of
She said it is necessary to thoroughly analyze the root causes
of the recent financial turmoil, re-examine the role of financial
innovation and the development of derivatives as well as the
As to Chinese economy, Wu said a major task for the Chinese
government is to prevent overheating.
"The Chinese government has taken measures to strengthen
macroeconomic management, improve investment structure, increase
fiscal expenditure in social sectors, boost domestic demand, and
speed up reform in the financial sector," she said.
In a joint statement issued on Friday, economists from the
world's seven richest nations also warned that the credit crisis
will hurt global economic growth.
"Strong global fundamentals and well-capitalized financial
institutions provide a sound and resilient basis but uneven
conditions are likely to persist for some time and will require
close monitoring," they said in a joint statement.
The International Monetary Fund has warned the global economy
will slow its continued expansion due to the recent financial
turmoil trigged by the US subprime mortgage difficulties.
Among the major advanced economies, the projection for US growth
in 2007 as a whole is unchanged at 1.9 percent, but it has been
lowered by 0.9 percentage points to 1.9 percent in 2008.
(Xinhua News Agency October 21, 2007)