Chinese President Hu Jintao is concerned about the poor situation of the financial system in America. Because China holds hundreds of billions of dollars in U.S. government bonds, they have been taking several actions to stimulate economic growth and they are trying to protect their export, that is suffering under the bad economy in America and Europe. China is a growing economy the current problems in the global economy have slowed this growth down. Hu hopes that the measures taken by the government will soon have their effect on the economy and the investors’ confidence. And he also said that there should be a better cooperation between the international governments to stabilize the situation. His Vice President Xi Jinping said that the China government is closely following and evaluating the developments of the financial markets. He also stipulated the fact that governments need to work more closely together.
Later this week there will be an international meeting in Beijing where the economic problems will be discussed. According to spokesman Qin Gang this meeting is an opportunity for the leaders to come up with a good solution. Nicolas Sarkozy will use the meeting to convince the other leaders to redraw the rule book for international capitalism, he wants a global system of regulation to prevent a repeat of the current problems. The banks of China, however, haven’t suffered a lot under the crisis. Because they are well protected by the government and strict credit controls. And the government is now looking what actions it can take against the slowdown of the economic growth. It is possible that the government will decide to boost the export tax rebates for labor-intensive products. And they will also boost their investments in building public housing and roads and also the rebuilding of the region devastated by the May 12 earthquake in central China.
The financial crisis started in America but now we can see that also China will be getting involved into the crisis. Thanks to the strict regulation of the Chinese government and the credit controls, the Chinese banks stay out of the line of fire for the moment. But how long will it last before the trouble starts there as well? The Chinese government is now mostly concentrating its actions to protect the national economy and especially the export. I really support the idea of President Hu to work on a better cooperation between the different countries.
I hope the meeting will be very productive, because we really need a good plan now. There has been taken a lot of actions by several governments but until now we haven’t seen a lot of improvement. Also the idea of French President Nicolas Sarkozy to build up a global system of regulation could help a lot, but I think it will be very hard to develop. But the most important thing to do now is to find a way to bring back some stability to the market and repair the confidence of the investors.
Source: CNN: China calls for cooperation on financial crisis
http://edition.cnn.com/2008/BUSINESS/10/22/china.us.ap/index.html
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I think that the markets in Asia were the one who suffered not so hard as here. In Asia you've got countries like China who nationalized their banks years ago by their communistic system. I hope Europe will come out with a good plan to help the investors because we need confidence on the markets. But now you only see them fighting while they need to cooperate to find a solution.
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