Dominique Strauss-Kahn, managing director of the International
Monetary Fund (IMF), said Friday that although there was some
impact from US sub-prime mortgage crisis on China, IMF still
expected the Chinese economy to expand by 10 percent this year.
Strauss-Kahn made the remarks at a press conference one day
after his arrival to Beijing, the first visit for him as as
managing director of the IMF.
Focusing on concerns about the current situation for the global
economy in his discussions with the Chinese officials, Strauss-Kahn
stressed again that the fast-growing emerging economies like China
and India could not "decoupled" from poor growth prospects in the
United States and Europe, and immune from the financial crisis.
"The current financial crisis, which began in the United States
housing market, is spreading to affect the real economy in the US
and elsewhere," said Strauss-Kahn, noting that no region will
escape entirely unscathed since both the industrial economies and
the emerging economies are closely linked with trade and financial
market.
But Strauss-Kahn also expressed his strong beliefs that despite
impact from the financial crisis, the emerging economies like China
and India are still full of vigor.
"We still expect China's economy to expand by 10 percent this
year, and India's economy to growth by about eight percent." he
said.
He called on emerging market countries to be ready to respond to
the crisis and warned there were still challenges ahead for China
in sustaining its strong economic performance.
Strauss-Kahn said China's most immediate priority was recovery
from the effects of the recent severe winter weather that disrupted
much of the country and caused a loss of life.
He said the Chinese government was also confronting several
macroeconomic policy challenges, including preventing inflation
from becoming entrenched, and rebalancing growth away from a heavy
reliance on exports and investment towards consumption. Addressing
social inequalities and improving energy efficiency were also
priorities.
China's continued tight monetary policy would be important in
containing investment growth and inflationary pressures, and the
government's emphasis on reorienting the budget towards improving
social services, including health and education programs, could
help to reduce disparities and rebalance growth, he said.
The IMF had seen China's focus on financial sector reforms, and
welcomed the decision to participate in the IMF's financial sector
assessment program, which could help China to assess its financial
risks and stability.
"We also welcome the Chinese authorities' objective of allowing
greater flexibility over time," said Kahn in relation to
exchange-rate policy. He praised China's exchange-rate reform as
moving in the right direction.
But Strauss-Kahn also expressed the hope of seeing a faster pace
of appreciation that would help address China's key economic
challenges and contribute to global economic stability.
As he promised in his latest speech in India, Strauss-Kahn
reaffirmed that he would continue his reform of the IMF, including
the development of a new income model and reforms that would give
greater representation to emerging economies.
"The international community is facing a challenging period
ahead as the global economy and financial markets adjust to the
recent turbulence and policymakers work to preserve economic and
financial stability," said Strauss-Kahn.
"I am confident from my discussions here in Beijing that China
will play a role in this effort commensurate with its growing
importance in the world economy." he added.
Strauss-Kahn arrived in Beijing on Thursday after he met with
the finance ministers of G7 countries in Japan and visited
India.
Strauss-Kahn met with Chinese Premier Wen Jiabao on Thursday afternoon in Beijing and
also held discussions with People's Bank of China Governor Zhou Xiaochuan.
(Xinhua News Agency February 15, 2008)
