China can’t let the global credit crisis derail financial reforms that have benefited the public and helped the nation’s banks weather the turmoil, said Yi Gang, vice governor of the People’s Bank of China.
By Li Yanping, Bloomberg
“Although there have been doubts in the market on whether China’s financial reforms should continue after this crisis led to massive government bailouts and nationalization of financial institutions, China’s bank reforms can’t backtrack,” Yi said at a conference in Beijing today.
The worst financial crisis since the Great Depression has caused about $966 billion of writedowns and credit losses among financial institutions worldwide, according to data compiled by Bloomberg. The U.S. Treasury has initiated a $700 billion rescue plan to shore up distressed financial institutions.
“The U.S. and Europe may need to rethink financial innovations that exceed real economy needs and have pushed risks beyond control,” said Zhao Xijun, a finance professor at Renmin University in Beijing. “China’s financial services are under- developed by comparison, so we need to push ahead with reforms.”
Banks in China sold shares, accepted foreign strategic investors and enhanced risk management over the past three years to avoid repeating the bad-loans crisis earlier this decade, when the government spent $650 billion rescuing them. Limited buying of subprime debt has helped the banks avoid bigger losses.
“State-bank reform has been a success, benefiting people and greatly enhancing financial services,” Yi said. “China’s banks may have taken an unimaginable shock from this financial tsunami if they hadn’t completed shareholding reforms.”
Reforms based on market principles must continue to help shield banks from future risks during economic cycles, Yi said today. Banks will also be “tested” when the nation’s currency gradually become convertible and when interest rates are further liberalized, he added.
Read the rest:
Chinese President Hu Jintao, seen here, begins a Latin America tour on Monday, taking in Costa Rica, Cuba and Peru, as China tightens economic ties and the region hopes for help in tougher times.
SAN JOSE (AFP) – Chinese President Hu Jintao begins a Latin America tour on Monday, taking in Costa Rica, Cuba and Peru, as China tightens economic ties and the region hopes for help in tougher times.
The Asian giant has increased diplomacy and investment in Latin America in recent years, with an eye on its natural resources and developing markets for manufactured goods and even arms.
Many in Latin America hope for an investment boost to help ride out the economic crisis.
Exports from the continent to China include soya and iron ore from Brazil, soya from Argentina, copper from Chile, tin from Bolivia, and oil from Venezuela.
The trade is still only a small percent of the continent’s total, but it is growing.
China’s state-run Xinhua news agency reported this month that exports to Latin America grew 52 percent in the first nine months of 2008 to 111.5 billion dollars.
Hu will visit San Jose and Havana between a G-20 meeting on the global crisis in Washington on November 15 and an Asian Pacific Economic Cooperation forum summit in Peru on November 22.
China and Cuba have remained all-weather friends for decades, their Marxist Socialist past a driving force in relations.
Read the rest: