WB Chief Economist Says US Credit Crisis Has Limited Impacts on China

  2008-03-10 09:56:30     CRIENGLISH.com 
A senior World Bank official says the credit crisis in the United States will have little impact on the Chinese economy.
Justin Lin, also known as Lin Yifu, Chief Economist and senior Vice President of the bank, says China will suffer fewer losses from the crisis than European countries. He also says the Chinese economy will continue to grow at a high speed in the next few decades.
The newly appointed World Bank official makes the upbeat estimate while attending the National People’s Congress session here in Beijing.
Justin Lin tells reporters that the US sub-prime mortgage crisis has very little direct impact on the Chinese economy, but it may slow down China’s exports to the US.
"China’s financial institutions have bought very few subprime loan securities, so there will be no direct impacts. But if the US economy enters recession due to the crisis, China will suffer, but much less than other countries, because China’s exports to the US are mainly daily necessities, which are consumed no matter the economy is good or bad. So China will only be affected in the way that its increase of export to the US will slow down a little."
He also says China will see a high speed of economic growth in the next few decades.  "There is still big room for China’s industries to be upgraded. China also has a very big domestic market. Foreign investments will also continue to come as China is both a manufacturing base for export and expanding market for them. With these factors, China’s economy has potential to maintain fast development in the next 10, 20 or 30 years."
But the renowned economist says China should implement tight fiscal policies to curb inflation. Raising interest rates can keep more money in bank deposit and reduce the inflow of large amount of cash into real estate and stock markets.
He dismisses the worries that international hot money will flow into China to take advantage of a higher interest rate. "Raising interest rate will prevent the surge of asset prices and property prices. They won’t be able to make money in these areas. If China continues its current active, controllable and gradual foreign exchange policies, the hot money will not be able to make profit either. So if it doesn’t make money, it won’t come."
Justin Lin was appointed Chief Economist and Vice President of the World Bank earlier this year.
He was the first economist from a developing country to the post at the global institution, and is expected to start his new job in May.

About kchew

an occasional culturalist
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