China central banker warns global economic risks increasing
A woman leaves a branch of Bank of China in Beijing July 6, 2011.
Credit: Reuters/Jason Lee
BEIJING |
BEIJING (Reuters) - The global economy faces risks from both slowed growth and persistent inflationary pressure, which is spilling over from emerging to advanced economies, Ma Delun, a vice-governor at China's central bank, said in comments reported on Friday.
The People's Bank of China vice-governor's gloom about world economic prospects echoed earlier comments from Chinese Premier Wen Jiabao, underscoring that Beijing policy-makers are not counting on major foreign markets to recover quickly.
Ma told a financial forum in far western China on Thursday that slower growth in the United States, Europe's debt problems, and Japan's poor economic performance were adding to those global risks, the China News Service reported.
"The long-term fiscal sustainability of the United States faces challenges, the European sovereign debt crisis continues to fester, and the Japanese fiscal deficit is growing," the report cited Ma as saying.
"Government debt risks have become a major challenge affecting the global economic recovery," he added.
Ma also warned that "some emerging economies are feeling the consequences of policy contraction, and their rates (of growth) are slowing, and downstream risks to the global economy are increasing," the report said.
Ma said those growth risks co-existed with persistent inflationary pressure, which he blamed on excessive global liquidity.
"Inflationary pressures have spread from emerging economies to advanced economies," he said. Ma's published comments did not directly address how those pressures are affecting China.
But in comments published on Thursday, China's Premier Wen also focused on the mix of sluggish global growth and inflationary pressures, and said fighting inflation remained his policy priority.
Wen said the global economy is still fragile and sovereign debt problems in the United States and Europe are set to put a "drag" on world economic growth. He said China's exporters would suffer from softer external demand and rising costs.
China's inflation ran at 6.5 percent in July, outstripping the government's full-year inflation target of 4 percent.
Chinese factory activity data issued on Thursday indicated that the pace of inflation is quickening, and manufacturers have experienced a sharp drop in export orders partly caused by sovereign debt problems in rich nations.
(Reporting by Chris Buckley; Editing by Ken Wills)
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The Chinese bankers are just being polite, not wishing to be labeled Cassandras. But the Western economic systems have rot built in, and the deterioration is getting more rapid with the years. Taking the U.S. for example: the debt level is increasing by over a trillion and a half dollars a year (over $5 Trillion in the last 3 years).
The Western financial industry, which is supposed to function as the backbone for growth and stability for the nation, directly money traffic and nursing the steady growth of financial wealth, instead had become an insatiable vampire, sucking all strength and vitality out of Main Street economy. The American financial industry had so far taken over $3 Trillion from the public well, since the 2008 debacle – yet these banks no longer bank – they refuse to lend money to the economy. Instead, they hoard the free money and collect interest on it, continue to gamble recklessly on derivatives, and fight any and all reforms.
Dodd Frank’s implementation has now been deferred 28 times, and is now slated for AFTER the elections in 2012. NOTHING has changed, and the highly destructive derivatives cancer grows unchecked – and is now almost US$700 Trillion, almost 50 times the size of the American economy. NO AMOUNT of innovation or manufacturing genius (or even another 20 Steve Jobs, if that’s possible), is going to overcome that sort of irresponsible gambling.
Yes, global economic risks are increasing, and that risk will not subside until and unless the derivatives cancer goes into remission.
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