(Updates with comments from Communist Party magazine in
paragraphs 4 and 14-16)
By Chris Buckley
BEIJING, Sept 17 Threatened by a "financial
tsunami," the world must consider building a financial order no
longer dependent on the United States, a leading Chinese state
newspaper said on Wednesday.
The commentary in the overseas edition of the People's Daily
said the collapse of Lehman Brothers Holdings Inc "may augur an
even larger impending global 'financial tsunami'."
The People's Daily is the official newspaper of China's
ruling Communist Party, and the overseas edition is a smaller
circulation offshoot of the main paper.
Its pronouncements do not necessarily directly voice
leadership views. But the commentary by a professor at Shanghai's
Tongji University, as well as an essay in a Party journal,
underscored official alarm at the turmoil in world financial
China's central bank earlier this week cut its lending rate
for the first time in six years, a move analysts said was aimed
at bolstering the economy and the battered stock market.
"The eruption of the U.S. sub-prime crisis has exposed
massive loopholes in the United States' financial oversight and
supervision," writes the commentator, Shi Jianxun.
"The world urgently needs to create a diversified currency
and financial system and fair and just financial order that is
not dependent on the United States."
But Vice Premier Wang Qishan, on a visit to the United
States, told U.S. trade officials in a meeting on Tuesday that
China and the United States needed to maintain close economic
ties with global markets going through such turbulence.
"The Chinese government is well aware of the fact that the
United States, which is the world's largest developed country,
and China, which is the world's largest developing country,
should have constructive and cooperative economic and trade
relations," he said.
China is a major buyer of U.S. Treasury bonds, and through
its sovereign wealth fund it has taken stakes in two large U.S.
In July 2005, China revalued the yuan and freed it from a
dollar peg to float within managed bands. But the yuan and
China's trade remains tightly linked to the fortunes of the
The commentary suggested China must brace for grave economic
fallout and look to alternatives, saying the crisis brings to
mind the Great Depression of the 1930s.
"Lehman Brothers announced bankruptcy will not only have a
domino effect on the global financial world, it will bring a
shock to the world economy," the front-page comment stated.
In the Chinese Communist Party's chief ideological magazine,
Seeking Truth, a deputy governor of the Agricultural Bank of
China, Luo Xi, warned that the U.S. crisis and consequent slump
will have a "serious impact on our country's export sector."
In this week's issue of the magazine, Luo said China must
beware of the loose currency policies, poor regulation and
reckless credit he blamed for America's crisis.
With China also worried about excessive real estate
investment and speculation, the U.S. troubles "serve as a
particular warning for our country's macro-economic policies and
micro investment decisions," Luo wrote.
(Reporting by Chris Buckley; Editing by Ken Wills)