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Monday, 1 December 2008

China not facing major crisis

SHANGHAI - CHINA can weather the financial storm because the economy has no major bubbles while a year of policy adjustments have tamed the property market, a top central bank adviser said in comments published on Monday.

The economic slowdown is a 'benign correction', the official Shanghai Securities News quoted central bank adviser Fan Gang as saying.

'Slowdown in the economy is inevitable at this stage, but China remains one of the fastest growing economies in the world,' Mr Fan said .

Fiscal tightening policies aimed at preventing the economy from overheating have squeezed out bubbles in the real estate sector over the past year, he said.

'There are no big bubbles in China's economy at present. With no big bubbles, there will not be big crisis in future,' Mr Fan was quoted as telling a forum hosted over the weekend.

Mr Fan said China had resources to navigate through the financial turmoil such as abundant foreign exchange reserves and tax revenues.

China's foreign exchange reserves, already the world's largest, rose to 1.9056 trillion dollars (S$2.9 trillion) by the end of September.

China's property market has boomed for the past few years, prompting a series of government curbs to deter speculators. But recent data show property prices grew in October at the slowest pace in more than three years.

Beijing has announced a range of measures to prop up the slowing sector, including lifting stamp tax on purchases and cutting interest rates on mortgages for first-time home buyers.

It has also removed a value-added tax on land in property sales.

Further efforts to encourage purchases will be introduced in near term such as making it less expensive for families to buy second homes, China Business News reported on Monday, citing government officials. -- AFP

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