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Beijing blames U.S. for global crisis

Davos: China on Wednesday laid the blame for the global financial crisis firmly at America’s door but said it was crucial that it works with the new administration of President Barack Obama to prevent the crisis getting worse.

Speaking on the first day of the World Economic Forum, Premier Wen Jiabao also insisted that the Chinese economy could grow by 8 per cent in 2009 thanks to prompt action by his government to combat the worst effects of the credit crunch.

“This crisis has landed the world in its worst situation since the great depression of the last century,” Mr. Wen told a crowded conference hall.

He made clear where responsibility lay: “Inappropriate macroeconomic policies of some economies and their unsustainable model of development characterised by prolonged low savings and high consumption.”

He also cited “an excessive expansion of financial institutions in blind pursuit of profit, lack of self discipline among financial institutions and ratings agencies.”

Mr. Wen appeared to be hitting back at U.S. Treasury Secretary Timothy Geithner, who last week accused Beijing of manipulating its currency, to the annoyance Chinese authorities.

In another sideswipe at the Americans, Mr. Wen warned of the dangers of protectionism, a policy supported by some U.S. Congress members in response to what they see as China keeping its currency too low. “Protectionism serves no purpose except to worsen and prolong the crisis,” he said.

He added that the Chinese economy had grown by 9 per cent in 2008 and should increase by 8 per cent this year, but acknowledged that a lot of analysts have doubts the Chinese economy — now the world’s third largest — could survive the credit crunch so well. “To be honest, it will be a tall order to achieve a growth rate of 8 per cent in 2009, but I still retain the conviction that we will achieve this. We have a stable financial system in China. The direct impact of the crisis on China is limited because of our banking system.”

He claimed there were early signs of recovery in the Chinese economy, with lending starting to increase again.

“The harsh winter has gone and spring is just around the corner,” he said, adding that the Chinese government was committed to boosting domestic demand in response to pressure from other countries which have complained that China was too focused on exports. China is enacting a stimulus package equivalent to 6 per cent of its gross domestic product, he added.

The world must “strike a balance between savings and consumption between financial innovation and regulation, and between [the] financial sector and the real economy,” he said.

Mr. Wen also called on the world to provide greater assistance to developing countries. — © Guardian Newspapers Limited, 2009

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