China says impacts from US subprime crisis less than expected
SHANGHAI (AFP) — China's economy has weathered the US financial crisis better than expected but many external concerns remain, the country's central bank chief said in comments reported Monday.
"The negative impact of the US subprime crisis on the domestic economy seems so far smaller than originally expected," Zhou Xiaochuan said, according to the Shanghai Securities News.
Restructuring in the financial system has made China's financial institutions more healthy and losses caused by the US credit crunch were "controllable and digestible", Zhou said.
But Zhou, who made the remarks during an International Monetary Fund meeting in Washington over the weekend, warned China's economy is faced with mounting external uncertainties, which makes it harder for policy decisions.
Factors clouding the outlook of the global economy this year include turmoil in financial markets due to the US subprime crisis, inflation pressure and rising protectionism in some developed countries, Zhou said.
Preventing runaway inflation and overheating in the domestic economy remained the two key tasks for the Chinese authorities, he said.
China is scheduled to release key economic data for the first quarter on Thursday.
Zhou also repeated that exchange rates had only limited effects in easing trade imbalances and their role should not be overplayed, amid the continued push by the United States for China to end controls on its currency, the yuan.
"The role of exchange rates in solving the imbalance in global trade is limited. Exaggerating their effects is unrealistic and will mislead the rebalancing process," Zhou was quoted as saying.
Last Thursday, the yuan broke the psychological barrier of 7.000 to the US dollar for the first time since Beijing scrapped its peg to the greenback in 2005 and allowed it to trade within a narrow band.
The United States wants China to eventually introduce a market-driven currency.
