China blames low savings, high spending for global downturn
Blaming the model of 'low savings, high consumption' followed by "some countries" for the worst global meltdown in the last 78 years, China has asked the Obama administration to work with Beijing in tackling the economic crisis.business Updated: Jan 29, 2009 16:04 IST
Blaming the model of 'low savings, high consumption' followed by "some countries" for the worst global meltdown in the last 78 years, China has asked the Obama administration to work with Beijing in tackling the economic crisis.
Addressing delegates at the World Economic Forum meeting in Davos, Chinese Premier Wen Jiabao said excessive expansion by the financial institutions "in blind pursuit of profit" has damaged the global economy.
To resolve the crisis, Wen called upon the new US administration to work in close co-operation with China.
"Continued, steady and healthy growth of China-US relations is not only in the interest of both countries and peoples but also in the interests of the world in meeting the financial crisis," Wen said.
Lack of self-discipline among financial institutions and rating agencies contributed to troubles in the world economy.
Making an oblique reference to complex products like derivatives in the US financial markets, the Chinese Premier said, "We must strike a balance between savings and consumption, between financial innovation and regulation, and between the financial sector and real economy."
Hit by the downturn, China has set a target of 8 per cent economic growth in 2009, lower than the 9 per cent attained last year, but still the highest in the world.
"International financial crisis has inflicted (a) rather big impact on the Chinese real economy. Last year, our growth rate was nine per cent, but the economy grew at 6.8 per cent in the fourth quarter. ... Under these circumstances we have set a target of ... 8 per cent for 2009," he said.
First Published: Jan 29, 2009 15:58 IST