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World Bank must act against toxic assets : China

Posted on: June 14, 2009


AFP – Saturday, June 13

BEIJING (AFP) – – The US government and global financial authorities need to remove toxic assets from their banking systems to restore world economic stability, a top Chinese banking regulator said Friday.

Actions taken by governments worldwide to stabilise the financial sector “have gradually eased the panic,” Liu Mingkang, chairman of the China Banking Regulatory Commission, told a forum.

“But from the flip side of the coin… I should say it’s not enough and all these are not… working,” given the massive losses incurred by toxic assets still lingering in banking systems around the world, he said.

“Toxic assets must be immediately resolved worldwide,” he said, adding “the foundation of stability still lies in the US.”

Separately, Liu said China’s economy was expected to grow seven to eight percent this year despite the impact of the crisis.

“China too is dealing with the sharp downturn in business prospects driven by the global macro-economic slowdown,” he said.

The growth rate of the country’s export-dependent economy slowed to 6.1 percent in the first quarter of this year, the slowest in at least a decade, as foreign demand shrank.

However, “I promise it will be coming back to seven or eight percent this year,” Liu said.

He further warned that recent developments in the economy were “full of mixed signals” and the government would remain “watchful.”

China’s May industrial output and retail sales both grew at a faster pace than in previous months, official data showed Friday, as Beijing’s 580-billion-dollar stimulus package introduced last year kicked in.

However, exports plummeted for a seventh straight month in May, down 26.4 percent year on year, while a 32.9-percent rise in fixed asset investment triggered concerns that the stimulus spending was unsustainable and over-capacity was building up.

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1 Response to "World Bank must act against toxic assets : China"

So far as the need to rid the banking system, around world, of the toxic assets is concerned, all govts are duty bound to do that. In the process some prented money may have to be injected but it can be done as an one time excercise only. The real need is to revert to some kind of regime where fresh money can be printed only when backed by some class of assets if not entirely gold,.

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