China's integration into the world economy means it is not immune to the financial crisis, and needs to take appropriate counter measures, Wu Jinglian, a well-known Chinese economist said a few days ago during an international forum on Chinese reform, Shanghai Securities News reported today.
Saying that the Chinese economy is already deeply integrated into the global system, Wu disagreed with the view that the major difficulties the county is facing are external. He said "the fundamental problem lies in our extensive mode of economic growth, and export-led growth model. This model has brought us many advantages, but simultaneously has exposed us to many problems."
Discussing how China should deal with the world financial crisis, Wu said that in the short term, China should maintain macroeconomic stability and cooperate with other countries to steady the international financial system through a looser fiscal and monetary policy. But he stressed that monetary policy should not be loosened too much, because previous lax policies are one of the main causes of the problems we are facing today, and it is necessary to consider the long-term impact of policy. In addition to monetary policy, the government should also take measures to support small and medium enterprises.
Wu stressed that the long-term solution is to change China's mode of economic development and to build a new international financial system in cooperation with other countries. He said there are institutional barriers obstructing the switch from a resource-intensive, export-driven economic model, and further reforms are necessary to eliminate these obstacles.
Wu said that although the financial crisis had broken out in the United States, it had now engulfed the entire global financial system.
For more details, please read the complete story in Chinese:
(http://paper.cnstock.com/paper_new/html/2008-11/04/content_65808284.htm)
(China.org.cn by Jessica Zhang, November 4, 2008)
