China's growth to be hit by slowdown in exports:central banker

Beijing, Oct 26 (PTI) China's economic growth, which has slipped to single digit for the first time in over six years, will be negatively impacted by dwindling exports, the nation's top banker said Sunday.

"Our economy is highly reliant on overseas demand.
Slacking exports resulted from the global economic slowdown
would have a negative impact on the economy," Zhou Xiaochuan,
governor of China's central bank, said.

In a report to the Standing Committee of the National
People's Congress (N.P.C.), China's parliament, he said the
country's economy was developing as expected, but the world
economic slowdown added uncertainties to its prospect.

He said China needed to be cautious on adjusting policies
because prices would possibly fluctuate frequently in the
future.

The People's Bank of China would strengthen the
supervision system and make advanced emergency programmes to
deal with possible negative impact on the country's banking
system. It would also work to keep a sufficient credit supply
on the domestic market, Zhou was quoted as saying by Xinhua
news agency.

He also said the central bank would monitor the real
estate sector and improve financial services in this market.

The central bank would let the market "play a bigger
role" in deciding interest rates and keep the exchange rates
stable. It would also step up supervision over cross-border
capital flows to prevent damages caused by short-term massive
flows of speculative capital, he added.

Meanwhile, premier Wen Jiabao has said China will
maintain steady and fast growth despite the current global
crisis. China's G.D.P .has been expanding at double-digit
growth for five straight years, peaking 11.4 percent in 2007,
the highest in the past 13 years.

"We have full confidence to do that, as long as proper
policies are put into place," Wen said here yesterday after
the two-day meeting of Asian and European leaders here, which
focused on the global financial crisis.

"The ongoing credit crunch has affected the country's
financial sector, but the direct impact was limited," he said.

Wen said China managed to reduce the impact of the
global financial crisis since it had carried out the opening
up of its financial sector in a steady way.

Thus, China's financial sector was not widely involved
in the global market, he said.

He also pointed out the influence of the crisis on the
world economy, especially as reflected in a global slowdown,
would inevitably have an impact on the Chinese economy.

Wen gave two reasons for the country's 9.9 percent
growth in the first three quarters -- the first time not to
have double-digit growth in nearly six years -- the country's
macro controls and the global crisis.

"Our macro control adjustments have played a role. But we
cannot deny that a change in the world economy, reduced
external demands in particular, has already affected the
Chinese economy," he said.

The premier, however, said with confidence that the
country had moved to tackle the crisis on an early date. "We
adjusted our macro control policies as early as in June ... to
set maintaining the economic growth as our top priority."

In addition, China had also adopted a series of measures
to expand internal demands, or mainly consumption.

On dealing with the current crisis, he said action
should first be taken to stabilise the world financial order
while preventing the credit crunch from harming the real
economy. PTI A.K.J.
RKM