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CHINA / National |
Credit crunch damage 'short-term'By Xin Zhiming (China Daily)
Updated: 2007-11-07 08:57 The world economy might not be fatally battered by the US subprime crisis and a US recession isn't imminent, economists and corporate leaders said Tuesday. And the controversy surrounding Sino-US trade relations needs effort from both sides if it is to be resolved, they said Tuesday at the 11th annual Business Week CEO Forum in Beijing. "At some point maybe we are going to take a recession, but not next year, maybe further on," Nobel laureate Robert Mundell said in the forum's panel discussion. The Columbia University economics professor said the US housing market is undergoing correction, but the blow dealt will not be as severe as when the hi-tech bubble burst at the start of the new century. Mundell said US policymakers have taken prompt measures to stop the situation from worsening and the job market remains sound. US non-farm payroll employment rose by 166,000 in October, and the unemployment rate was unchanged at 4.7 percent, the bureau of labor statistics of the US Department of Labor reported early this month. The US Federal Reserve decided on October 31 to cut the federal funds rate, or the rate that commercial banks charge each other for overnight loans, by a quarter of a percentage point to 4.5 percent, to help the economy survive the current housing slump and credit crunch. On September 18, the Fed cut the key rate, the first in four years, by 0.5 of a percentage point to 4.75 percent from 5.25 percent. Harold McGraw III, chairman and CEO of US-based McGraw-Hill Co, said the US credit crunch will cost some economic growth, but it won't throw the US economy into recession. "The credit crunch will be short-lived rather than long-term," said McGraw. The International Monetary Fund said on October 17 that the world economy is expected to grow robustly at 5.2 percent in 2007 and 4.8 percent in 2008, despite the recent financial turmoil triggered by US housing market problems. McGraw said the world's major economies such as Japan, Canada and Europe are all expected to grow steadily. "This is a very good thing." Chinese business leaders at the forum said the country has a gaping trade surplus with the US, but urged the US to reflect on its policies in order to solve the problem. The trade surplus is the biggest problem facing Chinese and US policymakers, said Wei Jiafu, president and CEO of China's COSCO Group. |
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