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Zhou says signs point to financial resurgence

THE drop-off in China's economic growth has slowed, and there are new signals indicating recovery as a result of the central government's stimulus efforts, the head of the country's central bank said yesterday.

The comments by Governor Zhou Xiaochuan, his third major statement this week, were posted on the People's Bank of China Website, where Zhou also called for a reform of international regulatory mechanisms.

All three statements were in Chinese and English - a rare move clearly designed to reach an international audience a week before the leaders of the Group of 20 major economies meet in London.

"The macroeconomic measures have produced preliminary results, and some leading indicators are pointing to recovery of economic growth, indicating that rapid decline in growth has been curbed," Zhou said, without revealing which measures were improving.

China's economy has slowed due to a plunge in trade and the domestic real estate industry. Analysts expect growth of at least 5 percent this year, sharply below 2007's 13 percent growth but the highest rate of any major economy. China has set an official target of 8 percent.

The state has launched a 4 trillion yuan (US$586 billion) stimulus package to reduce reliance on exports through higher spending on public works. It has cut interest rates, encouraged banks to increase lending, raised tax rebates for exporters and is promising to spend more on health and other social programs.

"Facts speak volumes and demonstrate that, compared with other major economies, the Chinese government has taken prompt, decisive and effective policy measures, demonstrating its superior system advantage when it comes to making vital policy decisions," Zhou said in yesterday's essay.

Economists said Zhou's recent high-profile pronouncements are previews of the points China will make at the G20 London Summit, whose goal is to formulate global answers for global problems.

"Zhou's three presentations all target key issues involved in tackling the global financial crisis," Lu Zhengwei, Industrial Bank's chief economist, said yesterday. "They show China's strong will to make its voice heard in the world financial arena."

Yesterday's piece targeted reforms in the global financial regulatory system, Lu said.

In the essay, Zhou suggested that governments give pre-authorized mandates to financial regulators "to use extraordinary means to contain systemic risk under well-defined stress scenarios."

In a Tuesday's essay, Zhou explained the cultural and historical reasons for China's mounting deposits, arguing that changing the foreign exchange regime is not the sole recipe for trimming China's high savings.


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