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Translation - English Securities Times September 24, 2008
[Article by Zhang Da and Zheng Xiaobo: CPPCC Subcommittee of Economy Member: Xu Shanda: 'US Real Economy is Not Cracking Up']
Xu Shanda, member of the Chinese People's Political Consultative Conference Subcommittee on Economy and former Deputy Director of the State Administration of Taxation, said yesterday that the financial risk actually comes from derivatives and from investment banks with no foundation in commercial banking. Not all of the [US] financial system is unsound; moreover, the real US economy up to this point has not suffered great losses.
"Now there are many news reports that the US financial crisis is extremely serious, that the economy is unsound, I do not agree," Xu Shanda said. The current US financial crisis does not mean the entire financial system is at risk, there is just a derivative bubble, and investment banks with no background in commercial banking are experiencing problems. Several large commercial banks at present have not experienced big problems.
As far of the real US economy is concerned, Xu Shanda says in spite of the fact that the US has had so many problems, the stock market has only fallen about 20%, other countries' stock markets have fallen 30, 40, even 60%. Since the US IT industry and other high tech industries such as biotechnology, machinery manufacturing, and the aerospace industry have not suffered huge losses and the several big defense contractors have also not had problems -- the real strength of the US economy is in these sectors -- therefore one should view the US economy with objectivity, calm, and accuracy, and neither understimate it nor view it with undo severity.
Xu Shanda says, if China is to remain unaffected it should concentrate on taking care of its own affairs. There are still many things China can do to maintain relatively fast economic growth, including a lot of room for research into monetary policy, fiscal policy, and tax receipts. Only if the Chinese economy grows relatively fast can China in a world economy with so many problems, maintain national and economy stability.
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