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Action is taken to spur domestic consumption and ''help the world by helping itself''

BEIJING – 01/12/09 – China says it is taking several major steps aimed at blunting the impact of the on-going global financial crisis including an increase in the country’s money supply by 17% next year in a move to spur domestic consumption.

The government in Beijing also hopes to boost bank lending by more than $14 billion over 2008, according to a statement from the China State Council on the government’s official website.

Last month, China's government unveiled a $600 billion economic stimulus package that includes funding on infrastructure, tax cuts, subsidies for consumers in rural areas and social security programs.

The president of the World Bank, Robert Zoellick, is praising China “for so far taking the right steps in helping stabilize its own economy amidst the global financial crisis.”

However, he has warned that there are many tough economic problems that will need to be addressed in the year ahead.

Zoellick visited Beijing recently for three days of meetings with Chinese leaders, to listen to their plans for dealing with the global economic downturn.

China, said the former US Trade Representative, “has been helping the world by helping itself. I think the best way China can help support the world economy this time is through the efforts China has taken to strengthen its own growth and recovery.” Zoellick praised the Chinese plan.

But, in his first day of meetings in Beijing Monday, he said there was general agreement that 2009 would be, in his words, a "very difficult" year.

"It involves considerable uncertainty. So, while countries can take actions today, they need to be flexible in the future as well," said Zoellick.

The World Bank chief also noted that some of the greatest dangers he sees in the next year include ineffective credit systems and increasing hardships for the world's poorest countries, adding that "as countries face rising unemployment, protectionism is an increasing possibility."

Zoellick said he is pleased Chinese officials emphasized to him that international cooperation is key to restoring global confidence.

The agricultural trade between the US and China was given a boost of cooperative energy with both countries recently agreeing to resist protectionist farm tariffs even in the face of the world economic crisis.

The agreement came during talks held during US Agriculture Secretary Ed Schafer’s recent visit to an international agriculture exposition in Shanghai.

Schafer told reporters that both countries “are aware the tough economic times could lead to a protectionist backlash and are committed to guarding against one” – a stance, he said, that could nudge along a seven-year effort to lower global trade barriers known as the Doha Round.
"We talked... about the tendency in times of trouble to instill protectionism in one's country," Schafer said. "And we pledged as two of the world's largest agricultural producers to encourage the rest of the world to back away from protectionism."

In early December, the leaders of China, Japan and South Korea jointly announced they will work together to boost their manufacturing sectors and help each other avoid mistakes that have hurt the economies of other countries, such as setting up new trade barriers.

The East Asian leaders made their bold pledge, aimed at helping revive the ailing global economy, during an unprecedented summit in southwestern Japan. Senior officials attending the meeting said they will set up an $80 billion fund to help stabilize the region's economies, and give more money to the Asian Development Bank.

China, Japan and South Korea make up 75% of the East Asian economy, jointly generating almost 17% of the world's economic output.

The three countries now say they will hold summits on trade-related issues on an annual basis in the future.

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