BEIJING — China’s central bank warned Wednesday that the Asian country’s economic recovery is still weak despite improving conditions and said changes in its development model are urgently needed.
In a quarterly report, the People’s Bank of China also said it is studying ways to improve oversight of China’s financial industry and guard against excessive risk.
“Our national economic situation is getting better, but the internal force of the economic recovery is inadequate,” the report said. “Structural contradictions still exist, so changes in the path of economic development are even more urgent.”
The communist government is trying to reduce reliance on exports and investment by boosting domestic consumption, a key element of its four trillion yuan (US$586 billion) stimulus. Economists say such a change is essential if China is to continue growing, and the plunge in global demand has made it more necessary.
With the recession affecting consumer demand in key markets in Europe and the United States. China’s manufacturing sector has been producing everything from appliances and electronics to machinery, textiles and toys which are piling up on the export docks with no overseas buyers.
A weaker Chinese economic rebound will also affect commodity prices for oil, metals and other materials and impact Canadian exports of minerals, fertilizer, grain and other commodities to the world’s fastest growing major economy.
Driven by the stimulus, China’s growth rose to 8.9 per cent from a year earlier in the third quarter after dipping to 6.1 per cent in the first quarter as exports fell.
But Chinese leaders say the recovery is not solidly established and have warned against complacency.
The central bank said it would encourage Chinese banks to lend in a balanced way in 2010 and avoid big credit fluctuations after a surge in credit this year as part of the stimulus.
The central bank will “research setting up a macro-prudentional system and effectively prevent and resolve all types of financial risk and guarantee the safe and stable progress of the financial system,” the report said.
Also Wednesday, the central bank and China’s bank and insurance regulators said in a joint statement they will curb potentially damaging overinvestment in industrial assets, though they gave no details.
The government warned in September that chaotic overspending in some industries could lead to job losses and financial problems. It says it has rejected dozens of proposed projects in steel and cement production and other fields.
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