THE global financial turmoil has posed bigger risks for China's finance industry but China is alert to such risks, top banking regulators said in Shanghai over the weekend.
"China's finance markets are facing bigger risks amid the deterioration of the global financial turmoil," said Su Ning, deputy governor of the People's Bank of China at a finance forum in Shanghai. "We are alert to the potential strike on China's economy from the international financial turmoil and decreasing external demand," Su said. "We are constantly paying close attention to the financial reaction triggered by the US subprime crisis."
Last week, US investment bank giant Lehman Brothers filed for bankruptcy protection and another Wall Street titan, Merrill Lynch, sold itself to the rival Bank of America. American International Group, the world's biggest insurer, was bailed out by the Federal Reserve with US$85 billion, to avoid Lehman's fate.
China's central bank last Monday surprisingly cut its lending rates for the first time in six years and scaled back reserve requirements to ease the effects of the global crisis.
On Thursday, the central government announced a three-way remedy including scrapping the stamp duty on stocks to revitalize the flagging domestic stock market.
The spillover of the financial crisis, the wild fluctuation of the stock market, and the plummeting of the property market may mean that the troubles might gradually extend to other economic sectors, Su said. He said the global financial crisis would not change the basics of China's economy.
Wang Huaqing, the discipline head of the China Banking Regulatory Commission, said the US-triggered financial crisis was teaching Chinese banks a good lesson in monitoring risk exposure.
So far, five domestic listed banks, including the Industrial and Commercial Bank of China and the Bank of China, have disclosed a combined Lehman exposure of US$454 million.
SHANGHAI stocks are expected this week to ride on the huge momentum from last week which saw the benchmark index surging more than 9 percent, and also on a series of favorable measures initiated by the central government, analysts said.
''The key Shanghai index is expected to hit 2,250 points on Wednesday and then perhaps fluctuate for the rest of the week,'' said Qian Qimin, an analyst at Shenyin & Wanguo Securities Co. ''The favorable policies (last week) encouraged the market's confidence and trading will likely be active this week,'' Qian said.
The Shanghai Composite Index was like a roller coaster last week, hit by several pieces of bad news ?? the demise of Lehman Brothers, the takeover of Merrill Lynch by Bank of America and the bailout of American International Group by the United States government.
The index dropped as much as 14 percent to 1,802 following the crisis, the lowest in almost two years. But three positive moves boosted Shanghai-listed companies to surge by the 10 percent daily cap last Friday and the barometer rebounded 9.46 percent, or 179.25 points, to end at 2,075.09 points.
The central government eliminated the stamp tax on share purchases from Friday, which means investors will only pay 0.1 percent levy when selling shares.
State-owned investment agency Central Huijin announced on Thursday that it would buy shares of three major Chinese banks to boost their prices.
Li Rongrong, chief of the State-owned Assets Supervision and Administration Commission, said the commission will encourage centrally administered state-owned enterprises to buy back their shares from the market and increase stakes in their listed units to help stabilize the market.