China: cautiously optimistic on economy. Periphery stand up and are walking on their own feet.
China: cautiously optimistic on economy
By ANGELA CHARLTON and COLLEEN BARRY – 17 hours ago
DAVOS, Switzerland (AP) — Chinese Premier Wen Jiabo brought cautious optimism to the World Economic Forum Wednesday, predicting that his country will achieve its target of 8 percent economic growth this year despite the global financial meltdown.
Wen called for enhanced U.S.-China cooperation to address the issue, even as he and Russian Prime Minister Vladimir Putin obliquely criticized the United States, blaming a relentless pursuit of profits for the worst financial crisis since the Great Depression.
Both Wen and Putin said the crisis had impacted their countries' economies, but Putin refrained from specific forecasts.
Wen conceded that creating 8 percent growth — the rate China needs to avoid unemployment and social unrest — was "a tall order," but he said it was attainable with growth in China "on the track of steady and fast development."
Even so, the rate would represent retrenchment for China, where growth in 2008 hit a seven-year low of 9 percent. That broke a five-year streak of double-digit expansion. Still, Wen voiced confidence.
"Will China's economy continue to grow fast and steadily? Some people have doubts about it," he said. "Yet, I can give you a definite answer: yes it will. We are full of confidence."
Wen's lightly veiled criticism of the United States and Western financial institutions came as he listed the causes of the financial crisis. He cited "an unsustainable model" of low savings and high consumption, a "blind pursuit of profit" and "a lack of self-discipline" among financial institutions as well as a failure of regulators to keep up with new financial instruments.
Putin, who called the crisis a "perfect storm" that was wreaking destruction on all corners of the global economy, refrained from blaming the U.S. directly — but pointedly noted that just a year ago at Davos American delegates emphasized the U.S. economy's fundamental stability.
"Today, investment banks — the pride of Wall Street — have virtually ceased to exist," a fact he said spoke louder than any public tongue-lashing.
The annual meeting of politicians, well-heeled business leaders and well-meaning activists and celebrities gathered under a pall that has seen personal fortunes trimmed, companies shuttered and hundreds of thousands of jobs lost. President Barack Obama's top economic policy makers did not attend.
People are "depressed and traumatized," Rupert Murdoch, chief executive of News Corp. said at the first full day of the forum. He noted that worldwide some "$50 trillion of personal wealth" had vanished since the crisis worsened with the Sept. 15 collapse of U.S. investment bank Lehman Brothers.
"The size of the problem confronting us today is larger than in the 1930s," said billionaire philanthropist George Soros.
The scope of the decline was evident even among the gift bags that attendees — who pay thousands of dollars to participate — received this year. Instead of loaded personal digital assistants, fine Swiss chocolates and gadgets, they got basic, blue-hued pedometers, suggesting shoe leather instead of limos as a way to get to meetings.
"There is a modesty, even a humility of confidence and certainty," said Michael Useem, a management professor at The University of Pennsylvania's Wharton School of Business. "This year, because of the events of the last nine months, everybody has a sense of being a little bit knocked off their perch, and thus more modest about their own confidence and about their own certainty."
Capitalism still had its supporters despite the stunning failures of the last year, as participants debated ways to make it more responsible and the role of government in easing the way toward recovery.
Profit, once the hallowed byproduct of capitalism, was the bogeyman of Davos 2009.
"Profit is a major driver of business, but it is clear that it cannot be profit at all costs and it is also clear that self indulgence cannot replace reasonable competitive remuneration," forum chairman Klaus Schwab said.
Still, no one seemed to offer an adequate explanation for the failure of the world's financial community and regulators to detect and deflect the crisis.
"Today, people from every corner of the globe ask how it was possible that decisions could be taken, led by greed or incompetence or with no effective oversight, decisions that had terrible consequences, not only for the global economy but also for real people, who have lost their pensions, their homes, their jobs," Schwab said. "They may not understand what went wrong, but they are clear that their leaders have let them down."
Laura Tyson, a former Clinton administration economic adviser now working with President Barack Obama, was blunt in her assessment of why government needs to take a lead role in the recovery — and why financial institutions are discredited.
"Governments can borrow. Banks cannot. The reason they cannot is because no one trusts them. Why should they trust them? They weren't transparent. They lost trillions of dollars. They created instruments even they didn't understand," Tyson said.
Associated Press Writers Edith M. Lederer, Matt Moore and Bradley S. Klapper contributed to this report along with AP Television News. |
