BEIJING, Oct. 14 (Xinhua) — China will keep reasonably robust economic growth despite the ongoing international economic recession, according to Merrill Lynch analysts here on Tuesday.

    ”As part of the world economy, China certainly would be affected by the current financial crisis,” said Liu Erfei, the company’s managing director. “We expect the country’s economy to slow down from its (current) double-digit growth to an 8 or 9 percent (annual GDP) increase, still relatively rapid.”

    He added while some countries including the United States stumbled in the credit sector from over-leveraging themselves, China didn’t get itself involved in a similar problem.

    The New York-based investment bank and brokerage house attributed the country’s stable economic performance to the governmental control on its state capital.

    ”Domestic capital market has not been completely open to the outside yet. This enables the country to avoid major international financial risks,” Liu said.

    The country was spared much trouble as it didn’t invest in sub-prime related financial products, the failure of which had been acknowledged as a prime cause for the present global financial woes.

    Meanwhile, the company’s research showed domestic consumption would stand out as a major driver for the country’s economic growth at a time when exports and the property sector were affected by a shrinking global market.

    A developing pro-labour policy, as well as an emerging major consumer force of people born after 1978, would help accelerate the nation’s consumption, according to Merrill Lynch market analyst Cui Wei.

    ”Our view on China’s economy in the next five to 10 years is very optimistic,” Liu added.

    HONG KONG, Oct. 14 (Xinhua) — The Hong Kong Special Administrative Region (HKSAR) Government announced on Tuesday that it will use the exchange fund to guarantee the repayment of all bank deposits in the special administrative region until 2010.

    The measure, announced along with the establishment of a contingent system for local banks to access capital, will remain in force until 2010, when the measures are subject to reassessment, said Henry Tsang, Financial Secretary of the HKSAR government.

    The two measures to safeguard banking stability, announced at a press conference with immediate effect, “are precautionary and pre-emptive in nature,” and “there was no serious issues in the banking sector,” he said.

    Hong Kong Monetary Authority Chief Executive Joseph Yam, who also appeared at the press conference, said he believed the expanded deposit guarantee scheme will give local residents ” infinite confidence” in the safety of their bank deposits.

    The new deposit protection scheme will cover all the deposits in local authorized institutions with full repayment, compared with the previous scheme’s cap of 100,000 HK dollars (12,800 U.S. dollars).

    Local broadcaster RTHK said the bank deposits in authorized institutions currently totaled around 6 trillion HK dollars (769 billion U.S. dollars).

    The contingent capital system will make additional capital available to locally incorporated licensed banks on request and subject to supervisory scrutiny, Tsang said.

    There are currently 23 incorporated licensed banks in Hong Kong.

    The HKSAR government decided on the unusual measure of expanding the deposit protection scheme because it was an unusual period of time, given the current financial turmoil, said Yam, who had also weathered the Asian financial storm a decade ago.

    Yam emphasized that he believed that the HKSAR government will not need to use even “a cent of the exchange fund” to repay the bank deposits before the end of 2010.

    Bank of East Asia had experienced a bank run recently following rumors questioning the bank’s financial stability. The dust settled shortly after when the bank disclosed its financial conditions and the HKSAR government pledged help to dispel the rumor.

    Local residents welcomed the full deposit protection scheme and some members of the Legislative Council said the measures, like similar moves by other economies, could help boost the confidence of local residents in the safety of their deposits.

    One of the academicians, however, said the measures could mean risks for the HKSAR government and that authorities need to strengthen the regulation and supervision.

    Tsang said he was aware of the different views on the deposit protection and the concerns about possible moral hazards.

    ”I have set a time limit for these measures in order to allay such concerns. Moreover, the measures are not just about protecting banks, they are also about protecting the people in our community,” he said.

Backgrounder: U.S. Financial Crisis    

    PHNOM PENH, Oct. 14 (Xinhua) — Cambodian Prime Minister Hun Sen said Tuesday that China was not affected severely by the global financial crisis and could help deal with it.

    ”I hope China could help deal with the global financial crisis because China still has a large amount of foreign-exchange reserves and potential of economic growth,” Hun Sen said at the two-day Fourth Asia Economic Forum held here.

    China will get a little bit impact from the global financial crisis, he added.

    Hun Sen said that the global financial crisis now is not strange for Asian countries because they had a financial crisis in1997, in which a few countries in Asia got impact and were saved by economic super powers.

    ”When we had the Asian financial crisis in 1997, China became the helper for the countries which got impact from the crisis,” he said, adding that the EU and the U.S. also intervened with the crisis.

    The global financial crisis will be discussed at the Asia Europe Summit in Beijing on Oct. 24-25, which will help to solve matters of the global financial crisis, Hun Sen said.

   ¡¡BEIJING, Oct. 14 (Xinhua) — China will take multiple steps to combat the falling price of cotton, according to National Development and Reform Committee (NDRC), the country’s top economy planner.

    Market statistics showed that the purchase price of standard cotton averaged 12,553 yuan per tonne (1,838 U.S. dollars) on Tuesday. That is 68 yuan lower than the previous trading day.

    The figure was down 677 yuan or 5.1 percent from the same trading period last year.

    ”Both short-term and long-term measures are needed to stabilize the price of cotton, so as to protect the nation’s cotton production as well as the interests of farmers,” said NDRC’s tradeand commerce official Ma Zhanping at a cotton forum on Monday.

    According to Ma, the country will encourage commercial banks and rural credit institutions to provide more loans to fund cotton purchases.

    China is also expected to purchase more cotton and put it in a state reserve in the Xinjiang Uygur Autonomous Region in hopes of slowing down falling cotton prices.

    Xinjiang is China’s largest cotton producer. Its output accounts for 36 percent of the country’s total cotton in 2007.

    As of August 2008, state departments had purchased 65,800 tonnes of cotton.

    Ma said the country was also working on a plan to strengthen financial support for farmers, which could include subsidies.

    ”The textile industry has been suffering from shrinking global market demand. By giving subsidies to farmers, we could support the cotton industry while avoiding putting more pressures on textile and garment manufacturers,” said Ma.

Backgrounder: U.S. Financial Crisis 

    BEIJING, Oct. 14 (Xinhua) — China’s government says state-owned enterprises (SOEs) should exercise prudence when investing in 2009 to prevent financial crisis as the global economy teeters on the brink of collapse.

    The State-owned Assets Supervision and Administration Commission (SASAC) made the request in a circular issued late Monday. It’s the first time SOEs have been asked to be cautious about investment budgets in stock markets and futures markets.

    Shanghai Securities Journal believed the statement was a signal that SOEs would cut back on investment specifically in securities markets.

    Li Feng, a senior analyst with China Galaxy Securities, said SOEs invested hundreds of billions yuan in securities markets, which is less than 10 percent of the overall volume.

    Feng said, fewer SOE investments would not have much impact on the securities market.

    According to the circular, SOEs should also seek long-term balance between funds used for operation and investment.

    Guaranteeing stable capital supply and preventing financial risks are among the government’s top concerns for the coming year.

    Turbulence in domestic and international economic environments has led to rising uncertainties for SOEs. Enterprises don’t know how much to budget for things like energy, raw materials and labor.

    Meanwhile, financing is more difficult for businesses due to a tight monetary policy.

    In the first half of 2008, SOE profits were down 10.3 percent year on year to 425.6 billion yuan (62.3 billion U.S. dollars) despite a double-digit growth of sales revenue.

    In the circular, SASAC ordered 147 SOEs, under its supervision, to map out fiscal budget reports for 2009.

    ”Centrally-administered SOEs should strive to increase revenue and reduce expenditure. Try every means to cut budgets in cost and expenditures,” said the notice.

    SOEs with shrinking profits were prohibited from a budget increase.

    The SASAC demanded SOEs submit budget reports before Jan. 31, 2009. Those reports should cover operations of all in-house units, subsidiaries both at home and abroad, institutions and construction projects under SOEs’ administration.

    BEIJING, Oct. 14, (Xinhua) — Capital Airports Holding Company (CAH), the mother company of Beijing Capital International Airport, will host the 15th World Routes Development Forum next year.

    It will be the first time the worldwide aviation forum will be held in China, taking place from Sept. 13 to 15, 2009.

    CAH general manager Zhang Zhizhong said the forum will be beneficial for the company’s Asia-Pacific international hub plan, as well as its global promotion and branding.

    World Routes Development Forum is a networking event for the airline industry. It is estimated that more than 2,000 delegates from airports, airlines and industry suppliers will attend the forum next year.