BEIJING, Aug. 22 (UPI) — There is no trend of a double-dip recession in the world economy, a senior Chinese economist told the annual China Bankers Forum 2011 in Beijing.
Fan Gang, a former adviser to the Chinese central bank’s monetary policy committee, also said the turmoil in Western markets will not affect emerging economies including China, China Daily reported Monday.
“Currently, there is no double-dip trend. It’s just a less optimistic situation,” Fan said. He said the slump in major stock markets is a correction of earlier overheating that would have a limited influence on other economies.
Earlier this month, Standard & Poor’s downgraded the U.S. long-term credit rating to AA+ from AAA, one of the factors blamed for the current turmoil.
However, Fan said, “There is no need to panic.”
He said since the 2008 financial crisis emerging markets have become more independent developed economies.
The economist said the current scale of sovereign debt at risk of default in Europe and the United States is far behind the level in 2008.
However, he also said China should further tighten its monetary stance to lessen capital inflows in the coming months.
The report said concerns have risen in China over accelerated capital inflows, especially of hot money, and their impact on efforts to curb inflation. China’s foreign exchange reserves rose by a faster-than-expected 30.3 percent year-on-year as of the end of June to $3.2 trillion. Inflation in July rose to 6.5 percent even though the central bank has raised interest rates three times and increased the required reserve ratio for commercial lenders six times so far this year.