Upgrade technology, urges bank governor

By Li Yanping  |   2008-12-15  |     NEWSPAPER EDITION

CHINA central bank Governor Zhou Xiaochuan said companies and consumers should be encouraged to upgrade technology to boost demand at home as the global financial crisis hurts the nation's economic growth.

"Upgrading technology can create huge demand," Zhou said at a conference in Beijing on Saturday, according to Bloomberg News. Financial institutions should provide more funding so that companies can upgrade technology and consumers can buy more advanced products, he said.

Boosting domestic demand is the most important policy China will pursue to revive growth in the world's fourth-largest economy, Zhou said. China's economic slowdown is deepening, with overcapacity in almost all industries, and won't bottom until after the first quarter of next year, officials said last week.

Zhou said in the past China had difficulty spurring domestic consumption because of a less-developed social welfare system that encouraged savings and relatively slow income growth.

Exports fell for the first time in seven years in November, imports plunged and producer and consumer price inflation cooled.

"The international financial crisis is having a severe domestic impact," Li Yizhong, head of the Ministry of Industry and Information Technology, said last Friday. "We don't think we've bottomed out yet, and the impact will broaden further in December."

The central bank last month cut the benchmark lending rate by the most in 11 years, two weeks after the government pledged a 4-trillion-yuan (US$584 billion) stimulus package.