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Snow urges faster China reform
(Reuters)
Updated: 2005-10-19 07:14
'Leapfrogging'
Snow said China could benefit by gaining quick knowledge of products like
asset-backed securities, credit and currency derivatives, options and hedging
devices, all of which could be used to reduce uncertainty and to let capital
markets develop.
"China can quickly take advantage of these important advances and thereby
'leapfrog' in the development of its financial sector," Snow suggested.
In two days of discussions on Sunday and Monday, U.S. officials urged China
to remove existing foreign ownership caps on financial institutions like
investment-banking firms and to set up a national credit bureau to improve
credit risk management.
Snow was returning to Washington on Tuesday but in a mark of the importance
the Bush administration places on its broad relations with China, Defense
Secretary Donald Rumsfeld arrived on the same day.
President George W. Bush is scheduled to visit next month.
Snow said China agreed it needed to transform its economy from one heavily
reliant on exports to a consumer-driven model, which likely would mean less
pressure on U.S. trade deficits.
At the same time China needed to focus on developing its capital markets so
that money also could be raised on stock and bond markets rather than relying
solely on bank financing.
"Beyond the United States, in Asia and elsewhere we have seen where the
excessive reliance on bank financing has contributed to financial crisis," Snow
said.
He added that stronger capital markets would "help China's economy shift from
savings to consumption without sacrificing growth."
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