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China Top Leaders Warn on Financial Risks as Rebound Falters

China ’s top leaders said the country must guard against financial risks and boost consumption amid signs that the recovery in the world’s second-biggest economy is faltering. “

China needs to cement its domestic economic growth momentum and guard against potential risks in financial sectors,” the Politburo Standing Committee said in a statement late yesterday published by the official Xinhua News Agency . Macro-economic policies should be stabilized and micro controls in some sectors should be loosened, it said after what Xinhua said was a “special session” on the economy. Data this week showed China’s manufacturing is expanding at a slower pace, adding to evidence a recovery is losing steam after an unexpected slowdown in growth in the first quarter. Goldman Sachs Group Inc. and JPMorgan Chase & Co. last week cut forecasts for 2013 expansion while Nomura Holdings Inc. said this week that growth needs to moderate to avoid a systemic financial crisis. The Politburo Standing Committee’s comments “provide support to the State Council’s decisions and don’t imply policy changes,” said Ding Shuang, senior China economist at Citigroup Inc. in Hong Kong. “While the leadership is saying China needs to boost growth momentum, it’s also warning about financial risks — it isn’t going to pursue the old way of stimulus to push up growth at the expense of long-term structural reform.” Government Financing Stocks in China fell, with the benchmark Shanghai Composite Index down 0.4 percent at 1:54 p.m. local time. The gauge slipped 0.9 percent yesterday, the third drop in four days, and is heading for a third straight monthly decline. The Politburo Standing Committee pledged to accelerate the establishment of a standard local government financing mechanism after “explosive” growth in local debt raised concerns about the financial health of the economy, according to Xinhua’s report which didn’t […]



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