- The Washington Times - Thursday, January 29, 2009

DAVOS, Switzerland

Premier Wen Jiabao of China on Wednesday coupled a barely disguised critique of practices that preceded the U.S. economic meltdown with the startling prediction of 8 percent growth in 2009 for his country, the world’s biggest emerging market.

Mr. Wen conceded such growth “will be a tall order” in light of the current crisis but said it was achievable because of China’s massive savings, robust consumption and continued industrialization and urbanization.

Speaking to the World Economic Forum here, the Chinese premier did not miss the opportunity to point a finger of blame at the United States.

“This crisis is attributable to a variety of factors and the major ones are: inappropriate macroeconomic policies of some economies and their unsustainable model of development characterized by prolonged low savings and high consumption; excessive expansion of financial institutions in blind pursuit of profit,” he said.

Russian Prime Minister Vladimir Putin also had some strong comments about the excesses and noted, “Today, investment banks, the pride of Wall Street, have virtually ceased to exist.”

Last year, China’s economy grew by 9 percent, Mr. Wen said, he but acknowledged that in the last quarter of 2008 it expanded by only 6.8 percent.

The International Monetary Fund in a revised forecast projects China’s economy this year to grow by only 6.7 percent in 2009.

William Daley, former U.S. secretary of commerce, said, “I think it’s a stretch, given what going on in the rest of the world, it would be a phenomenal accomplishment if they’re able to do it. But I think it’s a real stretch.”

However, Mr. Wen was far more upbeat about the prospects for the world’s most populous nation.

“China’s economy is in good shape on the whole … our confidence also comes from the fact that the advantages contributing to China’s economic growth remain unchanged,” he told 2,500 business and political leaders at the opening session of the World Economic Forum.

One startled senior Asia diplomat after hearing Mr. Wen’s prognosis said: “China is now the only locomotive of the world economy.”

Mr. Putin stressed that his nation has also been affected: “Regardless of their political or economic system, all nations have found themselves in the same boat.

“The time for enlightenment has come. We must calmly, and without gloating, assess the root causes of this situation and try to peek into the future,” Mr Putin said.

But earlier, some influential business figures and international economists stressed things were likely to get worse in the coming months both on the real economy and in the global banking system which the legendary financier George Soros told reporters was now “dysfunctional.”

Stephen Roach, chairman at Morgan Stanley Asia, said: “We cannot underestimate the challenges and the dangers that we face in 2009,” and noted the contraction in U.S. consumer demand may be far from touching bottom.

Some of the strongest remarks of the day, however, came from Rupert Murdoch, chairman of News Corporation.

Mr. Murdoch told reporters that in the last months $50 trillion to $100 trillion disappeared

“People are in shock, depressed, traumatized,” he said.

“The crisis is getting worse, real economic values are still going down,” Mr. Murdoch added.

He believes it will take “drastic action” to turn it around but that it would take a long time as world financial markets were in great disarray. And he said the crisis could be around for another one to five years.

Mr. Murdoch said in the current crisis the bigger role of government regulation is the least-bad thing, but added governments should not overreact and get in a situation of semisocialism.

The world should also not lose sight that what creates wealth is open markets and capitalism, he said.

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