China to see only mild impact from subprime crisis says central bank

BEIJING (AFP) — Chinese exporters might see only a mild impact from the US subprime crisis but should explore other markets to minimise any fallout, the nation's central bank governor was quoted Thursday as saying.

"The subprime crisis in the United States has dampened US consumers' spending and has likely affected some European consumers as well," Zhou Xiaochuan, head of the People's Bank of China, told the Xinhua news agency.

The next two months of US holiday spending would show how serious it was, but it was likely there would only be a "mild effect" on Chinese exporters and the Chinese economy, he was quoted as saying.

Nevertheless, he urged export-oriented companies in China to explore other markets rather than focus only on the US, to minimise the effect of a possible slowdown in trade with the world's biggest economy.

Zhou was speaking to Xinhua after attending a meeting in South Africa of the Group of 20 major economies.

Concerns have grown in recent months about the impact on Asia after the US subprime crisis triggered a credit squeeze as losses have piled up on securities backed by mortgages to home-buyers with patchy credit histories.

However, the World Bank said last week that despite the subprime woes and record high world oil prices, the economies of China and other countries in east Asia were likely to remain robust in 2008.

China is expected to see growth of 10.8 percent next year, just down from a projected 11.3 percent this year, the World Bank said in its half-yearly analysis of the region.

China's government is slightly more bullish, with Premier Wen Jiabao projecting 11.5 percent growth for this year.