China to push for mergers in slowdown

CHINA is facing increasing pressure that economic growth will slide, and a slowdown has spread from the coastal area to central and western regions, the China Economic Herald has reported, citing the country's top economic planner.

Declining profits have spread from export-led companies to other industries and from small and medium-sized firms to bigger companies, said Zhang Ping, chairman of the National Development and Reform Commission.

"The worsening trend is likely to continue in the next year," the commission-run newspaper quoted Mr Zhang as saying.

In 2009, the government will push for merger and acquisitions in the steel, auto and coal sectors to improve the country's industrial structure, Mr Zhang said.

The government will also increase reserves in key strategic resources in 2009, Mr Zhang added.

Meanwhile China's cabinet, the State Council, has called on local banks to provide funding to companies facing difficulties in the current financial crisis as it aims to maintain the country's rapid economic growth.

The State Council said it is encouraging banks to "provide lending support to companies that are experiencing temporary operating or financing difficulties".

It also said related lending rules may be adjusted.

The cabinet also pledged several capital market innovations, including the launch of a growth enterprise market and the introduction of steel and grain futures.

Listed banks will be allowed to trade bonds on the stock exchange in a pilot program. Currently, banks can only trade bonds in the interbank bond market.

The cabinet will encourage more financial companies to issue yuan-denominated bonds in Hong Kong, it added.

The cabinet reiterated it will keep the yuan basically stable at a reasonable, balanced level and added the yuan will be increasingly used as a settlement currency for trade with neighbouring countries.

The government will closely monitor the financial crisis and local financial market conditions. It will provide liquidity support and other assistance to maintain financial market stability, it said.



Source : TheAustralianBusiness
[tags : recession bankrupt collapse retrenchment financial news collapse stagnation economic slowdown financial collapse world recession global recession layoff job cut]