Recession reports - China central banker warns global economic risks increasing

Reuters cited Mr Ma Delun a vice governor at China's central bank as saying that the global economy faces risks from both slowed growth and persistent inflationary pressure, which is spilling over from emerging to advanced economies.

Mr Ma told a financial forum in far western China on Thursday that slower growth in the United States, Europe debt problems and Japan's poor economic performance were adding to those global risks.

He said that "The long term fiscal sustainability of the United States faces challenges, the European sovereign debt crisis continues to fester, and the Japanese fiscal deficit is growing."

He added that "Government debt risks have become a major challenge affecting the global economic recovery."

Mr Ma also warned that "some emerging economies are feeling the consequences of policy contraction, and their rates are slowing and downstream risks to the global economy are increasing."

He said those growth risks co-existed with persistent inflationary pressure, which he blamed on excessive global liquidity. He added that "Inflationary pressures have spread from emerging economies to advanced economies."

Mr Ma published comments did not directly address how those pressures are affecting China. But in comments published on Thursday, China Premier Mr Wen also focused on the mix of sluggish global growth and inflationary pressures and said fighting inflation remained his policy priority.

Mr Wen said the global economy is still fragile and sovereign debt problems in the United States and Europe are set to put a drag on world economic growth. He said China exporters would suffer from softer external demand and rising costs.

China inflation ran at 6.5% in July, outstripping the government full-year inflation target of 4%.

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