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SYDNEY: China can help bring global stability amid the financial crisis and western governments should encourage its integration into the global system, Australian Prime Minister Kevin Rudd said.
Rudd, a Mandarin-speaking former diplomat to Beijing, said China's extraordinary growth was a key driver of global growth and the Asian superpower had been a stabilising force during the Asian financial crisis of 1997.
With global markets in turmoil due to the credit crunch and many financial institutions in the United States and Europe in trouble, Rudd said China - as well as other economies such as Japan and Korea - could help strengthen global financial stability.
"Chinese institutions have the liquidity to take stakes in those US and European institutions," the prime minister told a weekend business forum in a speech made public late Sunday.
"Such investments should not cause alarm in western nations. They are a natural reflection of the structural changes in the global economy."
Rudd said China was already playing an increasing role in global financial markets, with its institutions estimated to hold some US$500 billion worth of US treasury bonds and US$200 million in US asset-backed securities by mid-2008.
"The current instabilities that are concentrated in the US should not be taken as a signal to China to retreat from integration and globalisation," he said.
"We need to address the problems that have given rise to the current crisis, and not withdraw or huddle down into ourselves."
Australia, along with other nations, must continue to encourage China to play a positive role in the global economy, the centre-left Labor Party prime minister said.
"It is important now for western nations to demonstrate our positive support for China as a responsible stakeholder in the global economy and in major financial institutions," he said.
"It is important we make it clear that China's ongoing economic and financial integration is important, and this integration is firmly in the interests of China, the interests of Australia, and the interests of the global economy."
- AFP/yb
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