Beijing, Can China save the world from the current financial crisis? To give the answer right away: No.

However, the nation with its more than one billion people and its strong economic growth may be able to offset at least some of the effects of the global financial meltdown.

"At the moment China can only save itself and thus be a certain stabilizing factor in Asia," said Joerg Wuttke, president of the European Chamber of Commerce in China.

He spoke ahead of the upcoming Asia-Europe summit (ASEM) which is running in Beijing. At the largest-till-date gathering of this kind, China will host almost 40 European government leaders and their Asian counterparts.

"It is impossible for China to help Europe, Japan or the United States out of their troubles," Wuttke said. China's economy was still too small for that, despite being the world's forth largest economy after Germany, he said.

But while the global crisis also has taken its toll on China, the country appears to be better prepared than others.

In the first quarter of 2008, China's economy grew by 9.9 percent compared to the previous year, and even during the third quarter growth only slipped to nine percent, with decreasing demand for Chinese exports being the main reason for the slide.

Investment banks corrected their projected figures downwards only slightly by between 0.5 and one percent to an expected growth of eight to nine percent for next year.

These, of course, are still growth figures many other countries can only dream about.

Until the financial crisis the government in Beijing was more concerned of overheating given the fast pace of economic growth, keeping one foot on the brakes so far.

But now China's economic planers change course. On Sunday, China's State Council announced a new economic strategy: away from "rapid growth and inflation control" and instead towards "stable and rapid economic development."

Under consideration are tax discounts to promote exports, and for banks to facilitate credit access for small and medium-sized enterprises.

Additionally, domestic demand is to be boosted by increasing financial support to farmers.

As the inflation rate unexpectedly dropped to 4.6 percent in September, fiscal policies could again be relaxed.

While stocks may have lost some 70 percent of their value compared to the record high a year ago, the situation by no means reflects the real economic situation, as only speculation bubbles had burst.

The same thing happened in the real estate sector, which had attracted a lot of so-called "hot money," money which is moved by its owners to China to speculate on the property market, while at the same time betting on a rise in the value of the Chinese currency.

But those bubbles already had started to burst before the financial crisis hit. In comparison to other countries, China's domestic debt is relatively low, while the Chinese have the world's highest amount of savings.

"China's problems are less lying with the stock market or non-performing loans but rather with energy inefficiency, environmental troubles and lacking quality of its products," explained Wuttke.

Apart from industry sectors with excess capacities like the steel, cement and car industries, China overall still enjoyed a boom, he added.

During the prevailing crisis the world looked towards China "more than ever before", because it contributed a great deal to global economic growth, said US Secretary of Finance Henry Paulson recently during a speech before the Committee for American-Chinese Relations in New York.

"China is feeling the current global financial] stress as well, but fortunately its economy is expected to continue to be an important engine for global growth during this period," Paulson said, recommending to the future US president to continue on the path of "constructive engagement" with China.

"We must recognise that China's growth is an opportunity for US companies and consumers, for our producers, exporters and investors," Paulson warned of protectionism during the prevailing crisis.

"A stable, prosperous and peaceful China is in the best interest of the Chinese people, the American people and the rest of the world," he said.

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