China must focus on domestic demand -c.bank's Zhou

BEIJING, Dec 13 (Reuters) - China needs to support domestic demand to cushion the economy, which has been hurt more than expected by the global financial crisis, central bank governor Zhou Xiaochuan said on Saturday.

China's top leaders wrapped up an annual strategy meeting earlier this week with a pledge to ramp up public spending and cut taxes to promote domestic demand, which economists say does not a play large enough a role in driving growth.

"In order to handle the impact from the financial crisis, we have to boost domestic demand, in part because of softened demand from outside -- exports already showed negative growth last month," Zhou told a financial forum, reaffirming the importance of the task of rebalancing.

Exports fell 2.2 percent from a year earlier in November, the biggest monthly fall in nine years.

Still, the impact on the economy from the financial crisis had come about more through weakening investor and consumer confidence than simply as a direct result of softer demand overseas, Zhou said.

While he did not offer specific policy prescriptions for supporting domestic spending, Zhou said such efforts should centre around getting consumers to upgrade their homes, home appliances, cars and electronic goods such as mobile phones.

He also urged banks to provide financing for environmental projects and emission reductions.

(Reporting by Zhou Xin; Writing by Jason Subler) Keywords: CHINA ECONOMY/DEMAND

(jason.subler@thomsonreuters.com; +8610 6627 1215; Reuters Messaging: jason.subler.reuters.com@reuters.net)

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