‘We Will Not Let Go of Reform’

The industrial and commercial bank of china has broken lots of records. In 2006 the bank went public in what became the world's largest IPO ($22 billion). After aggressive expansion at home and abroad, ICBC is now the largest commercial lender in China and among the world's biggest financial institutions. Last week, in the midst of the Sino-U.S. Strategic Economic Dialogue, ICBC's chairman Jiang Jianqing met with NEWSWEEK's Rana Foroohar, Melinda Liu and Mary Hennock to discuss the economic future of China and the world. Excerpts:

NEWSWEEK: Is the current economic slowdown in China just cyclical, or are the days of double-digit growth finally over?
Jiang: For three decades, China has grown over 10 percent a year. It seems that the rest of the world has gotten used to this speed. Right now, we're in the midst of a historic crisis, and there's no doubt we'll be affected. I believe the government will be able to keep growth above 8 percent next year. And I don't think the days of double-digit growth are over for good. But we are in the middle of a tsunami, and it could last into 2009 and 2010.

There are some Western economists who feel that China ' s fiscal-stimulus plan doesn ' t address the issue of domestic consumption aggressively enough. What more could be done?
I think the plan will work, but it was only announced a few weeks ago, and it needs time to take effect. In particular, there are a lot of very large infrastructure projects that will take time. But China is well equipped to organize and manage these types of large-scale projects.

How would you compare and contrast the 1998 crisis to today ' s situation?
No two crises are alike, but there are common roots. In 1998, there was a lot of talk about the emerging markets not managing risk well. Now, it seems the U.S.—a market we thought was very mature and well developed—has not managed risk. The key point [in both cases] is greed. Clearly, the regulatory landscape is going to change, and there were proposals around this at the G-20 summit.

After the last crisis, China made brave moves, joining the WTO and allowing more migration. Is this a time for more such moves?
We will not let go of reform. The last three decades of our growth has depended upon it. Some periods of the Ming and Qing dynasties, when China cut itself off from the world, were times of the country's worst-ever economic performance. Since 1978, we've gotten nothing but growth and wealth. Every Chinese citizen knows this.

Some people are concerned that the wealth divide in China could lead to greater social instability. Are you worried about this?
It's true we are confronting different problems now, and adjustments are necessary. That's why a lot of the current fiscal-stimulus plan is being directed toward rebates to farmers, bigger pensions and lower-cost housing. If the government can't deal with the crisis quickly, unemployment is going to become an issue. If exports are harmed, there could be a greater number of [small-business] bankruptcies. That's why the government is really trying to support businesses. Keeping the employment ratio high is key; 20 to 30 percent of our new loans are going to small and midsize enterprises.