25 Mar 2009

World may need China's help - Rudd

2:04 pm on 25 March 2009

Australian Prime Minister Kevin Rudd says the world may need China's help if the troubles in the banking system spread to developing countries.

Speaking in Washington, where he has met United States President Barack Obama to discuss the economic crisis, Mr Rudd said he was concerned that the contagion troubling banks in the developed world could spread.

Mr Rudd and Mr Obama held their hour-long meeting - their first - at the White House.

Mr Rudd said he feared developing countries would become a much bigger part of the story in the year ahead, singling out banks in central and eastern Europe as cause for particular concern.

Mr Rudd is pushing for China to be given a bigger role in the International Monetary Fund and says that should happen if the world is to turn to the Asian giant for help.

Mr Rudd also delivered a strong warning against a resurgence of protectionism in the wake of the global economic crisis, saying it was an intrinsic evil, and that the possibility of global economic recovery would be retarded if protectionism grew.

Meanwhile, China's central bank has called for a new global reserve currency, run by the International Monetary Fund, to replace the United States dollar.

The dollar was not explicitly mentioned, but rather that the current crisis showed the dangers of relying on one currency.

With the world's largest currency reserves of $2 trillion, China is the biggest holder of greenback assets.