Friday October 9, 01:30 PM

China bank regulator says financial crisis not over

By Clare Jim and Kennix Chim

HONG KONG (Reuters) - The global financial crisis is not yet over, and it is too early to talk about an exit strategy from the stimulative policies Beijing is pursuing to maintain robust growth, China's top banking regulator said on Friday.

China's gross domestic product is expected to rise more than 8 percent in the third quarter from a year earlier, Liu Mingkang, chairman of the China Banking Regulatory Commission, told a lunch in Hong Kong.

Figures for the third quarter are due to be issued on Oct. 22, and all economists polled by Reuters to date expect annual growth of more than 8 percent, up from the second quarter's 7.9 percent.

"It is too early to talk about an exit strategy for markets," Liu said in response to a question in English, adding that Beijing's strategy was far different from those in the U.S. or Europe "because we haven't spent a penny to rescue the banks."

Liu said his agency wants domestic banks to have set aside provisions equal to 150 percent of their non-performing loans by the end of 2009.

Beijing is implementing a 4 trillion yuan ($585 billion) stimulus spending plan to prop up the economy during the global downturn.

At the same time, the country's predominantly state-owned banks have ramped up lending, prompting the regulator to warn of a potential increase in bad loans.

However, bank lending in China has stabilised at a slower pace after a record surge in the first half of this year.

Chinese banks issued about 300 billion to 400 billion yuan of new loans in September, roughly in line with levels in the previous two months, Liu said earlier this week.

(For more news on Reuters Money visit http://www.reutersmoney.in)

(Writing by Alison Leung; Editing by Ken Wills)