China's economic downturn deepening with spread of global crisis

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SINGAPORE, Nov 27 (Reuters): China warned Thursday its economic downturn was deepening with the spread of the global financial crisis, raising the spectre of job losses and social unrest in the world's most populous nation.
In India, emerging Asia's other economic titan, financial markets were closed after militants killed at least 101 people and held foreigners hostage in the commercial capital Mumbai.
Trade Minister Kamal Nath described the attacks as "an unfortunate event" but said he did not expect they would slow investment.
The warnings from China's top planner came a day after its central bank cut interest rates by the biggest margin in 11 years in response to the worst global downturn in decades.
The crisis that began last year with the collapse of the US housing market spread around the world, bringing several top financial institutions to their knees and pushing the United States, Japan and Europe into recession or to the brink of it.
China's State Information Centre, a government think-tank, forecast annual growth would slow to eight per cent this quarter from nine per cent in the third quarter, a rapid cooling from double-digit rates recorded in the past five years.
"The global financial crisis has not bottomed out yet. The impact is spreading globally and deepening in China. Some domestic economic indicators point to an accelerated slowdown in November," Zhang Ping, chairman of the national development and reform commission, told a news conference.
With factories closing by the thousands, Chinese officials have grown increasingly concerned in recent weeks that slowing growth may threaten the stability that the ruling Communist party craves for its 1.3 billion people.
"Excessive bankruptcies and production cuts will lead to massive unemployment and stir social unrest," Zhang warned.
South Korea offered to do more to protect its economy, Asia's fourth biggest, from global headwinds.
The government plans to buy bad debt from banks and said it would also tap a 30-billion-dollar swap line with the US Federal Reserve to supply scarce dollars.
Aggressive interest rate cuts and trillions of dollars in financial sector bailouts and stimulus packages have been the order of the day since the collapse of Lehman Brothers in September, followed by a lending freeze and the spread of financial pain to consumers and businesses.
The world's banking system is still not strong enough to support the economy and avoid a recession, the head of Britain's financial regulator told an Italian newspaper in an interview.
Adair Turner, chairman of Britain's Financial Services Authority, added that the two key issues were bank capital strength and liquidity.
Japan's Norinchukin Bank said it would raise more than $10.5 billion to shore up its capital, the largest fundraising by a Japanese financial firm since the start of the global credit crisis.
Norinchukin, the unlisted central bank for Japan's agricultural and fishery cooperatives, said it plans to raise more than one trillion yen ($10.5 billion) through its associated cooperatives by the end of March.
Asia stocks posted a fifth day of gains Thursday, supported by hopes that policy action will ultimately prevail after China slashed borrowing costs.
European shares also opened higher, but trading was expected to be thin with US markets closed for Thanksgiving Day.