A senior Chinese official urged the international community in Washington on Saturday to analyze the root causes of the recent financial turmoil and to make efforts to safeguard global financial stability.

"Activities in the major advanced economies slowed in the second quarter of 2007, posing significant downside risks to global growth," Wu Xiaoling, deputy governor of People's Bank of China said at the 16th meeting of the International Monetary and Financial Committee.

Credit market retrenchment in the United States may further dampen the housing market, suppressing consumption and investment, giving rise to potential risks of recession with a spillover effect on other countries, she warned.

"It is all the more urgent a priority to strengthen surveillance of the systematically important advanced economies in order to safeguard global financial stability and economic prosperity," said the Chinese official.

"This round of adjustment has not yet come to an end," Wu said. "Despite the major central banks'liquidity injection, credit conditions are unlikely to be restored within a short period of time."

She said it is necessary to thoroughly analyze the root causes of the recent financial turmoil, reexamine the role of financial innovation and the development of derivatives as well as the associated risks.

As to Chinese economy, Wu said a major task for the Chinese government is to prevent overheating.

"The Chinese government has taken measures to strengthen macroeconomic management, improve investment structure, increase fiscal expenditure in social sectors, boost domestic demand, and speed up reform in the financial sector," she said.

In a joint statement issued on Friday, finance officials from the world's seven richest nations also warned that the credit crisis will hurt the economic growth.

"Strong global fundamentals and well-capitalized financial institutions provide a sound and resilient basis but uneven conditions are likely to persist for some time and will require close monitoring," they said.

The International Monetary Fund has warned the global economy will slow its continued expansion due to the recent financial turmoil trigged by the US subprime mortgage difficulties.

Among the major advanced economies, the projection for US growth in 2007 as a whole is unchanged at 1.9 percent, but has been lowered by 0.9 percentage point to 1.9 percent in 2008.

(Xinhua News Agency October 21, 2007)