Oct. 31 (Bloomberg) -- Chinese Commerce Minister Chen Deming warned against withdrawing economic stimulus measures, citing the risk of another world slump.

“There are increasing signs that the global economy is heading in a positive direction, but there are still many uncertainties,” Chen said at a forum in Shanghai today. If countries “withdraw the stimulus measures now, the global economy will plunge.”

Billionaire investor George Soros said yesterday that the global economy’s recovery from its worst crisis in 70 years may “run out of steam” and another recession may follow in 2010 or 2011. U.S. stocks tumbled yesterday as declines in consumer confidence and spending and the threatened bankruptcy of commercial lender CIT Group Inc. underscored the risk of a slump.

“For the world as a whole, it’s premature to think about exiting stimulus,” Nobel Prize-winning economist Joseph Stiglitz said at the economic conference in Shanghai today.

While the worst of the crisis is over, challenges include high unemployment, weak investment and consumption, rising commodity costs and fluctuating currencies, Chen said. It will be difficult for consumption to return to pre-crisis levels, he added.

Around the world, central banks are paring emergency measures taken at the height of the financial crisis.

Japan, Australia

Japan’s central bank said Oct. 30 that it will stop buying corporate debt at the end of the year. Australia this month became the first Group of 20 nation to raise rates since the height of the crisis and Norway’s central bank followed.

In the U.S., the economy grew in the third quarter for the first time in more than a year, propelled by emergency programs to boost buying of cars and homes, according to Commerce Department figures released Oct. 29. Gross domestic product expanded at a 3.5 percent annual pace.

In a speech today, Stiglitz said that “when we look at if workers can get jobs, if they can work full time, if businesses are able to sell goods they produce, in those terms, we are nowhere near the end of recession” in the U.S.

The nation’s unemployment rate reached a 26-year high of 9.8 percent in September and economists project it will exceed 10 percent by early 2010.

Talking to reporters, Stiglitz said the economic data would be “miserable” without the effect of stimulus measures.

China’s Pledge

In China, the State Council pledged Oct. 21 to continue monetary and fiscal stimulus even after the economy exceeded officials’ expectations for the first nine months of the year. Growth is likely to top the government’s 8 percent target for 2009, the central bank said yesterday.

Chen acknowledged the “dilemma” that global stimulus measures may cause long-term problems by swelling government debt and stoking inflation. Nations’ efforts to protect their own economies are also fueling protectionism in trade, he said.

Investment to create jobs may also intensify overcapacity problems in industry, the official added.

Stiglitz said emerging economies including China need to guard against “bubbles” caused by the surge in liquidity as governments try to stimulate growth.

--Li Yanping, Judy Chen. Editors: Paul Panckhurst, Alex Devine.

To contact Bloomberg News staff for this story: Li Yanping in Beijing at +86-10-6649-7568 or yli16@bloomberg.net

Last Updated: October 31, 2009 01:39 EDT