China embarks on reforms to secure inclusive growth

BEIJING -- China has embarked on reforms to achieve an inclusive economic growth in a changing world, said an IMF official in a recent interview with Xinhua.

Since the beginning of this year, the new leadership has introduced significant policies designed to broaden the benefits of growth, encourage competition, liberalize the financial system, assist small and medium-sized enterprises and cut the red tape, said Murtaza Syed, IMF's Resident Representative in China.

Syed said he was deeply impressed by the way China's new leadership has coped with a slowing economic growth, which had added to the jitters of investors around the world earlier this year.

"We have seen a strong resolve of the new leadership not to over-stimulate the economy," he said. "I have been very impressed by the way the Chinese leadership has not panicked."

Syed, who has spent three years in China, said the economic slowdown is largely "natural," because "as an economy becomes bigger and catches up with the rest of the world, its growth rates normally fall."

Syed said the slowdown is unlikely to end China's boom story, provided strong reforms are put in place.

"As China begins to put reforms in place to make its domestic economy more balanced, I think there will also be great opportunities for the rest of the world," he said, suggesting that China's growing middle class will start to demand many more products and services, some of which the rest of the world can offer.

"So I think the whole world has a stake in helping China to get its strategic change right. Done well, the potential benefits for the global economy would be immense," said Syed.

From a global perspective, Syed said that rebalancing the economy is necessary as it lays a solid foundation for sustained growth in the post-crisis era.

With regards to China, the share of private consumption in GDP needs to rise while that of investment and savings should come down, he said.

Syed said the current slowdown and volatility in emerging markets is unlikely to change the trend that they are becoming a stronger engine of world growth.

"You have to remember that this year was the first year according to IMF's estimates that emerging markets contribute more to the global economy than the advanced economies," he said.

Admitting that the emerging economies have their own challenges, Syed said, "with right policies, I am very hopeful about their longer-term prospects."