Int'l organizations bullish about 'new normal' China economy

BEIJING -- During the two-day China Development Forum 2015 in Beijing, which concluded Monday, a number of world organizations were upbeat of China's economic prospects.

Voices of confidence saying that China is capable of maintaining a medium-high-level growth rate while continuing its reform drive outweighed the skeptics, despite the growth target for 2015 being set at a record low of about 7 percent.??

Slower but better

World Bank managing director Sri Mulyani Indrawati said the Chinese economy, despite the slowdown, was moving fast when compared with other major economies.

"China can afford lower growth rates while continuing to deliver the necessary jobs. Not only that, the lower growth rates will also create space to implement reform measures," she said.

According to Asian Development Bank (ADB) president Takehiko Nakao, China's economic rebalancing had seen the economy moving away from its reliance on investment and exports, and toward a model driven by consumption and services.

According to a report released at an IT leaders forum held last weekend, the market volume of mobile Internet in China was 200 billion yuan ($32 billion) in 2014.

"The 'new normal' is the situation China needs to carry out reforms. It is not merely a matter of the growth rate," Nakao said.

Measures to promote good governance, environmental preservation and global partnership engagement impressed International Monetary Fund (IMF) managing director Christine Lagarde, who said they would result in "slower, safer, more sustainable growth."

OECD Secretary-General Angel Gurria said rapid urbanization had helped sustain economic growth, while avoiding typical problems such as the explosive growth of substandard housing.

More efforts needed?

China was urged to take bolder and faster measures to further unleash momentum.

Indrawati suggested that allowing private investment to flow to more sectors would encourage competition, efficiency and innovation, as well as accelerating state-owned enterprise restructuring.

"China must harmonize market mechanisms and the role of the government," she said.

Putting a focus on public finance reform, Nakao said, would ensure that sufficient resources were available at all levels of government.

At present, while sub-national governments are responsible for 85 percent of total fiscal expenditure, their share of total fiscal revenue was less than 50 percent, he said.

As a form of public goods and services, one of the twin engines that would drive growth, infrastructure investment in economic belt projects is expected to counter sluggish investment in other areas.

Regional economic projects such as the Belt and Road initiatives; the Beijing-Tianjin-Hebei region; and the Yangtze River Economic Belt are expected to be a focus in China's next "five-year plan" for regional development.

Angel Gurria advised that road networks should be designed to better support foot traffic and public transportation, and density should be managed.

He also pointed out that the segmentation of the Chinese labor market based on "hukou" (residence registration) should be addressed.

"Moreover, mechanisms for coordination among local governments should be strengthened and competition be discouraged," Gurria added.