US expert lauds progress in China's financial reform

NEW YORK - China has accomplished "extraordinary progress" in its financial reform in recent years, but more needs to be done, a US senior professional said here Saturday.

"Obviously, China needs to focus on fiscal reforms with respect to the introduction of property tax," said Elaine La Roche, former chief executive officer of China International Capital Corp..

Speaking at a forum themed "China's Financial Dream, Path to Capital Renaissance," she noted that fiscal reforms have been launched in one experimental zone and "that will likely be expanded."

Another focus is financial liberalization, she said. "Obviously the liberalization of interest rates is a key, but that cannot happen until there is a nationwide depository insurance put into place."

"All of these steps and building blocks take time, but, I think, are definitely on the horizon," she said.

Talking about the upcoming third plenary session of the 18th Communist Party of China Central Committee, La Roche said it would be "a major watershed event" for China's economy.

The world is waiting to see what reforms it would bring and how they would influence the Chinese economy, she said.

La Roche said the session would arouse debate not only domestically but also abroad, "because we all want China in the long run to be extraordinarily successful and to be able to transit from a growth model that's based on exports and investment to one that is more domestic consumption-oriented."

China's new leadership is "likely to initiate a number of pilot programs, which will also be China's experience when trying to look at other potential reforms, be it land reform, be it liberalization of interest rates, or the liberalization and establishment of free trade zones, such as that of Shanghai," she said.

Moreover, La Roche said she thought "the real challenges are the necessity to restructure large state-owned enterprises, which will be much, much harder to do and take much longer time."

However, "for the longer term, I'm still very optimistic," she said.

La Roche, who first visited China in 1978, said she never bet against China.

"I think we need to be a little more balanced and realistic," she said.