China's economic transformation 'hopeful'

HONG KONG - The outlook for China's economic transformation is "hopeful", and its new leadership has been "aware of the need" to make the transition, said Gorge Soros, the retired chairman of Soros Fund Management and founder of Quantum Fund in a recent interview with Xinhua.

"I think the initial signs (of the new leadership's financial policies) are very encouraging," he said, adding he is "optimistic" and China has been "at the forefront of economic planning".

China's 12th Five-Year Plan (2011-15) made a turning point in the country's growth model, steering the economy away from export and investment-led growth to boost domestic consumption.

"It is going to be a very difficult transformation," Soros said, adding the growth of household consumption taking one third of China's economy cannot make up for the slower growth in exports and investments, which account for two thirds of the economy.

"Therefore, the overall growth rate will have to be significantly slower than it has been up to now. That is a very important point."

He said the more than 10 percent rapid economic growth is unlikely to recur in the "more mature phase" that China is entering today.

Soros said the existing model has produced "positive results", and Chinese government has "quite substantially" accumulated reserves, such as the foreign reserve, that give them the need to correct shortcomings.

"On the whole, I think the outlook (for China's economic transformation) is hopeful," he said.

China sails through financial crisis

On China's financial regulation, Soros said the Chinese financial regulators have "a much closer and more intimate" knowledge of what goes on inside the banks, while in the West, the lack of detailed knowledge was the reason why "things went so wrong".