Reform orders, labor market flexibility important

NEW YORK - How to increase China's labor market flexibility and optimize the order of different reforms with the goal of financial stability and higher efficiency are two major issues the country needs to think of in its medium-term reforms, an expert said Sunday.

"What should be paid attention to is the meaning and relationship of five financial reforms, especially the optimal order of them, namely the reforms of banks' risk management, risk supervision of the regulatory system, market-oriented interest rates and exchange rates, opening of capital account and internationalization of the Chinese yuan," Wei Shangjin , professor of Finance and Economics at Columbia University, told Xinhua.

From the perspective of financial stability, the best order is to strengthen risk management and regulation ability first, followed by deepening market-oriented interest rates and exchange rates, and on that premise can other reforms be considered, he said on the sidelines of a forum.

The other issue that demands attention is a less flexible Chinese labor market now compared to a very flexible one in the past, Wei said.

If the labor market becomes relatively less flexible or even "stiff" like some European countries such as France or Italy, it may restrain China's growth, especially when facing negative impacts like a financial crisis, he added.

Talking about the newly-coined word of "Likonomics," which refers to Chinese Premier Li Keqiang's economic policies, Wei said it is just a fancy word created by some investment banks.

Premier Li's economic policies were interpreted by some investment banks as no stimulus, deleveraging and structural reform. However, Wei pointed out that the Chinese government has not yet fully disclosed its detailed economic strategies, goals or measures, thus the definition of the so-called "Likonomics" is just their guess.