China Economic Growth Still Needs Rebalancing

China Economic Growth Still Needs Rebalancing

      The strong growth of Chinese economy is helpful for the world, but the economy, which heavily relies on external demand, still needs rebalancing, experts said inWashingtonSaturday.

      China’s economy keeps growing very fast and strongly despite the drag of external demand, with trade surplus declining significantly, a panel of economic experts said at a seminar during the Spring Meetings of the International Monetary Fund and its sister agency the World Bank, kicking off Friday here.

     “The rest of the world all enjoy low-cost production inChina,” said Pamela Cox, vice president ofEast Asiaand the Pacific Region of the World Bank.

       Chinais walking in the orientation of higher income levels as its economic productivity has improved greatly, Cox noted. “Chinais growing and changing.”

       Chinese economy is expected to grow by 8.2 percent this year, signaling a soft landing despite negative spillovers of the European debt crisis, according to the IMF’s latest World Economic Outlook report released prior to the Spring Meetings.

    China’s current account ratio of the GDP has declined from over 10 percent in 2007 to 2.8 percent in 2011, said Yi Gang, deputy governor ofChina’s central bank.

           Yi noted that this huge improvement reflected both short-term factors, such as weaker external demand, and long-term structural changes, adding that Chinahas carried out a series of structural reform in recent years by investing in social security and promoting domestic consumption.

However, experts also cautioned that Chinese economy still needs rebalancing to ensure sustainable growth, as domestic consumption is not vigorous enough.

         China’s surplus remains high and its consumption ratio of the GDP is still low, said Naoyuki Shinohara, deputy managing director of the IMF.

       Rebalancing not only inChinabut in advanced countries is critical to the world, said Vincent Reinhart, Morgan Stanley’s chiefUSeconomist.

       In the future,Chinawill continue its structural reform to encourage domestic consumption, Yi noted, addingChinaalso needs to learn experience and lessons from advanced countries in achieving this goal.
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