China set for 30 more years of fast growth
China's star economist: World Bank's chief economist Justin Lin Yifu says China needs to raise interest rates to cool its red-hot property and stock markets. Picture: AFP
Saturday, March 8, 2008
CHINA'S economy will keep growing fast for up to 30 more years thanks to its vast domestic market and foreign investment, incoming World Bank chief economist Justin Lin Yifu said yesterday.
"For the prospect of China's development, as you know I'm an optimist and I believe China is absolutely likely to see high-speed growth for 10, 20, or 30 years," Lin, a Chinese professor, told reporters at a press conference here.
"There is quite a large amount of room for China's industry to be upgraded, and also China has a vast domestic market.
"Meanwhile, foreign investors, either taking China as a manufacturing base for exports or a market that keeps expanding, will (continue to) come to invest in the country."
China's historic economic transformation began 30 years ago when the nation's then-leader, Deng Xiaoping, began a capitalist reform programme under the firm control of the Communist Party.
Since then, hundreds of millions of people have been lifted out of poverty and China's economy has grown to become the fourth biggest in the world.
But with China's inflation hitting an 11-year high in January and economic growth rising at double-digit pace for a fifth straight year in 2007, there are concerns in Beijing over overheating and potential social unrest.
In a bid to cool the economy, the government has raised the amount of money banks must keep in reserve 11 times over the past 14 months and hiked interest rates six times in 2007.
Lin argued that interest rate hikes were a better tool than reserve ratio rises for China.
"I am personally in favour of using interest rate policies (more often)," said Lin.
He explained that the problem with reserve ratio hikes was that small and medium-sized enterprises the main providers of jobs were often the first to lose access to credit.
Lin, the founding director of the China Center for Economic Research at Peking University, was named last month as the World Bank's next chief economist, and will take over the position in May.AFP
"For the prospect of China's development, as you know I'm an optimist and I believe China is absolutely likely to see high-speed growth for 10, 20, or 30 years," Lin, a Chinese professor, told reporters at a press conference here.
"There is quite a large amount of room for China's industry to be upgraded, and also China has a vast domestic market.
"Meanwhile, foreign investors, either taking China as a manufacturing base for exports or a market that keeps expanding, will (continue to) come to invest in the country."
China's historic economic transformation began 30 years ago when the nation's then-leader, Deng Xiaoping, began a capitalist reform programme under the firm control of the Communist Party.
Since then, hundreds of millions of people have been lifted out of poverty and China's economy has grown to become the fourth biggest in the world.
But with China's inflation hitting an 11-year high in January and economic growth rising at double-digit pace for a fifth straight year in 2007, there are concerns in Beijing over overheating and potential social unrest.
In a bid to cool the economy, the government has raised the amount of money banks must keep in reserve 11 times over the past 14 months and hiked interest rates six times in 2007.
Lin argued that interest rate hikes were a better tool than reserve ratio rises for China.
"I am personally in favour of using interest rate policies (more often)," said Lin.
He explained that the problem with reserve ratio hikes was that small and medium-sized enterprises the main providers of jobs were often the first to lose access to credit.
Lin, the founding director of the China Center for Economic Research at Peking University, was named last month as the World Bank's next chief economist, and will take over the position in May.AFP
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