World Bank Raises Suggestions for China's Economy

Home>>Business

Last updated at: (Beijing Time) Tuesday, September 09, 2003

World Bank Raises Suggestions for China's Economy

A new World Bank report suggests China build on recent economic successes and take energetic policy action focused on domestic market integration and flexibility.

DISCUSSION

CHINESE

SEND TO FRIEND

A new World Bank report suggests China build on recent economic successes and take energetic policy action focused on domestic market integration and flexibility.

Also highlighted in the report, which was delivered here Tuesday, was for China to improve conditions for growth in the less developed regions and localities and address the risks to future growth and distribution performance in the country.

The report, titled "China: promoting growth with equity", took stock of China's economic performance and presented a set of policy options that could help accomplish China's objective of sustained growth with equity.

China needs domestic market integration and flexibility, since more than 70 percent of China's output will still be intended for the domestic market by 2007 although exports are likely to continue to grow rapidly, the report said.

"A movement to greater domestic market integration -- to match the rapid global integration that is taking place -- and to providing better social protection, human capital development and risk mitigation is needed to support the next stage of China's development process," said Yukon Huang, director of the World Bank China Program.

He praised China's growth and poverty reduction performance as "excellent".

"Although some increase in income inequality is inevitable during rapid growth, China is focusing more sharply on narrowing such inequalities and enhancing the quality of its economic growth," Huang said.

Huang told the press that 66-75 percent of the WB's loans for China will be poured into the country's central and western parts, mostly economically disadvantaged regions.

Large-scale poverty reduction has been one of China's greatest accomplishments during the post-1979 reform and opening-up period, he said, citing the 400 million people lifted out of poverty at the one US dollar a day expenditure level.

The report pointed out that achieving a better distribution of incomes and opportunities mainly depends on the creation of productive jobs, especially for people in the lagging regions.

In this context, the report presented the Chinese government with a policy package focusing on five areas: investing in people, promoting the diffusion of technology, facilitating urban agglomeration, expanding services and enhancing farmers' prospects.

"The Chinese government has a unique opportunity and capacity to make China's expanding economic opportunities accessible to a larger share of China's population," said Hana Brixi, leading author of the report.

"Productive jobs across China would be created more easily with effective market regulation and competition," she said.

The report identified major problems in the Chinese market, including local government protectionism, shortage of low-income housing in urban areas, weak execution of land use rights and the direct and indirect discrimination of migrants.

And the report addressed the main risks to China's future growth. Deficiencies in social security may erode risk-taking in an increasingly market-oriented society and could undermine social cohesion and public support for further reforms.

Inadequate delivery public services in poor localities could constrain future economic growth, the report said.

And macroeconomic risks -- particularly financial sector vulnerability and government contingent liabilities -- could escalate, exacerbating fiscal pressures.

To reduce the risks, the report suggested to expand the coverage of social security for the urban non-state sector and to offer some basic insurance schemes, such as protection against catastrophic illness and injury, for rural areas.

To preserve macroeconomic stability, the report reinforced its case for reforms in the banking sector.

Questions?Comments? Click here

China to Share 7% of World Export by 2007: World Bank

World Bank Official Backs RMB Rate Policy

China Making Major Contribution to World Economy: WB

When will the Immolation between the Jews and the Arabs Come to an End? ( 19 Messages)

Powell Says US-China Ties Best Since 1972 ( 10 Messages)

RMB Should Not Be Lumped Together with US General Election: Commentary ( 26 Messages)

Taiwan Huge Rally Opposes Lee Tung-hui's Split Plan ( 3 Messages)