The global financial crisis has had a limited impact on China because the government there introduced stimulus measures and exercised cautious control of the financial sector, but China should seek to depend less on exports to avoid external shocks, a visiting Chinese economist said yesterday.
Ba Shusong (巴曙松), deputy director-general of the Institute of Financial Studies under the Development Research Center of the State Council, told an audience in Taipei that China managed to emerge from the financial crisis relatively unscathed because Beijing adopted an aggressive stimulus valued at 4 trillion yuan (US$585 billion) in a timely manner.
The package helped boost domestic demand and alleviate the pain caused by falling exports, Ba said.
He recently predicted China would recover double-digit GDP growth in the fourth quarter after its economy expanded 6.1 percent and 7.9 percent in the first and second quarters respectively.
Ba said he suggests Beijing return to a moderate currency policy, saying credit availability is too loose and may have negative effects after economic stability has been achieved.
Ba said Chinese financial institutes had not incurred huge losses amid the market turmoil because of their low degree of globalization as well as cautious oversight by regulators.
Meanwhile, the contribution of exports to China’s economy proved less significant than expected, he said.
Looking ahead, Ba said China should embark on a bold and long-term reform of its economic structure and cut dependence on exports.
“It is a great challenge to transform from an export-oriented economy to one driven chiefly by domestic demand,” the economist said. “Companies in different sectors will have to make substantial adjustment and manufacture products for demand at home rather than consumers in the US and Europe.”
Ba said the change would take a long time, but the urbanization program in many parts of China could play a sustained and effective role.
The program, carried out on a citywide basis, had helped strengthen local infrastructure facilities as well as boost property transactions and overall GDP growth, he said.
In addition, Ba said the Chinese yuan should seek to become a major international currency although to do so would be a long-shot.
“China does not have to buy so many US government bonds if the yuan assumes more importance on the world stage,” he said.
He said Beijing could seek first to integrate regional currencies before the yuan could emulate the status of the greenback.
Also to that end, Chinese banks should upgrade and recruit talent rather than overly depend on credit loans, Ba said.
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