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IMF: China's economy to grow fast for 25 years
(Xinhua)
Updated: 2004-04-15 11:07
The Chinese economy can sustain its 25-year expansion at a rapid clip of six-to-nine percent a year and its impact on the rest of the world will be deep, a report released by the International Monetary Fund (IMF) said Wednesday.
However, the report in the IMF's twice-yearly World Economic Outlook said that failure to reform would spell trouble for China.
"Looking ahead, further implementation of key structural reforms could allow China to maintain economic growth of about six to nine percent although setbacks in the reform process would carry serious downside risks to the growth outlook," it said.
In the long-run, China was likely to play a bigger global role than any of the other post World War II economic powers such as Japan, or Southeast Asian nations, said the report by IMF analysts.
It said that industrialized economies would be enriched by cheaper labor-intensive imports, and by greater Chinese demand for services and imports requiring high skills. And other developing countries would have a bigger opportunity to export commodities and manufactured goods requiring reprocessing to China.
The outlook for China itself depended heavily on its commitment to reform. And a freer financial sector would let more credit flow to the economy, it said.
The report said an expanding labor force would only contribute about 0.25 percentage points to the pace of economic growth. But a shift of an estimated 150 million surplus workers in agriculture to industry and services would boost productivity by one to two percentage points.
Sizable foreign investment would still play a key role in boosting efficiency and introducing new technologies, allowing China to raise total productivity by two-to-four percent if it addressed priority reforms, it said.
It said one of China's top tasks is strengthening banks balance sheets, making them more market-based, and developing financial markets so as to improve the allocation of investment.
Other top tasks include setting up a well-functioning labor market to facilitate the migration of labor, reforming state companies, and shoring up long-term government finances.
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