China economic growth benefits world, 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 here Saturday.

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 in China," said Pamela Cox, vice president of East Asia and the Pacific Region of the World Bank.

China is walking in the orientation of higher income levels as its economic productivity has improved greatly, Cox noted. "China is 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 of China'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 China has 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 in China but in advanced countries is critical to the world, said Vincent Reinhart, Morgan Stanley's chief U.S. economist.

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