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Highly effective investment in infrastructure by the Chinese government
and the urbanization process in China will ensure a continuous rapid growth of
the Chinese economy in the next 20 years, said a senior World Bank economist on
Saturday.
During the Southeast Asian financial crisis in 1997-98, the Chinese
government solved the economic development bottleneck by investing in
infrastructure, said Justin Yifu Lin, chief economist and senior vice president
of the World Bank. It laid a solid foundation for the development of an
export-oriented Chinese economy, he pointed out.
"Since the financial crisis in the second half of 2008, the Chinese
government implemented a dynamic financial policy and heavily invested in
infrastructure. It propelled China's economic growth and contributed to the
global economic growth as well," Lin said during the China and the Future of the
Global Economy conference at the University of Chicago.
Most developing countries face backward infrastructure. The World Bank may
consider giving more loans to developing countries to help them invest in
infrastructure, Lin said.
He said China's future economic development has greater potential compared
with other major economies.
"Currently, China is a nation with medium income, with only a 40 percent
urbanization rate. With faster development of China's urbanization, the demand
for infrastructure investment will increase which will ensure a long-term growth
of the Chinese economy," he said.
On negative factors, such as high real estate prices, affecting the Chinese
economy, Lin noted that government measures over the last few weeks "will be
able to guarantee the smooth development of the economy."
He also said a growing income gap would hurt China's economic growth.
"The growing income gap in China will be a problem for the stable and
long-term economic development. We can try to reform the financial system to
reduce the income gap in China," he said.
He thinks that the current financial system in China is too concentrated in
lending to large enterprises while a large number of small and medium companies
and people in rural areas are not able to access much-needed financial services.
Lin believes that this restricts the development of the rural areas as well as
small and medium companies, resulting in a wider income gap.
Lin said the yuan's revaluation will not solve unemployment in the United
States because products exported from China are mainly labor-intensive which are
no longer made in the US. |
