China will keep its fast economic growth in a more balanced way
this year thanks to policy adjustments, a top Chinese banking
executive said on Wednesday.
"I think China is doing very well... and I would see China will
even have a better year this year," Min Zhu, group executive
vice-president of the Bank of China, told a seminar on the world
economic prospects at the World Economic Forum Annual Meeting held
in Davos, Switzerland.
China, one of the main drivers for the world economy, kept its
fast expansion in 2006. Zhu predicted that the Chinese GDP growth
rate last year would remain at the high level of 10.5 percent, over
two times more than the world's average, which was estimated at 3.9
percent by the World Bank.
At the same time, Chinese consumer price inflation stood at only
1.3 percent last year, and producer-price inflation at only 1.9
percent.
The faster-than-expected growth was achieved with prices under
control and profit earnings on increase, which means China is
improving efficiency, Zhu said.
Although there are widespread concerns about the threat of
overheating economy, Zhu said the Chinese government has
implemented serious policy adjustments since the second half of
last year. With those measures in place, China is going to
re-balance the economy by slowing down export-led growth and
cooling down over-investment.
"We see all these things in place now. This year we will have an
also strong growth, but much more balanced," Zhu said.
Despite robust growth, China is facing pressure for its climbing
foreign reserves. Zhu said the foreign reserves are likely to
continue growing in 2007, which passed US$1 trillion for the first
time in 2006.
Although some Chinese people seem excited about the money, Zhu
said he himself sees it as an increasing liability rather than free
money.
The US government has been pressing China to accelerate
appreciation of Chinese currency RMB as a way to solve its own
deficit problem.
Zhu said China would likely move slowly with any upward
revaluation of RMB, but also noted that no US policy action has
been taken to boost savings, widely considered as part of the
problem driving the US trade deficit.
"It's much easier for China to make its exchange rate more
flexible than for the US to raise its savings..." Zhu said. "The
ball is not in China's court. It's in the middle of everybody's
court."
(Xinhua News Agency January 26, 2007)
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