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| IMF Chief Calls for Public Spending to Help Boost China's Consumption |
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The Chinese government needs to shift spending to health, education and welfare to help boost consumption and refocus economic growth, the head of the International Monetary Fund (IMF) said in Beijing on Friday. IMF managing director Rodrigo de Rato Figaredo said he strongly supported the government's plans for a wide range of far-reaching social and economic reforms. Rato, who is in Beijing on his fourth visit to China as IMF head, said he agreed with the authorities that sustaining China's rapid pace of growth required refocusing the economy away from its heavy dependence on investment and exports and towards consumption. He said it also meant that prosperity be shared more equally across society, which required rural-urban income discrepancies to be addressed, and environmentally sustainable economic development. He said fiscal policy had a central role in China's economic balancing. "To increase consumption and reduce savings, China's households need to be reassured of adequate provision of health care, education and pensions, with a shift in public expenditure to these areas." Rato met with Premier Wen Jiabao earlier on Friday, and held what he called "fruitful discussions" with Finance Minister Jin Renqing and People's Bank of China Governor Zhou Xiaochuan. "Rebalancing such a large economy will require a wide range of policy reforms, and China's policymakers are keenly aware of what needs to be done," he told reporters. "In the near term, curbing rapid credit and investment growth continues to be critical to prevent overcapacity in certain sectors, and to put growth on a more sustainable footing. Improving the intermediation of China's large savings through further strengthening and developing the financial system and capital markets is key." He welcomed the priority these factors were given in the outcome of the National Financial Work Conference, held last week to set out the country's financial reform, he said. He said he had been impressed by China's continued strong economic performance. "China has transformed itself into a major economic powerhouse through rapid growth, job creation, and poverty reduction," he said. China registered a 10.7 percent economic growth rate for 2006. On the prospects for the global economy and the reform of the IMF, Rato said he and senior Chinese finance and central bank officials agreed the outlook was for continued strong growth, with China making an important contribution, and that risks to global growth had moderated in recent months. "China's continued economic success and stability have become more important for other countries in the region and worldwide," he said. "With the vision of its leadership and their resolve to tackle the challenges that China faces, I am confident that China will continue on its path to achieve greater economic prosperity," said Rato. (Xinhua News Agency January 27, 2007) |
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