Challenges to growth rife: China
China fears problems such as global imbalances and domestic consumption could prove a hindrance to growth.india Updated: Sep 13, 2006 11:41 IST
China's economic reforms have progressed smoothly, but problems including global imbalances and domestic consumption could prove a hindrance to growth, Vice Finance Minister Li Yong said on Wednesday.
The country had reaped major benefits from its integration with the world economy, but uncertainties at home and abroad needed to be addressed, he told a financial forum in Xianghe, near Beijing.
Trade and budget deficits in the United States, inflationary pressures arising from high global oil prices and rising protectionism would all have an impact on China's development.
China also faced challenges in pursuing a more sustainable path of development that focused less on expanding investment and exploiting natural resources, he said.
A high propensity to save among Chinese and low consumption rates also posed a challenge, he said.
"If we can't resolve these issues, obviously they will be obstacles to our development."
Li listed improvements in the way China supervised its financial system as a major achievement in recent years.
The splitting of regulatory functions, including the setting up of the China Banking Regulatory Commission in 2003, had gone a long way to improving the system, he said.
Looking foward, China would shore up coordination between its regulatory bodies.
"The government is trying to establish a financial regulatory coordination system between the central bank and finance departments and financial regulators to address complex developments in the financial industry," he said.
Li did not elaborate.
Government officials and economists have said that China will discuss later this year whether to establish a financial super regulator to improve regulatory coordination.
A project team under the State Council, China's cabinet, has been working on the proposal as part of the agenda planning for a meeting of top policy makers to be chaired by Premier Wen Jiabao towards the end of the year, according to a government economist close to the State Council.