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PBOC: China set for 30 more years of fast growth

(Xinhua)
Updated: 2008-06-26 20:03

BEIJING  -- China's economy will grow rapidly during the next 30 years, despite a slight slowdown at present, Fan Gang, a well-known economist and member of the Monetary Policy Committee of the  People's Bank of China (PBOC, the central bank) told an economic forum on Wednesday.

Higher productivity had been a major factor in China's economic growth and would continue to play a role in the coming decades, Fan said.

Delivering a review of three decades of reform and opening up policies that were instituted in 1978, Fan said market-oriented reforms, education and research, opening to foreign investment and urbanization had helped drive productivity growth.

"The effects of those factors will persist in the next 30 years. That's why I'm confident" of China's continued growth prospects, he said.

Rising productivity had contributed about 40 percent of China's average annual 9 percent growth from 1999 to 2005, with investment and human capital accounting for the remainder, said Fan.

Although labor might become scarcer and costlier over the next three decades, the delayed effect of education and research would play a bigger role, he said.

"The share of foreign investment in total investment is dropping, but the knowledge China gained from foreign-funded enterprises will be of more use in the future," said Fan.

Fan didn't give specific figures on the changing relationship between foreign and domestic capital, and the government doesn't break down total investment in that manner.

Meanwhile, there was still much room for further reforms in government efficiency, state-owned enterprises, pricing mechanisms and the financial and tax systems, which could unleash further economic dynamism, Fan said.

"China has finished only half or less of its reform journey," he said.

Gross domestic product (GDP) expanded 11.9 percent last year, the fifth year of double-digit growth. However, GDP grew 10.6 percent in the first quarter, down 1.1 percentage points year-on-year, on weakening external demand and the worst winter storm in more than five decades.

"Growth only slowed a little; [the economy] was not in stagnation. It was still running at double-digit speed," China Business News quoted Fan as telling reporters at the forum.

A report released by Renmin University of China and Donghai Securities earlier this week said the economy was decelerating from a record growth pace.

It forecast the economy would grow at a slower annual rate of 10.4 percent in 2008 because of the deteriorating external environment and the domestic tightening policy.

The World Bank last week raised its forecast for China's 2008 economic growth to 9.8 percent from 9.4 percent, down from the 10.8 percent forecast made in mid-2007.