'Committed to reform process'

Updated: 2012-04-09 09:08

By Ding Qingfen (China Daily)

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Programs likely to be introduced gradually, World Bank chief says

China is committed to "structural reform", probably introduced incrementally, Robert Zoellick, World Bank president, said.

His comments came after a World Bank report in February, launched in conjunction with the Development Research Center of the State Council, urged China to introduce reforms to sustain economic growth in the coming decades.

"From my last visit a month ago, I came away with the sense that leaders at both central and provincial level are committed to the reform process," Zoellick said.

"If you ask me how quickly it (the reforms) will happen, my guess is that the Chinese government will probably begin with pilot programs in some of the provinces," Zoellick told China Daily in a recent interview at the Boao Forum for Asia.

"I don't expect a 'big bang', but it's very important that China continues momentum on reforms."

Following rapid economic growth, China is now at a turning point as it shifts its development mode.

In his annual government work report in March, Premier Wen Jiabao said that reforms across a range of sectors will take root and improve the standard of living. The reforms include ensuring fairer wealth distribution and supporting the private sector.

One flagship project has already been announced.

Investors in the coastal city of Wenzhou, traditionally a center of entrepreneurship, will be able to buy into local banks and set up financial institutions such as loan companies and rural financial cooperatives.

Wen also criticized the monopoly of State banks last week and pledged to end it.

European debt and the sluggish global recovery means that time is pressing for countries, including China, to implement reforms, Zoellick said.

"The world economy has improved and the European situation has stabilized," as governments focus on macroeconomic stabilization, he said.

"I am not critical of the policies ... but the message that I would bring is in addition to the macroeconomic stabilization, countries need to focus on structural reforms for growth," he said.

Vice-Premier Li Keqiang said at the Boao forum earlier this month that China's economic fundamentals are good, but the nation's economy is still imbalanced, uncoordinated and unsustainable. Innovation, tax and finance reform, boosting social security networks and job creation, will boost and balance the economy, he said.

"We will probably wait for the details of the reforms to come later, but it's my expectation that the process will be done step-by-step through pilot projects," Zoellick said.

The last three decades have seen China's GDP growth average 10 percent annually and it has become the world's largest exporter and the second-largest economy after the US.

But China faces challenges such as environmental protection, a growing wealth gap and upgrading its industrial sector.

Some research agencies have estimated that China's economy might have grown 8.4 percent in the first quarter from a year earlier, the slowest growth since the second quarter of 2009.

According to the World Bank report, China is likely to become both the largest, and a high-income economy, before 2030.

But the report did carry a cautionary note.

"China needs to implement a new development strategy in its next phase of development," it said.

Experts also said reform is needed.

"If China expects to continue to maintain overriding economic expansion, the nation must conduct a new round of systematic reforms and many sectors are in need of reforming," said Nie Riming, a professor from the Shanghai Institute of Finance and Law.

The World Bank's proposal for China to overhaul its State-owned enterprises has met opposition. Zoellick was even interrupted at a press conference launching the report by a protester who identified himself as an "independent researcher" and shouted slogans to the press.

"There will be hurdles, as there are some interest groups benefiting from the current models and structures and that's not different than any other country," Zoellick said.