China capable of maintaining high growth rate

Updated: 2012-07-21 14:02


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SYDNEY -- China was capable of maintaining a high rate of growth in coming years despite domestic and global economic challenges, a renowned Australian economist has told Xinhua.

"I think China is capable of maintaining a high rate of per capita GDP growth for another decade or so, although overall GDP growth will slow as the growth rate of China's labor force slows from the middle of this decade onwards," said Saul Eslake, chief economist of Australia & New Zealand for Merrill Lynch.

The veteran economist, who started a professional career in the financial world some 25 years ago, also brushed off the "China Collapse" theory grabbing media attention again recently following the release of the latest figures on China's GDP growth.

The latest data showed China's GDP increased 7.6 percent year-on-year in the second quarter, the lowest in three years.

"China does face a number of economic challenges, both homegrown and coming from overseas developments such as the eurozone crisis, but I think the history of the past decade also provides good reasons to be confident in the Chinese authorities' capacity to face those challenges and avoid a hard landing," said Eslake, adding he did not subscribe to any kind of "China Collapse" theory.

Eslake also predicted that Australia, as an important trade partner of China, would continue to benefit from China's growth as the world's second largest economy sought to shift its growth pattern from investment-driven to consumption-driven.

The move was good news for Australia, since an overwhelming majority of Australia's exports to China, about 90 percent, went to China's domestic consumption, an area expected to be further boosted, Eslake said.

Aside from minerals and energy resources, Australia should be able to sell more food commodities to China as Chinese people's tastes change in line with their rising incomes, he said.

On China's economic restructuring, Eslake believed it is crucial to enforce more "discipline" in investment.

He also suggested State-owned enterprises should be asked to pay higher dividends to the central or provincial governments, and be obliged to increase transparency around their financial performance.

Measures should also be taken to reduce household propensity to save, he said.

And it was also important to adjust the property market and to ensure that housing remained affordable for people on ordinary incomes, he said, adding some of the policies China had been pursuing to this end should have been applied in Western countries.