Chinese Economy Must Undergo Change: OECD Chief

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Last updated at: (Beijing Time) Thursday, March 28, 2002

Chinese Economy Must Undergo Change: OECD Chief

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"Fundamental changes" must be made to the Chinese economy in order to reap the full benefits of further becoming part of the world economy, according to the chief of the Economic Cooperation and Development Organization (OECD).

Donald Johnston, secretary-general of the OECD, said "A substantial reallocation of resources in economic sectors and a major restructuring of the business sector will be needed to correct widespread inefficiencies."

Johnston, who attended the China Development Forum here last weekend, said that to some extent, China's economy will not be much affected by the slowdown in the U.S. economy because of the encouraging accession of China to the World Trade Organization andthe rational and effective readjustments the Chinese government has made to its economic policies.

"The realization of China's economic potential depends on the success of its on-going domestic economic reforms," he said.

The OECD chief listed some the challenges China would be confronted with in the coming decade as: a segmented market, insufficient utilization of resources, an imbalance in economic growth, a growing gap between rural and urban areas, the slow increase in farmers' incomes, the poor educational levels of the enormous rural population, regional protectionism, a financial system which lags behind economic growth, and trade monopolization.

He suggested that the Chinese government should play an active role in eliminating regional economic segments and encourage fair competition in the financial sector.

He cited Europe as an example where the problem of different rates of growth in different areas is being solved. While emphasizing free trade, Europe also regards balanced development throughout the area important.

The OECD chief expressed his confidence in the future of China's economy. He said that the OECD hopes to further its cooperation with China.

"The OECD is convinced that China's economy has enormous potential," said Johnston, "with proper management China can be a force for prosperity in the region and throughout the world."

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