Economists call for more reform to fuel China's long-term growth

A survey by the national television station CCTV has found that 88 of the 100 respondents, who include leading economists and entrepreneurs, agree that China is facing "serious inflation." However, a high economic growth rate is expected by 64 of the 100 respondents, either with or without a high inflation.

The respondents are mostly Chinese but also include Stephen Roach, chief economist of Morgan Stanley, a global investment bank giant based in the United States.

Only 12 of them do not agree that the inflation is a big problem in China. But despite widespread concern over inflation, reform is higher than curbing inflation on the policy agenda for 2011.

For example, one of the respondents, Li Daokui, an advisor of the central bank, has not seen any underlying foundation for a long-term price hike. Given that, the momentum can be eased next year.

Of the respondents, 43 said economic restructuring takes priority over taming inflation for next year's agenda. And reform is the key word to achieve that. "Reform is the only way to remove the systematic barrier" to pave the way for the economic restructuring, said Wu Jinglian, a noted economist at the Development Research Center of the State Council.

How well the reform will proceed next year is also regarded as a measure of the foundation of China’s economic growth. Compared with the forecast on the speed of the growth next year, they pay more attention to the mechanism building, which is the real engine for the economic recovery.

On one hand, no prospect of any sharp shrinking is on the horizon, although a moderate slowdown is likely. But on the other hand, only 46 percent of the respondents are confident enough on the foundation of China's economic recovery. The remaining 54 percent do not agree or at least see uncertainties in that foundation.

Jia Kang, head of the institute under the Ministry of Finance, said statistics cannot reflect the real development of reform. Ba Shusong at the think tank under the State Council hopes that substantial progress could be made on strategic emerging industries and the reform of wealth distribution.

That does not mean that they are downplaying the importance of curbing the inflation. At least it will be more important in 2011 than it is now. But they are divided on how to do that. Some proposed to raise the interest rate to at least higher than the rate of inflation. Others prefer more market supply to relieve the public's jitters over rising prices.

When it comes to the global economy, 43 of them predict stability for 2011, while about 40 percent forecast slight decline. Only 13 see the prospect of sustained growth, while even fewer, four, see the possibility of a double dip.

Generally they do not think that the quantitative easing action by the United States could take effect very soon. Neither do they believe it is realistic to expect the fast growing emerging markets to boost the global economic growth.

By Li Jia, People’s Daily Online