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China's growth good news for world: economist

(Xinhua)

14:19, February 25, 2012

WASHINGTON - China's fast economic growth is a boon to the rest of the world, but the country needs to master several challenges in adjusting its economic growth model by reducing reliance on exports and boosting domestic consumption, a US economist said.

In an increasingly intertwined world, other nations should cooperate with a fast-growing China through multilateral mechanisms, Arvind Subramanian, a senior fellow at the Washington-based Peterson Institute for International Economics, told Xinhua in a telephone interview.

If China maintains its fast economic growth, it is "unambiguously good news" for the world, he added.

"If China grows, the rest of the world benefits," as China will increase its demand for exports from other nations, the renowned expert said.

Domestically, more and more Chinese will be lifted out of poverty and enjoy better lives as the economy continues to expand, Subramanian said.

As China is trying to transform its economic growth model, many industries have to adjust to changing economic and financial landscapes, he said.

He also offered some suggestions on how to improve the quality of China's growth. For example, the expert said many price distortions need to be minimized, and that cheap loans have contributed to over-investment, which has environmental consequences. Furthermore, the price of energy needs to be adjusted, which would also help solve environmental problems, he said.

Moreover, China needs to further open up its financial sector, while state-owned enterprises have to adjust in the process as they might lose easy excess to credit, Subramanian said. China's export sector also needs to adjust because the nation is shifting its focus from manufacturing to services, he believed.

Subramanian pointed out that any change in growth strategy comes at a price, adding that "the reason to do it is that if you persist in the current strategy, in the future there will be much greater costs. That's the reason for adjusting earlier."

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