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People's Daily Online>>China Business

Reforms or face a crisis, China told

By Wang Yanlin   (Shanghai Daily)

09:22, February 28, 2012

China could face an economic crisis unless it pushes its reforms to a much deeper level given its growth model, the World Bank warned yesterday in a report that also urged it to reduce the dominance of state-owned companies and promote free markets to achieve its goal of becoming a high-income society.

China's sizzling economic growth over the past 30 years has come to a point where it is prone to an abrupt slowdown without any warning signs, a case of the "middle-income trap" encountered by many emerging economies, the report said.

A sudden slowdown could worsen inherent problems affecting the banking sector and other industries and even bring about an economic crisis in the world's second-largest economy, the report said.

The report's emphasis on curbing state-owned businesses clashes with China's strategy over the past decade of building government-owned champions in fields from banking to technology and is likely to provoke opposition. "As China's leaders know, the country's current economic growth model is unsustainable," said World Bank President Robert Zoellick at a conference about the report, co-authored with a Chinese Cabinet think tank, the Development Research Center. China has reached a "turning point" and needs to "redefine the role of the state," Zoellick said.

The report highlights the fact that after three decades of reforms which allowed Chinese entrepreneurs to become world leaders in export-driven manufacturing, state companies still controll domestic industries from steel and airlines to oil and telecommunications.

Government companies are supported by low-cost credit from state banks and business groups complain regulators shield them from foreign and private competitors despite China's market-opening pledges.

By adopting a new growth strategy, China will increase its stake to become the world's largest economy before 2030, the report said.

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Leave your comment6 comments

  1. Name

wende at 2012-02-2971.255.84.*
Just remember that IMF, WB and a lot of the int"l organizations are tools set up by the west, specially the US to subjugate and control other countries. These organizations had destroyed many non-west countries in the past. China should work out its own problems and should not take the advice of WB hook, line and sinker. These organizations are tools to destroy China if China is not careful.
haha at 2012-02-2958.166.44.*
"This was and remains the US plan to surplant Socialism with Capitalism cheap labor exploitation for US multi nationals"This has been what is occuring for the last 30 years so who knows what world you live in.
McCarthy at 2012-02-28206.125.76.*
Sure. The Capitalist model of anything goes Capitalism has worked so well for the United States and EU, they believe China should also walk off the cliff. This was and remains the US plan to surplant Socialism with Capitalism cheap labor exploitation for US multi nationals and undermine the Communist government and replace it with a pro capitalist pro US one. Instead of meddling in China they should first get their own house in order.
PD User at 2012-02-2860.53.51.*
Yeah, do what the West and its quislings in China want, and finally sell China off lock, stock, and barrel.
helen at 2012-02-28203.82.92.*
Prescription by an American must be taken with a ton of salt. Everything coming from the US controlled IMF and World Bank has an ulterior motive behind it.China must continue to do what is right for her economy and its people.

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