Reliance on investment should be reduced, says IMF

As China's economy becomes less dependent on exports, care has to be taken not to let future growth become too dependent on investment.

That's according to Il Houng Lee, the International Monetary Fund's senior resident representative in China, who added that it remains vital to determine exactly what is the best amount of investment for the country, as it changes its economic growth model from an export-driven economy to one more reliant on domestic growth.

Lee said he didn't think there would be a "hard landing" for China in the short term, but he warned of continued risks if the level of investment remains at current level.

He said that despite benefiting from the strong growth by developed countries in the past, as well as strong investment in China, both growth engines have hit problems at the moment and need to be adjusted.

China's economy has become more sensitive to external economic influences, evidenced by recent economic figures, which show growth has slowed for seven consecutive quarters.

Lee said the most pressing need now is to transform the economic model into one less dependent on advanced economies, and more focused on encouraging domestic consumption.

One possible answer for the first challenge is to expand the country's trade within Asia instead of exporting more to advanced economies, he said.

" And China has to lower its reliance on investment.

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