China's growth still encouraging
Updated: 2013-06-07 01:35
CHENGDU - China's growth trend is encouraging and the successful transformation of its economic structure will create significant opportunities for the world, US economist Stephen Roach said Thursday.
"There is too much focus on the overall rate of GDP growth," Roach said while attending the ongoing 2013 Fortune Global Forum in Chengdu, capital of west China's Sichuan province.
China's GDP grew 7.7 percent year on year in the first quarter, renewing concerns over insufficient growth momentum.
But Roach is still optimistic, saying that a mix of economic data shows that China's economy is still in good shape.
In the first quarter, China's service sector grew by 8.3 percent year on year, indicating that its economy is becoming increasingly service- and consumption-led, the economist said.
"I am encouraged that this is the right path for China. China does not need to go back to 10-percent GDP growth. In fact, that would worry me," Roach said.
By the end of 2015, the growth rate will likely slow to about 7 percent, which will actually benefit China, the economist added.
Roach said China's consumption and service sector as a portion of GDP are still far below those of other major economies, creating a large opportunity for the country's major trade partners.
He said there could be growth of 5 to 6 trillion US dollars in China's tradeable services sector from now until 2025.
Roach said China's recent economic slowdowns were the result of crises in Europe and the US, its two largest foreign markets.
But Roach said the two shocks have in fact "worked to China's advantages." Although the crises challenged China's export-led growth model, the country should see the crises as an opportunity to stimulate internal demand, especially private consumption, he said.
Roach said it is urgent to expedite the implementation of a consumer-led economic model.
"The debate is over. The only question left is implementation. My advice is China should move very quickly in that regard," he said.
He said the agenda includes developing the service sector, funding the social security net, reforming the residential permit system and revamping state-owned enterprises.
When asked about the upcoming summit between President Xi Jinping and U.S. President Barack Obama, Roach said building a confident personal relationship between the two leaders will be the single most important result of the meeting.
He said he hopes both sides will discuss the impact that their economies will have on future relations.