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IMF: Chinese economy to grow fast for 25 years
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The Chinese economy can sustain its 25-year expansion at a rapid clip of
six-to-nine percent a year and its impact on the rest of the world will
be deep, a report released by the International Monetary Fund (IMF) said
Wednesday.
However, the report in the IMF's twice-yearly World Economic Outlook
said that failure to reform would spell trouble for China.
"Looking ahead, further implementation of key structural reforms could
allow China to maintain economic growth of about six to nine percent
although setbacks in the reform process would carry serious downside
risks to the growth outlook," it said.
In the long-run, China was likely to play a bigger global role than any
of the other post World War II economic powers such as Japan, or
Southeast Asian nations, said the report by IMF analysts.
It said that industrialized economies would be enriched by cheaper
labor-intensive imports, and by greater Chinese demand for services and
imports requiring high skills. And other developing countries would have
a bigger opportunity to export commodities and manufactured goods
requiring reprocessing to China.
The outlook for China itself depended heavily on its commitment to
reform. And a freer financial sector would let more credit flow to the
economy, it said.
The report said an expanding labor force would only contribute about
0.25 percentage points to the pace of economic growth. But a shift of an
estimated 150 million surplus workers in agriculture to industry and
services would boost productivity by one to two percentage points.
Sizable foreign investment would still play a key role in boosting
efficiency and introducing new technologies, allowing China to raise
total productivity by two-to-four percent if it addressed priority
reforms, it said.
It said one of China's top tasks is strengthening banks balance sheets,
making them more market-based, and developing financial markets so as to
improve the allocation of investment.
Other top tasks include setting up a well-functioning labor market to
facilitate the migration of labor, reforming state companies, and
shoring up long-term government finances.
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