admininflation remained the most important challenge in the short term.
Robert Zoellick said the world’s second-largest economy would have to focus more on domestic demand, and warned that the coming months would be a “sensitive time” for many of the major developed economies.
“It’s hard for me to see that a continued reliance on export-led and investment-led growth will work for China over the next 10 years,” he told journalists at the end of a five-day official visit to China.
“And that challenge will even become clearer if the major developed countries have a hard time resuming their growth. So China needs to rebalance its economy, rely on more domestic demand, and increase consumption.”
Zoellick said inflation remained the biggest short-term challenge to China’s leaders, but that moves to rein in rising prices appeared to be working.
“It’s too early to conclude that this has been solved, but I think China has been moving in the right direction,” he said.
Beijing has been struggling to tame inflation, which hit a three-year peak of 6,5 percent in July. The August figure will be published on Friday.
The government has raised interest rates and tightened lending restrictions numerous times this year to stem a flood of credit in the economy, and allowed the yuan to strengthen at a faster pace in recent weeks to help curb imported inflation.
Zoellick also said European banks would come under pressure if governments failed to reassure investors about the security of their debt. – AFP.
Bongani Ndlovu
Online Reporter