LONDON, Mar. 15 -- China's efforts of switching economic growth pattern would help to make an overall more stable world economy, said John Hawksworth, head of macroeconomics of PriceWaterhouseCoopers (PWC), one of the world's four largest accounting firms.
He told Xinhua in a recent interview that this would also ultimately be good for China in the long term. There will be a reduction in the global trade imbalances in the long run with China's efforts of shifting economic growth pattern.
China's adjustment important for world economy
Hawksworth said that China plays its part in making these adjustments, which is important for the long-term stability of the world economy. That is because China is a very important player, the world's biggest economy after the United State.
Meanwhile, he emphasized that other economies should also make adjustments and play their parts for the world economy.
He said that the United States need to control its high level of government borrowing. The same applies to European countries with high levels of borrowing.
"So all the main economies need to adjust and China is an very important element in the overall adjustment process," said Hawksworth.
He was optimistic about the prospects for China in the efforts of shifting its economic growth pattern.
"It will remain a very strong growing economy and I'm optimistic that it will meet challenges and will continue to increase its relative importance in the world economy over the next 10 or 20 years," he said.
Long-term process for China to shift economic growth pattern
With regards to the main reasons for China to shift its economic growth pattern, Hawksworth said that in the long run China wants to promote consumer spending as a big driver of growth.
China has been quite reliant on exports and investment in the past, he said. "Ultimately as China becomes a bigger part of the world economy, it can't continue to grow exports as fast as before. Also opportunities for more and more investment will be increasing. "
"In the long run, you'll be better if more of China's growth would be dependent on consumer spending," he said.
However, he said that China can not suddenly switch to consumer spending. "It has to be a long-term process and would also depend on other types of policies."
For example, he said providing better healthcare provision at the moment is quite important because Chinese households are concerned about their future health care and therefore don't like to spend money.
He also said that it might be encouraged by gradual move towards an increase in the Chinese exchange rate which would tend to reduce the price of imports and therefore boost consumption and boost the household spending power.
"It is a combination of policies which can't be done overnight, there has to be a long-term process over 10 years or more to gradually take effect," said Hawksworth.
Short- and long-term challenges for China
At the same time, Hawksworth said China is facing some short- and long-term challenges in the process of shifting its economic growth pattern.
As for the short-term challenges, he said that China has obviously put a lot of emphasis on government spending and investment to stimulate the economy during the global financial crisis.
"Although that has been quite successful, it may also have led to some dangers of an overheating with increases in property prices and asset prices," he warned.
He said that is a short-term problem which really requires a gradual tightening of monetary policy. Some restrictions on bank lending are also needed to avoid this asset price bubble getting out of control.
In his view, the long-term challenge is about moving towards an economy that is more driven by household spending.
"This is partly about encouraging households to feel more confident about the future, about providing better healthcare from the state or better pensions to the households," he said.