by Niu Hairong
NEW YORK, July 19 (Xinhua) -- The global economic downturn exerted heavy pressure on emerging countries, but China still has the ability to achieve a stable economic growth along with structural adjustment, a UN economist said Thursday.
Hong Pingfan, chief for Global Economic Monitoring of the UN Department of Economic and Social Affairs (DESA), told Xinhua in an interview that the current world economic situation was unfavorable for an export-oriented emerging economy like China.
"As major trade partners like the United States, Japan and the European Union all suffered apparent economic slowdown, the external demand for Chinese goods has seen a notable decrease in recent months, which added to the downward pressure to the Chinese economy," he said.
The latest data showed China's gross domestic product increased 7.6 percent in the April-to-June quarter, the first time for China to report a growth rate below 8 percent in three years, which spurred concerns and speculations over a hard landing for the world's second largest economy.
"Under such circumstances, if Chinese government failed to adopt appropriate policies and take effective measures to stop the external risks from expanding, the possibility of an economic hard landing does exist in theory," said Hong.
However, unlike other smaller export-dependent economies in Asia, China has a different economic structure, which gives it the ability to alleviate the external pressure through internal structural adjustment, he said.
In the face of the current challenges in global economy, Hong believed that China needs to continue with market economy reforms while taking into consideration both goals of "stable growth" and "economic restructuring."
Hong said that for China, which is still a developing country, it should not overemphasize the pace of development. However, it is important to maintain a relatively rapid growth rate, he added.
Given China's demographic structure and potential for technological advancement, it is attainable for China to keep a growth rate of 7 percent to 8 percent in the next decade.
Hong argued that maintaining a relatively fast growth and restructuring the economy can actually go hand in hand. For China, there are three issues which should be addressed at this point.
First of all, it's necessary to find the best way to judge whether the existing structure is working or not. "When China introduces a policy, it should not solely rely on macroeconomic indexes, because they are too general and short of much economic implications," said Hong. "The best way is to see whether resources are allocated in the most efficient way from the perspective of market economy."
Secondly, the government needs to identify what has caused the problems in current economic structure on the basis of how market operates, and let the market play a bigger role in allocating production factors.
He stressed that "it is important to know whether there is artificial monopoly in competitive industry, and whether there are any excessive profits controlled by the monopolized industry. If there is, the government must intervene and stop it."
Thirdly, it's important to intensify institutional reforms, change the role of the government from "an athlete" to "a referee," and improve the government's services and its administrative ability.
Hong believed that China has recognized the importance of stopping the economic downturn, and has adopted a number of monetary policies. But such steps need to be accompanied by certain fiscal incentives when necessary.
"To achieve a stable economic growth is not only important for China, but also crucial to the rest of the world," Hong said.