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‘China could sustain 6 per cent growth rate in medium term’
October 16, 2017
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NEW YORK: Chinese economy could sustain current growth rate of over 6 per cent for the foreseeable future, a US expert has said.

“The growth rate has come down from the previous eight or 10 per cent, but that is still a very healthy rate and that should be the envy of any other country in the world,” Farok Contractor, a distinguished professor at Rutgers Business School, told Xinhua.

Contractor noted that China has made enormous progresses in economic development for the past five years, highlighting poverty reduction and RMB internationalization.

“Today there are only about 50 million Chinese left in grinding poverty, according to the World Bank’s criterion, so that’s a wonderful accomplishment not just for China but for the whole world,” he said.

Having visited China for many times, the professor noticed that income inequality in the country is being addressed, and that “more attention is being paid to relatively poor provinces like Guizhou.”

“There has been a more balanced distribution of benefits and more balanced growth,” he added.

In terms of finance, the expert lauded China’s continuous efforts in liberalizing its foreign exchange market.

He pointed out that one of the related achievements is the “inclusion of the Chinese RMB into the IMF’s SDR basket, which is putting it on the path to becoming a recognized internationally tradable currency.”

Rather than adopting large-scale stimulus, China has been intensifying efforts to shift the economy towards consumption, services and innovation.

The expert believed such structural reform could help the country to maintain a more sustainable growth rate.

“I think China will continue the 6-per cent growth rate for the foreseeable future, because the population is over 1.3 billion... there are more and more people coming out of the lower middle class into the middle class status,” said Contractor.

“Encouraging the consumption of the lower middle-class will give a stimulus or boost to the Chinese domestic economy,” he added. Moreover, he was also optimistic about the prospect of innovation in China.

“China is emerging as a R&D (research and development) center and there is a prospect of a few cutting-edge technologies, especially in biotechnology or in solar where China can become a leading contributor to the development,” he said.

Reuters

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