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A 'strong' Chinese economy needed: World Bank chief

2014-07-08 08:16 China Daily Web Editor: Qin Dexing
China has seen tremendous success in its yuan program, World Bank Group President Jim Yong Kim told China Daily. WU ZHIYI/CHINA DAILY

China has seen "tremendous success" in its yuan program, World Bank Group President Jim Yong Kim told China Daily. WU ZHIYI/CHINA DAILY

Restructuring will bring sustainable growth, World Bank president says

The world needs a strong Chinese economy over the long run, not the short run, as the nation's economic restructuring will lead to more sustainable growth, said Jim Yong Kim, president of the World Bank Group.

The most important thing for China to do is to get on a path of more sustainable growth, Kim said in an interview with China Daily on Monday.

"The growth that comes with the reforms is going to be more sustainable in the long run ... We strongly encourage the Chinese government to continue down that path of reform," said Kim.

China's economic growth is being driven by domestic consumption on the demand side and manufacturing on the supply side, a shift from a model driven by exports and investment.

"We think these are very smart things to do. We need a strong Chinese economy over the long run, not just the short run," he said.

Growth in China is expected to decrease marginally to 7.6 percent in 2014 and 7.5 percent in 2015, from 7.7 percent in 2013, according to a recent World Bank report.

"I'm less concerned about the shrinkage in what was just extremely high level of growth ... my own view is that maintaining this reform program over time will lead to strong and sustainable growth," said Kim.

International Monetary Fund Managing Director Christine Lagarde said on Sunday that the IMF doesn't expect a "brutal" slowdown in China.

"Looking at emerging Asian countries, and in particular China, we are reassured because we do not see a brutal slowdown but rather a slight slowing of growth that has become ... more sustainable and that we see at 7 to 7.5 percent this year," Lagarde was quoted by Bloomberg News as saying.

Kim said there has been "tremendous success already" in the internationalization of the yuan, and the currency will become even more internationalized as the financial sector gains strength.

The World Bank has issued several yuan-dominated bonds, with the latest launched in London. Some of the bank's loans and other instruments in the yuan are welcomed by its client countries, particularly developing countries that do lots of trade with China, he said.

Kim said one of the reasons for his trip to Beijing is to present to the Chinese leaders the World Bank's latest Urban China report. It was compiled with the Development Research Center under the State Council, a top think tank.

In China, about 500 million people have moved to cities since 1978, the largest urbanization shift in history. It has been forecast that another 300 million people will move to the nation's cities in the next 20 to 25 years, making China the first country to have 1 billion city dwellers.

Inevitably, this kind of rapid urbanization can lead to problems such as air pollution, Kim said. The World Bank suggested several steps for the Chinese government, including liberalization of rules on hukou (urban residency permits) and better urban planning.

There are ways to make cities denser and more compact, but also cleaner and more livable, by introducing clean transportation and making services more centralized and uniform, said Kim.

Also, cities need to be self-financing. Cities need to have more sustainable and broader sources of financing, which could be achieved through reforms in the tax system that would ease reliance on local land sales. At the same time, farmers need to be given more land rights, he said.

"China can do things that very few countries at this level of GDP per capita can do ... We have a chance to demonstrate to the rest of the world a process of urbanization that would be a model. I think that's the goal of the Chinese government, and that's certainly our goal in coming here," Kim said.

Kim: Commitment to fight pollution 'admirable'

As a World Bank president trained in the sciences, Jim Yong Kim feels it is his role to tackle some issues related to the global public good, particularly climate change.

Roughly 70 percent of the work that the World Bank does with China is related to climate change and sustainability, ranging from energy efficiency to the development of carbon trading, Kim said.

"One of the things that most people in the world don't realize is that China has made a huge commitment in terms of reducing its carbon intensity," he said.

The country has set a national target to cut carbon emissions per unit of GDP by 40 to 45 percent between 2005 and 2020.

"That's an incredibly ambitious goal. We applaud China's commitment to that particular issue," Kim said.

Kim said he has witnessed a "renewed sense of urgency" on the part of the Chinese government in tackling not only climate change but also related issues like air pollution.

"There is no question that China is still one of the largest emitters in the world and has to deal with this problem, but the level of ambition is admirable," he said.

He said that the World Bank will help China come up with innovative solutions and achieve strong economic growth with a cleaner approach.

Kim is a Harvard-trained Korean-American physician and anthropologist. He is making his third official visit to China since becoming the 12th president of the World Bank Group in July 2012.

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