3. The World Economic Outlook 2016 issued by the IMF calls for countries all over the world to use coordinated cooperation and effective policy levers to boost the growth prospect. What's your opinion on using these two tools properly?
Global policy coordination is essential that many institutes endeavor to achieve, including IMF, which is dealing with monetary policies, and also World Bank and other regional banks, they also facilitate the bilateral communications between governments. I think one thing I want to mention especially and which is a new creation, is Asian Infrastructure Investment Bank (AIIB), which would give a big boost to modern trade in infrastructure development. Because from now on we would have really professional infrastructure investment bank based in Beijing, which is an extending to financing the whole region in Asia, so that is a positive bank cause it allows countries to improve their potential growth in infrastructure. If we trace back to history, when you have roads, infrastructures, trade and connectivity, then you need many services: communication, transportation, all these services create jobs and economic activities. So it's not only win-win for China but also win-win for anyone who's in the other side, who's taking advantage of these would eventually benefit from them.
4. People are paying very close attention on whether the property market could sustain stable development and whether private investment would grow. What do you think these two areas will look like in 2017?
The fundamental of property market in China would continue to be long term positive. This is because it has large population whose living standard and requirement of housing quality is improving, cities are developing. Of course the growth rate maybe a little lower than what was before, but it's still positive impressive growth. So as for real estate market, maybe the price growth is not there, while the demand would be still there, based on the large population's needs for better housing.
The suggestions I could give is that real estate developers should be careful when they're producing houses, to choose right types for target markets, to rely on the real need of market. Instead stick to growth agenda, they should be smarter and be specific on customers.
5. The research department of PBOC pointed out, compared to other economies, the ratio of debt and GDP in China's non-financial sector is still reasonable, while the leverage ratio of the corporate sector maintains high and keeps moving forward. Would you give some suggestions for de-leverage? Evidence from other countries improve that for the first two years of de-leverage process, it somehow could pose negative influences for economic development, after this period then it could achieve rebound. How could we control the short-term negative influences brought by de-leverage?
PBOC is really professional central bank, within the banking system, private sector should be very cautious about how much they're borrowing and what the leverage is. Because I believe that banks themselves are also very cautious, if there are too much leveraging, they would not lend any more. And also PBOC act as regulator, it would oversee each bank to see their portfolios, to prevent them from over-lending. It's a very important point and we must highlight it repeatedly because in the history there are full of examples that crisis happened because of leverages. I'd prefer leave this problem to central banks and the regulators; they're really qualified to deal with it. I'm also impressed that China's ministries and central bank governor, they're quite professional people.
If in the short term, de-leverage may bring negative influences to economy, it's the regular pattern of economic development, you may have fluctuation, then you have consolation finally you regain the growth again. The economic cycle problem is faced globally, since you're connected to it, you could not escape from the cycle.
6. What would you predict will be the biggest challenge for China in the next year when deepening the reform?
I think the biggest challenge would be laid in the labor market in several industries, the need for trained people, especially in the service sector. Because China achieve most growth in service system, like tourism, IT, telecommunication, value added sector would need people who're qualified for the industries. The human resources to meet the future requirements of economy is key, and also need the innovation of education system.
