Others News
- World Bank report emphasises flaws in China's economic growth model
Date: 15-Feb-2007 Sources: (Xinhua Online)
China should rely less on the industrial sector and fixed asset investment for future economic growth, according to a report released by the World Bank (WB) on Wednesday.
The report, a quarterly update on the recent social and economic development of China, says China's current growth model, based on industry, investment and exports, has met increasingly serious problems, such as trade frictions, environmental pollution and resource shortages.
It advises China to carry out further reforms in its financial sector, saying it has a long way to go to improve its allocation of capital.
China should place further financial reforms high on the agenda as the state's share in the economy is currently below 40 percent but most bank loans go to state-owned enterprises rather than private and small businesses that yield better returns.
It also points out 40 percent of China's labour force is still tied up in farm production, where labor productivity is one sixth of that in other sectors of the economy.
Reallocating excess labor to other sectors, especially to the labor-intensive service industry, will greatly boost China's productivity and economic growth, says the report.
This will also raise workers' wages and household incomes, thus stimulating domestic consumption and reducing the trade surplus, which are key targets of the government's macro-economic control, it says.
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