China in focus at Davos forum

Conventioners talk with each other at the congress center of the World Economic Forum, in Davos, Switzerland on Jan. 22, 2014. The World Economic Forum (WEF) started its annual meeting Wednesday in the Swiss ski resort of Davos under the theme "Reshaping of World." Photo: Xinhua

The annual World Economic Forum (WEF) kicked off Wednesday in Switzerland to champion in-depth adjustment and change to the world economic architecture to cement a fragile recovery.

China's growth and its comprehensive reforms, rolled out at a key Party plenum last November, have been listed as one of the major topics at the WEF for a global brainstorming over their implications for China's future and the global economy.

Held under the theme "The Reshaping of the World," achieving sustainable growth and reducing inequality are high on the agenda of this year's WEF. The four-day event has drawn over 2,500 participants, including China's foreign minister Wang Yi.

In a message to the WEF, Chinese Premier Li Keqiang said on Wednesday that the key to China's economic policy this year is to seek steady progress through reform and innovation, noting "this is consistent with international expectations for reshaping the world economy."

Among the many sessions and workshops at the WEF, at least eight discussion panels will center on China-related themes, mostly on the reform package released after the Third Plenary Session of the 18th Communist Party of China Central Committee.

The sessions listed many of the daunting challenges facing the world's second-largest economy, trying to raise ideas for China to incorporate sustainability into growth models, restructure its industries and State-owned enterprises, reduce its local debts and address gaps in talent and innovation.

A session at the WEF dedicated to growths in the BRICS, which groups emerging economies Brazil, Russia, India, China and South Africa, raised a question as to whether the BRICS are in "midlife crisis," and how they could recharge their respective growth models.

Lian Ping, Shanghai-based chief economist at the Bank of Communications, told the Global Times that the golden age for China's economic growth is not over yet.

"Considering China's growth in GDP and industrial output last year, the country's real economy has been doing very well and that will continue as long as the government continues to carry out the ongoing reform," Lian said.

The country's GDP grew by 7.7 percent in 2013, the lowest in 14 years, and its industrial output increased by 9.7 percent last year, down from 10 percent in 2012.

Lian said that China's GDP gain would stand at 7.5 to 8 percent for at least the next decade.

In his Wednesday message, Premier Li said China took proactive steps to boost economic vitality, stabilize expectations and promote economic transformation last year, despite the once increasing downward pressure on the economy.

The stability of the country's economic growth, however, is challenged by a range of issues such as limited domestic consumption and the enlarging income gap, Tian Yun, a scholar with the China Society of Macroeconomics, a government think tank, told the Global Times on Wednesday.

"Central and local government efforts to optimize the resource allocation in society are far from enough," Tian said.

The authorities are not spending sufficiently on social welfare, so the poor do not have adequate support to improve their financial status, and young people are inclined to save their money for the older family members' medical use and refrain from consuming more, Tian noted.

Another China-related panel at the Davos forum put the country's mounting local government debt as one of the top issues to be addressed. According to the National Audit Office, the State auditor, China's local government debt increased to 17.9 trillion yuan as of the end of June last year, up by 67 percent from 2010.

Local government debt will not produce systemic and fundamental risks to China's economy in this year or next, Lian said, but small-scale regional crises could happen.

"The central government needs to stop the debt from growing rapidly, through efforts such as allowing local governments to expand their financing channels," Lian said.