Financial system should increase support for SMEs, experts say
China's economy still faces many challenges, but continued structural reform could serve as a driving force, economists said Wednesday at the Summer Davos Forum in Dalian, Northeast China's Liaoning Province. [Special coverage]
While shifting from an investment-driven economy to one driven by consumption, the country is coping with the new reality of adjusting to slower GDP growth, Rich Lesser, global CEO and president of Boston Consulting Group, said during a forum at the event.
"Real reform is fundamental to getting China on a good growth path" for the future, said Lesser.
China's GDP growth dropped to 7 percent in the first half. Also on Monday, the nation revised its official 2014 GDP figure from 7.4 percent to 7.3 percent, the lowest in 25 years.
Continuing structural reform is the only method of maintaining appropriate growth in the medium and longer terms, economists stressed.
China has announced many reforms during the past few months, such as measures to streamline administration, further opening-up in the financial market and the establishment of free trade zones.
These pro-growth measures will gradually feed into the economy, experts said.
The government should continue its efforts in areas such as fiscal and tax reform and local-government debt reform, Helen Zhu, managing director of BlackRock Asset Management North Asia, told the Global Times on Wednesday.
She noted that authorities should also work out more pricing reforms. For example, she said, the pricing mechanism for natural gas should be further improved.
Implementing credit ratings for local government projects and identifying the liabilities of local governments could be seen as a step forward on the path of reform and an increase in the transparency of information on government debt, Zhu said during the forum.
Randall Kroszner, an economics professor at the University of Chicago, noted the country has to build a sustainable foundation for the middle class.
He added that "the structure of the Chinese financial system has been largely more focused on large enterprises instead of focusing on small and medium-sized enterprises (SMEs) as well as supporting consumption."
Kroszner told the Global Times Wednesday that China could learn more from US economic development in recent decades, which required institutions to support SMEs and consumption.
"Reforms of the financial sector that allow for more competition, allow for more ability for individual consumers to access credit and build private credit-scoring are very important," said Kroszner.
