China's economic transition to smarter growth would not only put its economy on a more sustainable and healthy growth, but also benefit the global economy, said Nathan Sheets, undersecretary for international affairs at the U.S. Treasury Department.
"A Chinese economy more reliant on services and household consumption would not only be more balanced internally," said Sheets in an op-ed published on Monday. "It would be more balanced externally so as to be less dependent on exports."
He said China has made important progress in rebalancing its economy, including greater share of consumption in GDP growth, faster investment in services and consumption-led sectors, and faster growth of employment and new businesses registered.
"This transformation would allow China to solidify its status as a driver of global demand and offers the best formula for China to achieve an orderly transition and put its economy on a more sustainable footing for healthy growth in the future," said the undersecretary.
However, China's transition would not be easy and faces challenges, said Sheets. China's service sector remained underdeveloped and households have low income and consumption rates.
Sheets called on China to continue implementing market-based economic reforms, such as reforming state-owned enterprises, reducing industrial overcapacity, opening up service sectors, and clearly communicating policy actions.
He said, if China implements the reforms, it has the necessary tools to support domestic demand and succeed in the economic transition. "We want to see China make this transition, because we recognize that China's success ultimately benefits our own," said Sheets.
