China has progressed to an economy driven by service sectors where a given unit of growth creates a lot more jobs than in the past, the International Monetary Fund's (IMF) mission chief for China told Xinhua in a recent interview.
"Ten to 15 years ago, to create 1 million jobs, China needed 1.4 percent GDP growth. Five to 10 years ago, it needed 1 percent. Now it only needed 0.8 percent GDP growth," said Markus Rodlauer, who had chaired IMF's China mission for years, adding the world does not have to get too nervous when China's growth declined to more moderate growth.
"We have seen the major structural changes from an industrial economy to a service economy, this is progressing gradually. We have seen consumption growth quite steady at 9 or 10 percent every year, slightly higher than the GDP growth," he noted.
Talking about China's economic rebalancing, Rodlauer said the result is mixed. While some other countries are impatient with China's market-based economic reform agenda, he said, it is unrealistic and unnecessary to expect drastic changes taking place overnight.
"China has already progressed quite significantly in rebalancing. Let's not forget the current account surplus was over 10 percent of GDP just five to seven years ago. That has gone away with the current account surplus was down to 2 percent, because domestic demand has grown, export demand has weakened," he said.
But he also pointed out that investment still accounts for nearly 50 percent of China's GDP growth, and this proportion should be lowered to around 30 percent. Investment should also be transformed from the one led by government to that driven by private sector with smaller scale and providing more services.
"All the reforms hanging together, making the economy more productive and taking Chinese households to take most of the output for themselves. There is a long way to go, but it doesn't come overnight," he said.
Rodlauer said China needs to change, but change is difficult and does not have to come overnight. "We need a strong and stable China," he added.