London - AFP
The sources of China's stunning economic growth over the past 30 years are beginning to lose their punch, highlighting the need for reforms, World Bank President Robert Zoellick said Thursday. If China is to continue to grow strongly, it can no longer rely simply on soaring exports and investment, Zoellick said, but must rebalance through greater domestic consumption. "The drivers of China's meteoric rise are waning," Zoellick said in an article published on the World Bank's website and to be printed in the Financial Times on Friday. "By 2030, if China reaches a per capita income of $16,000 -- a reasonable possibility -- the effect on the world economy would be equivalent to adding 15 of today's South Koreas," he said. "It is hard to see how that expansion could be accommodated within an export and investment-led growth model." Without fundamental changes, Zoellick said, China will only exacerbate the problems of the world's economy and its own: greater imbalances, higher food and resource prices, more environmental damage, difficulty supporting an aging population, and over-reliance on foreign markets. Writing on the eve of a high-level meeting in Beijing by Chinese and foreign experts, Zoellick said Beijing's policymakers are well aware of what they need to do. "The challenge is 'how' to do it," he wrote. "A critical question is how China can complete its transition to a market economy. A broad agenda needs to include redefining the role of the government and the rule of law, expanding the private sector, promoting competition, and deepening reforms in the land, labor, and financial markets," Zoellick said. He called on Beijing to promote green industries, strengthen its fiscal system, and build better and more efficient public services, with the private sector taking part. Zoellick noted that China's strengths have been crucial in helping the world stabilize in crisis, but that its growth model is unsustainable. "What happens in China is as important as Europe, Japan, or the United States," he reminded.