ADB vice president: no hard landing for China

Visiting Vice President of the Asian Development Bank (ADB) Stephen P. Groff said in Beijing Saturday that he is optimistic about China's economic growth this year despite signs of downward risks at the year beginning. "We believe the growth will be moderate in the first few months of 2012, and pick up later in the year," said Groff in an exclusive interview with Xinhua before flying to Hainan province to attend the Boao Forum for Asia Annual Conference 2012. Groff said although downside risks are increasing in the short-run, he believes the Chinese government can cope with the challenges through fiscal operation and expansionary monetary policy. "We don't have any concern of hard-landing for China in the future," said Groff. Noting China has lowered its GDP growth target to 7.5 percent this year, Groff said the slight downward revision highlights the Chinese government's efforts to pursue growth quality. But Groff also stressed that to secure long-term balanced growth, China should further expand its domestic consumption, especially in the case of current fragile external demand affected by the modest recovery in the United States, fiscal and debt concerns in the European Union, and Japan's lackluster economic performance, which are China's largest trading partners. He suggested that China should diversify its trading partners and increase trade activities within Asia as well as BRICS countries. Meanwhile, he said China should take the opportunity to spur domestic demand, to address its social issues with more spending on education, healthcare, pension, public housing and other social security programs, which will also impact consumption positively. Groff also warned of the widening Gini Coefficient problem that not only China faces, but other Asian countries. He said to address the big gap between the rich and the poor, more efforts are needed to strengthen income distribution policies and social security nets, in addition to increasing fiscal transfers to poorer regions. According to Groff, another challenge ahead of China is a shortage of labor brought by the growing aging population. But he added that increasing cooperation within the Asian-Pacific region could help offset the problem as there is a different demographic profile. "To solve the problem, the whole region should increase regional integration, not only in the labor resources, but also in the manufactory-chain, infrastructure construction as well as more in economic cooperation," he said.