China's role in Asia and the world economy: fostering stability and growth

This book presents the proceedings of a conference on “China’s Role in Fostering Financial Stability and Growth in the Asian Region and the World Economy”. Contributions by Chinese and international financial and trade experts examine the challenges China is facing when dealing with domestic, regional and international economic issues, focussing on four broad areas:

• China's economic reform agenda
• China's role in regional financial and monetary cooperation efforts as well as in global finance
• the functioning of the global financial system
• China's future challenges as seen by Chinese, Japanese and Korean experts.

The contributors are generally agreed that:

• China must reform its financial sector if it is to maintain growth and macroeconomic stability
• China’s economy will be the engine of growth for the world economy, possibly transforming it over the coming decades
• there is a need for regional or multilateral integration
• the Chinese government may face difficulties in maintaining the existing political system while sustaining economic growth.

Suggested reforms include:

• establishing an efficient financial intermediation mechanism to eradicate the deflation bias in China’s economy and ensure macroeconomic stability
• transforming the Chinese banks into commercially viable entities
• increasing rural income and consumptive spending in rural areas to tackle rural/urban income disparities
• China should proceed cautiously in reforming the financial sector, with a gradual capital account opening, long-term flows liberated before short-term, and the ability to take precautionary steps against capital surges.