ADB has confidence in Chinese economy

The Asian Development Bank (ADB) believes the Chinese economy can remain strong despite the problems it is confronting, its president said on Monday. "We are currently looking at the figures concerning Chinese growth, and I think basically it will remain at the same level as the ADB's previous forecast of about 7.5 percent this year," Takehiko Nakao told Xinhua on the sidelines of the China Development Forum 2014. Although he noted several concerns in economic areas, including shadow banking, local government financial vehicles and over-investment from previous years, Nakao said all of them are manageable. For example, he said, Chinese authorities have strengthened monitoring and regulation of shadow banking issues. "There may be some problems, and there are already bankruptcies. But I don't think shadow banking will cause a systemic problem to the financial system. The authorities have the capability of managing systemic risks," according to the economic chief. As for problems in the property sector, Nakao said home prices in some cities are rising too high and there are some downturns, but this can happen in any country or economy. "What I am trying to say is that the ADB doesn't believe it will cause major problems, a crisis or a slowdown in the Chinese economy," he said, adding that economic situations in the United States, Europe and Japan are all improving. "So overall, China's economy can remain strong," said Nakao. The president was impressed by the comprehensiveness and clarity of China's reform plan adopted at the Third Plenary Session of the 18th CPC Central Committee in November. Nakao believes China's leadership is committed to improving modern market systems, accelerating the transformation of government functions, deepening public finance reform, developing mechanisms for closing the urban-rural divide, liberalizing the financial sector and protecting the environment. In his view, China's pledge to assign a decisive role to the market in the allocation of resources will unleash the dynamism of the private sector to facilitate the country's transition to higher income status. The picture may be rosy, but for Nakao, it's more important for China to implement the plan. "Implementation should be solid and expeditious," he said. The ADB is assisting the National Development and Reform Commission, China's top economic planner, in the preparation of the 13th Five-Year Development Plan, which will start in 2016 and implement longer term structural reforms, according to Nakao. "While numerous challenges await China, the country can enjoy an important comparative advantage, which is the opportunity to benefit from both successful and failed international experiences," he said.