Quality, sustainable growth the priority

World Bank official warns against over-reliance on economic solutions

A growth rate of above 7 percent should be high enough for an economy the size of China, but what matters most is that the quality of growth is maintained, a leading World Bank official said on Tuesday.

Sri Mulyani Indrawati, managing director and chief operating officer of the World Bank

Reacting to China's gross domestic product growth slowing to 7.3 percent in the third quarter of the year from a year earlier, the World Bank's Managing Director Sri Mulyani Indrawati warned that over-reliance on the macro policy was "something that needs to be avoided, especially in the long run".

The quarterly GDP result, the lowest growth figure since the first quarter of 2009, has left some questioning whether or not the authorities should step in with major stimulus measures, such as possible interest rate cuts.

Speaking in Beijing ahead of the upcoming APEC Finance Ministers' Meeting being held in Beijing this week, Indrawati said that China had already done an excellent job of minimizing the effects of the global financial crisis by providing sensible monetary or fiscal stimulus.

But she underlined in the long term further measures might raise questions over growth sustainability and the ability to manage the future consequences of any expansion in stimulus policies.

"The shift in the growth model will definitely have a short-term impact on the Chinese economy as well as the global economic performance, which already remains disappointing," she said.

The former Indonesian finance minister said that maintaining growth of 7 percent to 7.5 percent is actually still high compared with most other major markets and will raise questions about what kind of growth it is and whether it is sustainable and improving in quality.

When talking about quality growth, that can be measured in various ways, she said. For example, will that growth further pollute the country's air and water, and will it be achieved with more efficient use of energy?

She suggested that China's social and economic policies should focus on areas such as land liberalization and capital reforms, for example.

She also said she fully understood the challenges facing the country as it adjusts its economic model from one heavily reliant on investment and exports to one more driven by productivity, innovation and consumption.

Chinese leaders have recently stated they have greater tolerance toward slower economic growth and that progress slightly lower than 7.5 percent is acceptable.

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