China’s plan for a free-trade zone (FTZ) in Shanghai is “very positive” and will help improve the country’s competitiveness, World Bank president Jim Yong Kim said.
“Every single country in the world is trying to become competitive and I think this free-trade zone will allow China to become more competitive,” Kim said at a briefing in Shanghai yesterday at the start of a four-day visit.
The government is committed to financial and fiscal policy reforms that will pave the way for long-term expansion, he said.
Chinese Premier Li Keqiang (李克強) will this month officiate at an opening ceremony for the zone, which will test economic and financial changes including interest-rate liberalization, Bloomberg News reported on Friday, citing two people with knowledge of the matter.
China may see the weakest expansion in 23 years this year and Li warned last week that the country will fail to achieve sustained growth unless it restructures the economy.
“These kinds of financial sector reforms can be difficult, but they are critical,” Kim said. “We want to be as supportive as we can be of the government in tackling these kinds of difficult financial sector reforms even in a time when growth is slowing.”
China’s economy expanded 7.7 percent last year, the least since 1999, and the pace may weaken to 7.5 percent this year, according to the median estimate in a Bloomberg News survey last month. That would be the slowest rate since 1990 and match the government’s target set in March.
Chinese leaders are seeking to maintain confidence in the economy.
Chinese President Xi Jinping (習近平) said this month the government chose to bring down the growth rate to solve “fundamental problems” hindering long-run development.
Speaking in Dalian on Wednesday, Li said China would focus on shifting its growth model while ensuring economic expansion remains within a “reasonable range.”
“Everyone in the world is looking at Chinese growth numbers,” Kim said yesterday. “The fact the government is saying, well, it’s a little bit slower, but we are committed to quality, we are committed to reforms we need to take, I think is a cause for great optimism for long term growth.”
China’s State Council, headed by Li, approved the Shanghai free-trade zone in July. While no detailed policies have yet been released, a draft plan included expanded opportunities for foreign companies in industries from banking to health insurance.
HSBC Holdings PLC, Mizuho Securities Asia Ltd and Standard Chartered Bank PLC say the zone will also test interest-rate liberalization and freer yuan convertibility, and promote development of services industries.
n opening ceremony will take place on a day from Sept. 27 to Sept. 29, depending on Li’s schedule, two people with knowledge of the matter said last week.
The focus of Kim’s visit to China is climate change, a World Bank statement said last week. While in Shanghai, he was scheduled to visit projects that are helping the city shift to a low-carbon growth model, it said.
The World Bank is working with China on a broad climate-change agenda that includes promoting clean energy, reducing traffic jams and air pollution and improving flood risk management, Kim said at yesterday’s briefing.
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