Special Report: Global Financial Crisis

Special Report: Boao Forum For Asia 2009

    By Xinhua writers Zhu Yifan and Liu Jie

    BOAO, Hainan, April 19 (Xinhua) -- China's stimulus plans are very impressive, and more investment will be the key to success, Lawrence Greenwood Jr., vice president of the Asian Development Bank (ADB), said in an exclusive interview with Xinhua on Saturday.

    Under the moderately easy monetary policy adopted by the government late last year, China's bank lending increased by a record high of 1.89 trillion yuan (277.9 billion U.S. dollars) in March, making new loans in the first quarter of this year reach 4.58 trillion yuan, or 93 percent of the annual target of new loans for the entire year of 2009, according to data released by the People's Bank of China, the country's central bank.

    China's monetary policy expansion was probably "the largest and the most effective in the history of mankind", Greenwood said at the Boao Forum for Asia (BFA) in China's southern province of Hainan.

    Though large credit increase might lead to more bad loans, but that was "a secondary consideration at this stage of the crisis," Greenwood said.

    The expansion of credit is needed to stimulate economic activities, and to get the economy going again, he said, adding it is the best way to avoid non-performing loans.

    China's economic stimulus package plan is already paying off, and positive changes have taken place in the economy, Premier Wen Jiabao said Saturday at the opening ceremony of the BFA annual conference 2009.

    "The situation is better than expected," Wen said, adding that the "swift" and "decisive" measures taken by China to deal with the crisis have proved essential for easing major problems in the economy.

    Though the ADB forecast China's GDP growth at around 7 percent, lower than the 8-percent target set by the Chinese government, Greenwood said the figures are roughly "in the same territory."

    China's retail sales and fixed-assets investment figures are all better than what were expected and some positive signs have appeared, he said.

    Chinese officials are facing huge challenge of maintaining the growth rate while transforming the economy, but the country has seen good investment numbers and solid increase in consumption, which would make up for the drop in exports, he said.

    He noted that China, and Asia as a whole, could not return to the former export-oriented development pattern that depended on the import demand in the United States and Europe.

    "Those days are over, because that was based on the housing bubble. The bubbles now burst, and U.S. consumers are now saving and not spending," said Greenwood.

    "The economic structure and the pattern of trade and investment will be quite different from what we know in the past six years...We need a more sustainable model of growth. That's why China has taken steps to transform its economy to depend more on domestic demand expansion," he said.

    It is a wise practice for China to strengthen social spending instead of boosting infrastructure alone, he said.

    Talking about financial reform in China and Asia, Greenwood said the changes should be more "evolutionary" rather than "revolutionary".

    He agreed it was a more responsible way to avoid rash judgment, learn lessons from the crisis, carefully analyze problems, and "feel the pebbles when crossing the river".

    The reform does not mean to slow down the development of financial systems, or over-regulate the financial systems, he said.