BEIJING, Nov. 13 (Xinhua) -- China's new leadership was heading in the right direction to secure sustainable growth, but it needed to handle economic reform more delicately, given the global economic landscape would change in the next five years, a senior strategist at United Bank of Switzerland (UBS) said Wednesday.
"Global investors on average have placed high expectations on the economic reform since the new generation of Chinese top leaders came on board, to steer the world's No. 2 economy with a slower, but more sustainable growth model based on domestic consumption instead of investment and exports," said Edward Bang, Asia and Pacific (APAC) head strategist of Global Investment Solutions at UBS Global Asset Management in an interview with Xinhua.
A slew of restructing measures, including further simplifying administration and decentralizing government, have been rolled out since China's new leaders were sworn in in March, to revitalize the economy and give markets a bigger role.
"The leadership is very intelligent to conduct structural reforms, while reducing over-capacity in some manufacturing industries and deregulating the country's financial market are also wise decisions," said Bang, noting China's economy had been saddled with mounting pressures, such as a slowdown in growth, production overcapacity, restructuring of state-owned enterprises (SOEs), local government debt and shadow banks.
But the decision makers should also be deeply aware of the importance of monitoring inflation when fine-tuning the economy, which would hurt domestic consumption if not properly handled, Bang said.
For the longer term, China's decision makers should gear up for an ensuing "coordinated global liquidity tightening" after the Federal Reserve's QE tapering.
Federal Reserve Chairman Ben Bernanke's commitment in May to reduce the pace of asset purchases later this year has triggered market volatility globally.
"There will be a coordinated liquidity tightening country by country following the Federal Reserve's decision, and the Chinese government needs to get ready to cope with a reversed global economic environment, including an increase in interest rates and volatility in a variety of asset classes worldwide," Bang said.
Moreover, there would be other changes in the global economic landscape in the next three to five years, and China would be a big part of the global rebalancing, during which the developed countries and emerging nations were likely to wrestle for economic leadership, he said.
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