(Reuters) - China's
economy could grow at more than 8 percent in 2013, giving some underpinning to
global economic activity that is set for a mild, tortuous recovery this year,
the head of China's sovereign wealth fund said on Saturday.
"China's
economic growth could be over 8 percent this year. China's economy supports a
very large part of global demand," Lou Jiwei, chairman of the China Investment Corp. (CIC) CIC.UL, told a
forum.
China's economy
expanded an annual rate of 7.9 percent in the fourth quarter of 2012, snapping
seven consecutive quarters of weaker growth, as a raft of pro-growth policies
kicked in.
The Q4 bounce helped
lift full year growth in the world's second biggest economy to 7.8 percent
which, though China's slowest pace for 13 years, generated roughly a third of
global economic growth of 3.2 percent - itself the worst since the 2009
financial crisis and just barely above the 3 percent mark economists say
signals a worldwide recession.
Lou said that even if
China's growth did accelerate further in 2013, increased financial market volatility
caused by Europe's debt crisis and concerns about the U.S. fiscal position,
left the world economy set for a "mild, tortuous and slow recovery"
at best.
Problems in
debt-constrained countries, though, meant opportunities for cash-rich China,
Lou said, adding that the government should encourage local firms to step up
their efforts to expand and invest abroad.
"There are big
opportunities for countries with cash on their hands, especially for China. We
should grasp the opportunities and give firms more freedom in investing
overseas," he said.
China has accumulated
the world's biggest store for foreign reserves, some $3.31 trillion as at the
end of 2012, generated largely as a function of capital controls that have
forced Chinese exporters to sell foreign currency to the central bank.
Easing capital
controls to let firms more readily use export earnings to buy overseas assets would please many executives who say strict rules
and a lengthy approval process for outbound investments are big impediments to
doing cross-border deals.
Despite the
difficulties, Chinese non-financial outbound foreign direct investment hit a
record $14.7 billion in December, taking the 2012 total to $77.2 billion from
2011's $60.1 billion, Commerce Ministry data shows.
Beijing targets a
total of $560 billion in outbound foreign direct investment in the five years
to end 2015.
REFORMS NEED
POLITICAL COURAGE
Zeng Peiyan, a former
vice-premier, told the same forum that China's leaders must have
"political courage" to quicken economic reforms to help sustain
long-term growth.
Zeng, now chairman of
top Beijing think-tank the China Centre for International Economic Exchanges
(CCIEE), said the Chinese economy was "shifting gear" and clearly
decelerating from the double-digit average growth rates of the past three
decades to 7-8 percent in the foreseeable future.
Chen Xiwen, deputy
director of the office of the Central Financial Work Leading Group, a powerful
body that charts key government economic policies, said China's growth strategy
should focus on improving urbanization in its next stage of development.
Chen, who also heads
the ruling Communist Party's office on rural policy, said China's actual
urbanization rate is around 35 percent - lower than the official rate of 51
percent.
"In other words
there are some 200 million (rural) people who have entered cities, but have not
yet become urban residents. This is a big problem that we need to deal with in
the future urbanization process," he said.
China's rigid
household registration, or hukou, rules are seen by many analysts as China's
most pressing reform item as a change there would address inequality and boost
domestic demand, rebalancing the core growth drivers of the economy.
The millions of
migrant workers who have entered cities from the 250 million-strong rural
workforce are denied access to services like health and education, forcing them
to save hard and constraining spending that would boost domestic consumption.
Spreading the benefit
of China's ascent to its position as a global economic powerhouse is widely
seen as the best way of quelling the risk of popular revolt and officials have
pledged to gradually loosen hukou controls.
A newly recalibrated
official index this month indicated China's gap between rich and poor was so
wide that serious social dissatisfaction may be brewing.