China will still be a huge growth driver for Asia: Australian economist

CANBERRA - Despite the bleak picture of global economic turmoil, China will still be a huge growth driver for Asia, which will continue to outperform the rest of the world, Australian economist James Laurenceson told Xinhua on Monday.

Laurenceson, who is also deputy director of University of Technology, Sydney's Australia-China Relations Institute, noted that China's growth has been driven by domestic demand since 2010.

"In other words, Asia has a huge growth driver that lies within the region. It no longer needs to rely on demand coming from the US and Europe. The most important consideration is that China's path to a predominantly middle class country remains on track," he said.

However, China has been under continuous pressure of economic slowdown. Higher labour costs lead to the transfer of some industries to other low-costing countries, putting China's economic future on doubt.

Laurenceson said rising wages is a challenge, but fundamentally necessary if China is to become a predominantly middle class country.

"I look upon rising wages as a sign of strength and the progress that is being made toward China's growth being driven by consumption and its goal of becoming a moderately prosperous society."

As representatives from Asian governments, business sector and other walks of life are about to meet in Hainan, China for the annual Boao Forum for Asia, Laurenceson emphasized that major Asian economies should strengthen cooperation and coordination by giving priority to the completion of the Regional Comprehensive Economic Partnership (RCEP).

"The Boao Forum provides the logical venue for where the case for this trade agreement can be made," he said.

While the US Federal Reserve aims to have the interest rate hike and Europe and Japan implement new round of quantitative easing, Asian economies need to strengthen policy coordination in order to mitigate the risks.

Laurenceson said the challenge for Asian economies, in particular China, is to collectively resist the idea that growth can come from extremely loose macroeconomic policies rather than structural reforms.

"Recent statements by Premier Li Keqiang and People's Bank of China Governor Zhou Xiaochuan give me confidence that China's leaders understand this."