China should spend more on social causes: ADB official

China should spend
more on social causes and less on infrastructure if it plans to introduce
another fiscal stimulus package to spur the economy, a senior Asian Development
Bank (ADB) official suggested on Thursday.

"The (Chinese) government should focus more on
spending that will benefit the low-income families and less on infrastructure if
there is another large fiscal stimulus package," said Lawrence Greenwood,
vice-president, ADB.

Social spending, Greenwood said, would have a
long-term impact in terms of stimulating domestic consumption as it will reduce
people's precautionary savings on items such as education and medical care.

Such spending, therefore, would help spur domestic
demand more effectively in export-dependant countries like China that are trying
to boost domestic consumption, Greenwood said.

Spending on education, to raise the labor skills and
productivity, is also important for economic growth, he said.

The spectacular economic growth China achieved in the
past few years, Greenwood said, is largely due to the increased productivity in
the country.

"This has been achieved by moving hundreds of
millions of farmers into industries, but such days are gone now," Greenwood
said.

Education and more labor mobility would increase
productivity, he said.

The Chinese government should also give more support
to small- and medium-sized enterprises (SMEs), open up more industries and
sectors and also create more jobs, he said, citing the examples of utility, air
services and retail sectors.

The ADB Vice-President, who once served as secretary
of the bureau of Economic and Business Affairs at the US State Department, said
it was not necessary for China to introduce more stimulus packages for the time
being.

"Continued robust implementation of the 4-trillion
yuan economic stimulus package" should be the focus at this stage, as the huge
economic boost measures have started to show initial results, Greenwood said,
referring to China's 6.1 percent GDP growth in the first quarter.

"The economy is slightly better than we expected and
there are small signs that the economy is recovering," Greenwood said, pointing
to the robust retail sales and strong fixed asset investment growth.

The slightly better than expected economy could give
the country "breathing space" to fine-tune its policy and transform its economic
structure, he said.

"But the country still faces challenges such as
falling exports and the major worry is on whether the momentum can be
sustained," Greenwood said.

(Source: China Daily)