Finance

Finance

WB: China risks economic crisis if no reforms

23 February 2012 12:48 (UTC +04:00)

The recommendation is contained in â€˜China 2030â€™, a report set to be released Monday, according to a half-dozen individuals involved in preparing and reviewing it.

The report, which addresses some of China’s most politically sensitive economic issues, is designed to influence the next generation of Chinese leaders who take office starting this year, these people said. It challenges the way China’s economic model has developed during the past decade under President Hu Jintao, when the role of the state in the world’s second-largest economy has steadily expanded.

It recommends that state-owned firms should be overseen by asset-management firms, say those involved in the report. It also urges China to overhaul local government finances and promote competition and entrepreneurship.

"China’s state-owned sector is at a crossroads," said Fred Hu, chief executive of Primavera Capital Group, a Beijing investment firm. The Chinese government must decide "whether it wants state-led capitalism dominated by giant state-owned corporations or free-market entrepreneurship".