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China's growth model to accelerate Asia's integration: IMF

China's growth model to accelerate Asia's integration: IMF

Updated: 2012-04-27 20:20

(Xinhua)

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KUALA LUMPUR - China's economic growth model will accelerate integration in Asia as the world's second largest economy is shifting its focus to consumption, away from its reliance on investment, director of the International Monetary Fund's Asia Pacific department Anoop Singh said on Friday.

"As you look ahead three to five years, our expectation is that in that China would change its own growth model and do away with reliance on investment... demand from China will likely shift away from where it is recently and more towards commodities and capital goods that will meet rising consumption within China," Anoop said.

"It might lead to changes in the intra-Asian trade. There maybe less demand for inputs that will be processed into exports to advanced economies and more into goods that would meet China's own consumption," he added.

Traditional capital goods exporters like Japan and South Korea and commodity exporters, including Australia and Indonesia would benefit from China's growing demand.

"The nature of the trade might change but trade in Asia has been high and we expect that will continue given the integration is already taking place," Anoop said.

He was speaking to Xinhua after launching IMF's Asia Pacific regional economic outlook in Kuala Lumpur.

Leaders in Asia who have been pushing for inclusive growth to reduce inequalities are closely watching China as a slowdown there would create a knock-on effect in the region.

IMF predicted China's growth to ease to 8.2 percent this year as government efforts to engineer a soft landing take effect and rebounds to 8.8 percent next year.

The economy grew 9.2 percent last year.

Beijing curbed lending and investment in the past two years to cool growth that peaked above 10 percent in 2009 before reversing its policies late last year to boost growth in response to the deteriorating global demand.

Anoop said China would pick up momentum in the second half of the year provided that the global condition stabilises.