FAVOURABLE POLICY FRAMEWORK NEEDED FOR SUSTAINABLE DEVELOPMENT IN CHINA

KUALA LUMPUR, Oct 3 (Bernama) -- Policy frameworks should be more favourable
to the private sector to sustain development in China's economy, said Steven
Xu Sitao, Chief Representative of the Economist Group in China.

While saying that financial liberalisation was the key to China's
sustainable development, he said China was already experiencing strong recovery.

" We are already seeing a V shape recovery in the financial market. But the
question now would be whether it would be sustainable.

" Going forward, next year we might have a double dip. A more favourable
policy framework and real estate growth will be more accommodative. This would
mean tax reduction for corporates, personal income tax and equity issuance," he
told reporters after presenting a talk at the FIABCI-Malaysia Global Summit 2009
here Saturday.

Xu Sitao said the property market in China has escaped the downturn.

" Real estate in China, as a pillar sector driving domestic demand and
fiscal revenues, has resumed strong growth in response to extremely
accommodative macro conditions," he added.

Asked whether it would be wise for Malaysian companies to tap the property
sector in China, he said this sector is controlled by local players.

" Just because the real estate industry is booming in China, it does not
mean you have to get involed.

" It would be better to team up with local players in China to tap the
market or tap the property market in under developed areas in China.

" This is because first and second tier cities in China are already
exploited by local players," he explained.

Speaking on China's stimulus package, he said it has restored confidence but
created bubbles although banks are well capitalised with tangible assets.

" China's financial liberalisation is at a unfavourable juncture. So, by
catching up or engaging at a faster pace in financial liberalisation, the
bubbles would deflate," he added.
--BERNAMA