WASHINGTON (Reuters) - The International Monetary Fund’s top official for Asia gave a thumbs up to reforms on the drawing board in Japan and China, welcoming changes to revitalize Asia’s two biggest economies.
Although Japan will not start to unveil structural reforms until later this month and China will not announce its plans until November, IMF Asia-Pacific Department Director Anoop Singh voiced confidence on Friday that Tokyo and Beijing were clearly committed to big shifts.
Japanese Prime Minister Shinzo Abe’s signature “Abenomics” has already been helpful to Japan and the region, based on results of the first two of its three parts - extensive monetary and fiscal stimulus - Singh said in an interview with Reuters.
“The arrows that have been fired so far are remarkable,” he said, using Abe’s archery metaphor for his plans. The third arrow is structural reforms in labor, farm and service markets.
“Already we are seeing significant steps that go well beyond the historical record, so we have to assume that this will continue in the structural area too,” he said.
“Structural reforms for any country cannot happen overnight. They have to have consensus,” he said. “It will take time to build, but there’s no doubt that Abe has the objective.”
Singh earlier told a news conference that Abenomics had helped make Japan a “bright spot” in Asia, reigniting the economy to begin pulling Japan’s $5.9 trillion economy out of two decades of deflation.
China is expected to unveil concrete plans to retool its economy to rely more on investment-driven growth and less on consumption at a Communist Party Central Committee plenum in November.
Singh said Beijing had already signaled strong commitment to changing the way it operates its $7.2 trillion economy, second in size only to the United States.
“The authorities there have accepted the trade-off having lower growth than they had in the past provided it is more sustainable and qualitatively strong,” he said.
Chinese officials have indicated since early this year that one pillar of the reforms is a pilot free-trade zone in the commercial hub of Shanghai that would test more liberal policies for investors and the financial and service sectors.
“The Chinese always like to take steps forward in this way,” Singh said of the pilot scheme, details of which have not been released. “They try to implement it in a certain part of the economy, see how it develops and then broaden it,” he said.
Reporting by Paul Eckert; Editing by Tim Ahmann