China's largest producer in the next 5-7 years

The Organisation for Economic Co-development (OECD) published its second report on China's economic survey in Beijing yesterday. China will be the first to emerge from recession in the global economy, thanks to China's impressive fiscal position, and it is expected to maintain strong growth in the next two years, the report said.　　And as the world's second-largest economy, China is expected to overtake the US as the largest producer of manufactured goods in the next 5-7 years.　　Social transfer spending needs to be increased the OECD believes the Chinese government's strong financial resources will allow China to bear additional spending, with China taking the lead in the global economy, backed by a huge fiscal stimulus package, and is expected to continue its economic expansion in the next two years. China's government debt accounted for only 21% of China's gross domestic product in 2008, and a series of fiscal stimulus plans, such as "4 trillion", are expected to add 3% to the 2010-year debt ratio.　　By contrast, all of the OECD countries ' debt this year is almost equal to its gross domestic product, and will be larger in 2011.　　Although the reform of the Chinese government has paid more and more attention to the people's livelihood in recent years, the OECD believes that in order to ensure the continued improvement of living standards in the future, China should increase its financial expenditure on the pension and health care system. Padoan, the OECD chief economist, said China had recently introduced a series of pension and health insurance reforms in order to move the workforce across the region, but that the ageing crisis would be the biggest obstacle to future Chinese social security, including raising the retirement age, increasing transfer payments,　　Subsidized health insurance and many other ways to deal with the crisis.　　In the labor market construction, the OECD believes that the division of the household registration system still hinders the trans-regional movement of migrant workers and should be relaxed in policy.　　The renminbi should be pegged to a basket of currencies the OECD believes that China's financial institutions are generally strong and financial regulation is more orderly than in the 90 's, but financial reform still needs to be more clear about market orientation. The OECD advises China to market interest rates and liberalise some interest rates to make them adjust to market supply and demand.　　The central bank remains focused on changes in interest rates rather than on quantitative liquidity controls alone. The OECD China and Asia Group director Hurd told reporters that interest rate liberalization is conducive to building a stronger bond market in China. "There is a lack of long-term financing for Chinese companies, and a change in the bond market is dependent on interest rates as a price signal." "Padoan that as a policy tool, China's current monetary policy is difficult to undertake multiple tasks."　　The central bank's policies often require trade-offs in stabilizing prices and controlling asset price bubbles, and careful regulation of bank lending makes it difficult to control the risk of a real-estate price bubble.　　The OECD also believes that China will adopt a more flexible exchange rate policy to match interest rate policies, effectively monitor asset prices and prevent inflation. What is a more "flexible" exchange rate policy? Mr Hurd's explanation is that the renminbi should be pegged to a basket of currencies, not just the dollar, soHelp to tame currency fluctuations. The OECD points out that China's exchange rate has moved away from economic fundamentals at both the absolute and relative purchasing power parity levels, and that the future will require upward adjustment in both nominal and real exchange rates.