China is experiencing enormous economic growth, Federal Reserve Chairman Benjamin Bernanke says. But "by most measures China remains a developing nation," according to Bernanke. The Fed chief's comments came in a speech delivered at the Chinese Academy of Social Sciences in Beijing.
In explaining his observation, Bernanke told the academy that China's per-capita gross domestic product is "about one-sixth of that of the United States on a purchasing-power-parity basis and about one twenty-fifth that of the United States at current exchange rates."
Bernanke also noted the rapid progress the country is making. Since it instituted Open Door reforms in 1978, China's economy has grown at a rate of between 6 and 10 percent each year.
The top U.S. economist also applauded China's adherence to market reforms, noting that by 1999, market pricing was shaping 95 percent of retail and more than 80 percent of agricultural transactions in the country.
But Bernanke also called for China to take steps to reduce its massive trade surplus with the United States. Among his suggestions: enact policies to increase China's consumer spending; embrace more flexibility in the exchange rate; and develop more of a 'social safety net', so that households will be less preoccupied with saving and more willing to invest.
The Fed chief said the Chinese people would also benefit from the change, noting, "Although China's extensive participation in the global trading and financial systems has been invaluable for the country's development, the ultimate purpose of economic growth is to improve living standards at home."
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