Economic Growth Flawed

China should rely less on the industrial sector and fixed asset investment for future economic growth, according to a report released by the World Bank.

The report, a quarterly update on the recent social and economic development of China, says China's current growth model, based on industry, investment and exports, has met increasingly serious problems, such as trade disputes, environmental pollution and resource shortages.

It advises China to carry out further reforms in its financial sector, saying it has a long way to go to improve its allocation of capital.

China should place further financial reforms high on the agenda as the state's share in the economy is currently below 40 percent but most bank loans go to state-owned enterprises rather than private and small businesses that yield better returns.

It also points out 40 percent of China's labor force is still tied up in farm production, where labor productivity is one sixth of that in other sectors of the economy. This will also raise workers' wages and household incomes, thus stimulating domestic consumption and reducing the trade surplus, which are key targets of the government's macroeconomic control, it says.

Record Mobile Users

China's mobile phone users are expected to top 520 million at the end of this year, predicts the Ministry of Information Industry (MII).

The prediction was made based on the average monthly rise of 5 million mobile subscribers in previous years. More fixed-line users are expected to turn to cellphones as a result of falling prices of handsets and services, according to the MII.

The number of cellphone users reached 460 million at the end of 2006, up 67.677 million year on year. On average, there are 35.3 cellphones in China for every 100 people.