Legislators face test of trust by foreigners
The main challenge facing legislators in China is how to win the confidence of international investors, according to former United States treasury secretary Lawrence Summers.
Speaking at a news conference yesterday after addressing the Credit Suisse First Boston Asian Investment Conference, Mr Summers said: 'And that goes to taking steps to raise the confidence of investors by promoting transparency, market integrity, property rights, and enforcement of contracts by procedures that can be relied upon.
'It is most important to put into place in China the intangible structure of the rule of law.'
On US economic prospects, he said while the economy had slowed sharply, growth would be sustained - albeit at a 'much reduced rate'.
Earlier during his address Mr Summers clashed with fellow keynote speaker Professor Allan Meltzer on the new Bush administration's US tax plans.
'The appropriate strategy in the tax area is to focus on measures which target middle-class families which are front-loaded and which address crucial priorities - like raising children or taking care of an ageing relative,' Mr Summers said.
The policy priorities for Japan, he said, were to reflate the economy and deal effectively with the bad loan problem of its banks.
'Those reforms require the kinds of measures used in other countries - including taking bad assets off bank balance sheets, liquidating them, and allowing markets in real estate and other assets to find their appropriate level,' he said.