China should deepen reform by upgrading or restructuring unproductive firms, launching flexible exchange rates and liberalizing its capital accounts under the stimulus plans offered by the latest fiscal and monetary policies, Tristram Sainsbury, a visiting Australian researcher, has said in an exclusive interview with China.org.cn via email.

Sainsbury, a research fellow in the G20 Studies Center at the Lowy Institute and visiting scholar of Chongyang Institute for Financial Studies, Renmin University of China, made his remark on Sunday after being asked about the ongoing "two sessions" (meetings of China's top legislature and advisory body) in Beijing.

"There are great benefits in upgrading industries and restructuring State Owned Enterprises (SOE) and by more effort to open up services sectors, such as, health and education, creating a deeper social safety net to support the progress in dynamic adjustment of the economy, and investing in cleaning up environmental pollutants," he said.

"One thing that needs to happen is ongoing clear communication of exchange rate settings. The recent public statements and interviews by People's Bank of China (PBOC) governor Zhou Xiaochuan are a welcome step and need to be continued."

Zhou addressed the G20 Meeting of Finance Ministers and Central Bank Governors last month in Shanghai, saying China would keep on with its reforms in economic restructuring and quality improvements. High savings deposits would be transformed into more investments, and macro-economic policies would maintain continuity and stability as there were still enough monetary policies stored in the financial toolbox. However, there was no basis for incessant devaluations of the RMB.

Commenting on the achievement of G20's Finance Ministers and Central Bank Governors Meeting, Sainsbury wrote: "The Shanghai meeting was able to signal ambition, and Chinese negotiators worked effectively to push the G20 towards 'core finance' areas such as investment, the financial architecture, financial regulation, and tax".

He expected the Shanghai meeting would lay a sound foundation for the G20 Summit to be held in Hangzhou aiming to tackle pressing issues and longer term challenges confronting global governance.

According to the Australian researcher, a number of actions are expected to be launched, including a proposed structural indicator system to secure the delivery of the G20's growth strategies (by April); IMF reviews on the global financial safety net architecture (ditto) and on the possible broader use of the SDR arrangement (by July); support for a proposal to develop a tax platform jointly by the IMF, OECD, UN and World Bank Group, and various actions by development banks and the Global Infrastructure Hub on investment challenges.

"When Finance Ministers and Central Bank governors meet in Washington next month, the world will be looking for a stronger statement of political will to address near-term economic challenges," Sainsbury said.

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