China should spend more on public services, UN says

Other News Materials 17 November 2008 01:48 (UTC +04:00)

China needs to spend more on education, health care, and social welfare to sustain economic expansion as a global recession looms, the United Nations said in a report Sunday, TehranTimes reported.

The fruits of China's rapid growth have not spread equally, and disparities limit continued expansion, according to the China Human Development Report. Shanghai and Beijing compare in development to European countries such as Cyprus and Portugal, while inland provinces like Guizhou in the southwest are closer to African economies like Botswana and Namibia, it said.

Improving services including health care will support a shift to consumption-led growth by boosting consumer spending and labor productivity, the UN said. Investing 372 billion yuan (55 billion dollars) a year, or 7.5 percent of state income, would let China assure nine years of compulsory education nationwide, basic medical care and old-age insurance, the report estimates.

"You have an opportunity here of doing the right thing, and also helping the financial crisis," said Khalid Malik, UN resident coordinator in China. "If you can increase spending on health, education, social security, this would also help in maintaining the growth rates."

China announced a 4 trillion yuan stimulus package focused on roads, railways, airports and low-rent housing on Nov. 9. Asia's second-biggest economy, which expanded by more than 10 percent a year since 2003, grew 9 percent in the three months from July to September, the fifth straight quarterly slowdown.