'China facing complex challenges'

Though China is unlikely to see a hard landing this year, it still faces several complex economic challenges, Tharman Shanmugaratnam, deputy prime minister and finance minister of Singapore, said on Friday.

"China has the most competent and capable economic team among the major economies, but is faced with the most complex challenges. They are moving in a direction that is farsighted, but all along the way, there are risks," he said during the DBS Asian Insights Conference 2014 in Singapore.

Unlike other economies, China has to take serious note of social disruptions while restructuring its economy.

"Major restructuring usually means you take a hit. You go through retrenchment before you come out. That's what happened to Greece, Spain and Portugal. But China can't afford to take that dive in growth, because the risk of social disruption is a very serious one," he said.

Moving ahead with all the reforms also requires a major alteration of the relationship between the central and provincial governments, he said, because China is actually many different economies combined into one, if people look at the nature of its provinces.

"The central government has to take on more expenditure, and the provinces need more revenue so that they don't need to rely on shadow banking and land sales," he said.

Apart from that, China has to deal with a heavy legacy while moving toward economic marketization.

The financial crisis in 2008 has led to burgeoning credit in certain sectors. Shadow banking is a significant problem that cannot be unraveled easily. Another part of the legacy is the entrenched interests in the State-owned sector. That will shape reform all along the way, he said.

"If the nation can achieve three quarters of what has been set out (in the reform agenda), that's a transformation in China and a huge plus for Asia and the world's economy," he said.