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China needs to focus on broader reforms, convertible currency not ultimate goal: Bernanke

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HONG KONG, June 2 (Xinhua) -- China needs to focus on broader reforms which lead to longer, sustained growth and the Renminbi ( RMB) internationalization is not the ultimate goal, former U.S. Federal Reserve Chairman Ben Bernanke said here on Tuesday.

"China is slowing down, first of all, because no country can grow at 10 percent per year forever. ... In the case of China, it' s going through a very important change in the growth model," Bernanke said. "The RMB is to be an international currency but that's not the ultimate goal to have a stronger, reproductive economy."

China should move to diversify its economy to make it more domestic demand oriented, more entrepreneurial and more market oriented towards services, he said.

Bernanke said from the perspective of policy makers, when it comes to create new services, high tech companies and financial services alike, the government has to try to provide a framework or a background to let the market, entrepreneurs and private sectors do that.

"So it's gonna be periods of uncertainties as China makes this transition. ... It's not gonna be variations that can be easily handled by monetary or fiscal policies," he said.

He said China is making progress but still has a long way to go, especially to get households consume more and in terms of a hard landing, there are some risks, including risks of the banking sector, property and stock markets.

Bernanke said the Chinese government is aware of these problems and has a lot of resources to tackle them.

With regard to the Chinese currency, the former Fed chief said China is moving in the direction of more liberalized trading of the RMB, and the country needs to continue to liberalize its capital account and currency trading regimes, and strengthen its bond market and other asset markets. Hong Kong can play an important role in these efforts, he added.

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