'China must focus more on soft assets'

Alhough there has been frequent mention about China's growing soft power, it is equally important that it takes steps to harness more soft assets, a top industry official said.

"It is high time that China starts focusing more on soft assets such as education and research at colleges and universities," said Roger Dassen, global managing director, clients, services and talent, Deloitte Touche Tohmatsu Ltd.

"China has proven to be very good at providing hard assets such as airports, highways and many industrial zones. But in contrast, more attention should be turned to soft assets," Dassen said. Soft assets are necessary to make China, and indeed any country, become a strong player in the global economy, he said.

In many countries there is a lot of emphasis on mathematics physics and technology, which is absolutely necessary, he said. "If you think about the reguirement in this society 10 years from now, you will see that many routine and non-routine tasts will have been automated. You will need people who are able to work in such an environment. And those require structural investments that have to be made, both by public sectors and private firms," he said.

There is also a need for "structural investment" from both public and private firms in this regard, he said.

Citing the European Union as an example, Dassen said that because of its preoccupation with finding solutions for the sovereign debt crisis and the high unemployment situation, EU has been unable to focus on other growth opportunities.

"We've seen that the European Central Bank's programs related to massive bailout were successful in mitigating the collapse of the euro system. But, we see the problem is that Europe primarily focused on solving its short-term issues rather than gearing up for the future and making the necessary investments to remain a strong global player," said Dassen.

In contrast with Europe, is over investment an issue in China? After all, local governments are believed to have accumulated debts of more than 12 trillion yuan ($1.93 trillion), he said. Most of these debts were guaranteed by land, which lead to the concerns that if real estate market bumped into a drastic adjustment, are local governments able to repay the debts?

There are two kinds of investment - one that comes with good returns and the other with no returns.

"What we are seeing in China is a lot of good investments with good returns," Ken DeWoskin, director of China Research and Insight Center with Deloitte, said, adding that there are also "a lot of worrisome investments".