Possible Fed rates hike affects little

The President of Asian Development Bank (ADB) said on Monday that China has no need to worry too much about a possible interest rate raise signaled by the U.S. Federal Reserve.

"It's natural for them to raise interest rate and I don't think it will cause a major problem," Takehiko Nakao told Xinhua on the sidelines of China Development Forum 2014.

"The interest rate adjustment is likely to be gradual, and in my view, China is not so dependent on short-term finance or hot money," said Nakao, adding that many Asian countries including China have big current account surpluses.

What's important to Nakao is to keep the domestic economy going well, including consumption and investment.

"For this end, we need market-friendly policies, in order to invite foreign direct investment, to keep open trade and investment regimes and to facilitate the financial sector development," said the ADB president.

By doing so, there can be more financing for needed consumption and needed investment. It is also important for China to make its financial system more inclusive, such as including small and medium-sized enterprises and developing consumer finance in a healthy way, he said.

"Easy finance for consumers can boost domestic demand and that is really important,"said Nakao.

The U.S. Federal Reserve signaled last week that it may raise the federal interest rate as early as next spring as the economy is firm enough to keep the taper on course. Many fear that increased interest rates in the U.S. may drain capital from emerging markets.