China to Grow at Sustainable Levels, No Need to Panic: Wealth Fund Head

China's economy will grow at sustainable levels and there is no need for panic about the level of growth, Jin Liqun, chairman of China's $482 billion sovereign wealth fund China Investment Corp, told CNBC on Wednesday.

"I don't think people need to panic, China will continue to grow at sustainable levels. The government target will be met without much difficulty," said Jin.

China's first quarter economic growth figure came in at 7.7 percent which was below expectations and lower than the previous quarter's 7.9 percent growth, raising questions about the strength of the rebound in the world's second largest economy. The government's gross domestic product growth target for 2013 is 7.5 percent.

"We aim at improved quality of growth. The Chinese economy will continue to be instrumental to the rest of the [global] economy by its strong sustained growth. But of course, something will have to be done on the other side," he added.

(Read More: Not Concerned About Hard Landing in China: IMF)

Local Government Debt Fears

Jin's comments come amid rising concerns over China's excessive levels of local government debt, following reports that a senior Chinese auditor had said local government debt was "out of control," with the potential to spark an even larger financial crisis than the U.S. housing crash.

Bloomberg | Bloomberg | Getty Images

"I don't think it's out of control, the government has been taking care of this issue over the past two years," Jin said.

(Read More: China Local Authority Debt 'Out of Control')

Analysts have warned that the combination of rising credit issuance and slowing economic growth is toxic cocktail for the economy.

Last week Fitch Ratings cut China's sovereign debt rating in the first move by an international credit rating agency since 1999 to downgrade Chinese debt. Moody's Investor Services cut its outlook for China's rating from positive to stable on Monday.

(Read More: Has China's Economy Hit a 'Dead End'? )

However, Jin acknowledged there was an issue surrounding the completion of local infrastructure projects, which will generate the cash for local governments to pay back their debts.

"The only issue is how can we get these done so they can generate revenue for local government so they can pay back the debt. It is important to wind down the whole process in a well ordered mannered," he added.

"More importantly the government should shift their role, the financing should be left to the market and companies, responsible for their own profits and losses. It's the changed role of the government that matters," said Jin.

Haruhiko Kuroda
Julian Abram Wainwright | Bloomberg | Getty Images
Haruhiko Kuroda

Praise for BOJ

In the exclusive interview with CNBC, Jin praised Bank of Japan governor Haruhiko Kuroda's monetary policies, but said monetary policy alone will not be enough to solve Japan's economic problems. He encouraged Japan to follow the example of the U.S. and relax their tight immigration policies.

"Kuroda is dealing with an issue head on, but my view is solving Japanese problems will call for whole bunch of measures, monetary policy is necessary but not efficient," he said.

"The demographics of Japan is a formidable challenge… [they need] some adjustment to their policies on demographics, such as relaxing their policies on immigrants, like what the Americans are doing."

US Concerns

The CIC chairman also sounded a warning on how political wrangling in the U.S. needed to be resolved in order to the fix the economy's economic woes.

"This is a bit worrisome that the two parties are locked in fighting fiscal problems. They need to solve some basic issues faced by Americans, restore competitiveness of the U.S. economy particularly in high end manufacturing, and the fundamental restructuring of the economy. And of course, the debt ceiling and fiscal cliff should be resolved without further debate. They are pushing forward day of reckoning," he said.

The U.S. economy avoided falling off a fiscal cliff in January when a simultaneous rise in tax rate and decrease in government spending was set to come into force, threatening to damage growth. However, U.S. policy leaders still face the challenge of how to tackle its colossal debt pile, with the Democrats and the Republicans divided over the best way to do this.

Jin added that the U.S. need not worry about cyber security threats from China.

"We don't do anything that will post security threats to the American people they shouldn't worry about this," he said.

In recent months the U.S. and China have accused each other of cyber-hacking, in an increasingly heated dispute which threatens to undermine trade between the two largest economies.