World Bank trims China growth to 8.2%
Baku, May 23 (AZERTAC). In its twice-yearly update on developments in the region, the World Bank said Chinese gross domestic product was expected to expand 8.2 per cent in 2012 - down from its previous forecast of 8.4 per cent - before recovering to 8.6 per cent in 2013.
The update said that China`s lower growth could be seen as a welcome retreat from unsustainable levels, but noted concerns that the slowdown could be too rapid.
“The burden of any countercyclical response should fall on fiscal policy,” it said. “Fiscal measures to support consumption, such as targeted tax cuts, social welfare spending and other social expenditures, should be viewed as the first priority.”
The World Bank report comes amid expectations that Beijing will adopt more stimulative policies at a sensitive time for a global economy facing crisis in Europe and an anaemic US recovery.
After a tour of the area around the central industrial city of Wuhan, Wen Jiabao, China`s premier, at the weekend said it was time for the government to give “more priority to maintaining growth”.
However, the World Bank counselled against relying too heavily on bank lending and infrastructure investment to shore up growth.
It said Beijing`s administrative policies had been helpful in cooling the property sector, but called for these to be “phased out in favour of market-based measures” that would raise capital costs and provide alternative opportunities for Chinese investors.
In the longer term, China needed to make growth more sustainable, through such measures as encouraging greater competition between enterprises, developing human resources and moving from low-cost to higher value production.
“Investment rates are already extremely high and cannot be increased much further without adverse social and environmental consequences,” the World Bank report said.
Slowing Chinese growth was expected to play an important role in cutting economic expansion in the developing nations of east Asia to 7.6 per cent this year from 8.2 per cent growth in 2011, it said.
The lowered growth forecast for China is in line with the Organisation for Economic Co-operation and Development which revealed its forecasts on Tuesday.
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