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China's GDP growth will be 8.2% this year and 8.6% in 2013 according to a just released World Bank report. The "China Quarterly Update" says the prospects for a gradual adjustment of growth remain high.
China's GDP growth will be 8.2% this year and 8.6% in 2013 according to a just released World Bank report.
It has now come to the point where the world's second-largest economy has started to slow down its decades-long double-digit growth rate. The World Bank quarterly report on the Chinese economy says the prospects for a soft landing remain high, projecting the country's GDP growth at 8.2 percent for 2012.
Ardo Hansson, lead economist for China, World Bank, said, "Looking now first at the recent past, we see that Chinese economy is in the process of a gradual slow down. Growth was reduced from 10.4 percent 2010 to 9.2 percent last year. It combines the effect of a weakening external environment and tightening of domestic policies. As a result of these factors, we see a modest 8.6 percent in 2013. "
The World Bank report has been released just ahead of Friday's expected announcement on China's official economic data from the National Bureau of Statistics. In an earlier statement, the NBS said China's CPI, a key indicator of inflation, had increased by 3.6 percent in March over the same period last year, higher than the estimated 3.3 percent.
Ardo Hansson, lead economist for China, World Bank, said, "As for the inflation issue, I think the news has been good. Inflation has been brought under control, but also a lot of policy efforts have born fruits. The up-tick we saw in March is probably temporary. We see inflation being on a controlled path. "
Hansson identifies the key risk factors for China's economy as the uncertain external environment and China's domestic property market. Sufficient policy space exists to respond to downturn risks, but the economy needs to be carefully crafted regarding longer-term effects and objectives.
Ardo Hansson, lead economist for China, World Bank, said, "I would say a lot of reforms are in the enterprises and banking sectors, because to keep the growth going you need new sources of productivity. Another area is the fiscal system. Both the growth challenges and social challenges are tied to the way local governments finance themselves. Something which I think if we really want to make progress over the next ten years will have to be tackled. "
In the quarterly updates, the World Bank highlights consumption, innovation, and structural reform as the keys to China's sustainable growth in the future. While the country's growth rate is expected to be gradually slowing down, according to the report, the new focus should be shifted to the quality of economic development and the improvement of people's livelihood.