Connect with us

China

World Bank expects moderate growth in China

Growth in China is expected to slow to 7.6 percent in 2014, and 7.5 percent in 2015, from 7.7 percent in 2013, according to the World Bank’s China Economic Update released today.

World Bank

Published

on

Growth in China is expected to slow to 7.6 percent in 2014, and 7.5 percent in 2015, from 7.7 percent in 2013, according to the World Bank’s China Economic Update released today. China’s growth will moderate over the medium term as the economy continues to rebalance gradually. 

“The rebalancing will be uneven, reflecting tensions between structural trends and near term demand management measures,”

says Chorching Goh, Lead Economist for China.

The slowdown in the first quarter reflected a combination of dissipating effects of earlier measures to support growth, a weak external environment and tighter credit, especially for real estate. However, economic activity, including industrial production, has shown signs of a pick-up in recent weeks.

The recent acceleration, which is likely to continue into the next two quarters, reflects robust consumption, a recovery of external demand, and new growth-supporting measures, including infrastructure investments and tax incentives for small- and medium-sized enterprises.

The China Economic Update, a regular assessment of China’s economy, identifies several risks to this gradual adjustment. First, a disorderly deleveraging of local government debt could trigger a sharp slowdown in investment growth. Second, an abrupt change in the cost of, or access to, capital for such sectors as real estate could significantly reduce economic activity. Finally, the recovery in exports may not materialize if growth in advanced countries weakens.

The Update notes that the policy responses to these medium-term risks should center on fiscal and financial sector reforms, which were part of the government’s reform agenda outlined in November 2013. These include effectively managing and supervising rapid credit growth, especially in the shadow banking system, and gradually reducing the local government debt that has been accumulated through off-budget and quasi-fiscal activities.

“The proposed reform measures are structural in nature,” observes Karlis Smits, Senior Economist and main author of the Update. “In the medium term, these policy measures will improve the quality of China’s growth, making it more balanced, inclusive and sustainable and lay the foundation for sound economic development.”

While these reforms may reduce growth in the short run, policies that promote competition, lower entry barriers to protected sectors and reduce the administrative burden on businesses will help dampen the impact, and create a more market-oriented economy.

 

The World Bank's mission is to end extreme poverty and promote shared prosperity

Comments

China

RCEP and China: Reimagining the future of trade in Asia

The Regional Comprehensive Economic Partnership (RCEP) could eventually usher in an era of much deeper regional integration: for corporates doing business in the region, their future success may well hinge on how adeptly they manage to navigate the evolution of Asia’s trade landscape under the RCEP.

Avatar

Published

on

Last month, 15 countries in the Asia-Pacific region – including the 10 member states of the Association of Southeast Asian Nations (ASEAN) as well as China, Australia, Japan, New Zealand, and South Korea – signed the landmark Regional Comprehensive Economic Partnership (RCEP) on the final day of the 37th ASEAN Summit.

(more…)
Continue Reading

China

Thailand ready to ink big Chinese-backed trade deal

The RCEP will cover all 10 Asean member states plus five partners: China, Australia, Japan, New Zealand, and South Korea and will take effect from the middle of 2021 if at least six Asean members and three partners agree to its terms.

Olivier Languepin

Published

on

Thailand is set to sign the world’s biggest free trade agreement with Japan, China, South Korea and 12 other Asia-Pacific countries at the 37th Asean Summit this week.

(more…)
Continue Reading

Business

Great Wall Motor (China) takes over GM factory in Thailand

The Thai production hub will become operational in the first quarter of 2021 with automobile production capacity of 80,000 units per annum.

Avatar

Published

on

Chinese carmaker Great Wall Motor (GWM) hosted a ceremony on November 2nd to celebrate the latest milestone in taking full ownership of Rayong Manufacturing Facility in Thailand.

(more…)
Continue Reading

Trending