World Bank increases forecast for China's growth this year to 10%

Securities Times reporter Jia Gong the World Bank's latest China quarterly report says China's growth is likely to slow further as global growth slows and macroeconomic policies normalize, but traditional growth drivers and strong labour markets will continue to underpin growth.　　The World Bank has set China's GDP growth forecast for the whole year to 10%, predicting growth of 8.7% next year. The report says China's GDP year-on-year growth in the three quarter fell from 10.6% in the first half, but still surprisingly maintained a 9.6% per cent strong growth. As the impact of the stimulus waned, the money supply tended to be normal, the domestic economy cooled, and investment, urban consumption and import growth slowed.　　At the same time, exports remained strong, net exports made a significant contribution to economic growth, and external surpluses rose again. "Despite the expected drop in growth, but as emerging markets are strong, the outlook for global growth remains quite favourable, and risks such as the weak outlook for the less high-income countries remain", the World Bank said in its report that, globally, prices have continued to be curbed by overcapacity in many countries,　　However, because of the rebound in raw material prices, the international risk of inflation upside. On the issue of inflation in China, the bank believes inflation is likely to remain above 3% per cent for some time, driven by rising food prices. Headline inflation is unlikely to rise sharply as core inflation is subdued. However, the price of raw materials may continue to rise, the possibility of sustained sharp wage growth, although not too, but can not be completely excluded. Given that housing prices are unlikely to remain unchanged for long, there is a fundamental incentive to rise.　　According to current trends and policies, external surpluses in dollar terms tend to rise in the coming year and in the medium term. Ardo Hansson, China's chief economist at the World Bank, said China needed to normalize its macroeconomic policies to prevent macro risks.　　The main concerns are rising asset prices, local fiscal strains and bad bank loans, while inflation risks cannot be ruled out, and it is important that two-way risks require flexibility in policy formulation. The report also notes that China's 12th five-year plan (2011-2015) requires a focus on structural issues and reforms, and that changing growth patterns is a central objective. China's current rebalancing of the economy towards domestic demand and service-oriented growth is more urgent than it was five years ago, but the international environment has become even more unfavourable. Rebalancing will not happen spontaneously, and achieving that goal requires major policy adjustments.