World Bank’s Take on China
In its quarterly economic report, the World Bank summarized China’s current economic situation. Its main conclusions are that China’s growth will be 9.4 percent this year, but will slow to 7.5 percent in 2009 as the global financial crisis takes a greater toll. The World Bank’s latest forecast for 2009 represents a downward revision from its previous forecast of 9.2 percent for growth in China next year. A 7.5 percent GDP growth rate would be the lowest since 1990 when the China economy grew at 3.8 percent, and just below the 7.6 percent reported in 1999.
Some of the other conclusions in the World Bank report are:
- Beijing’s multibillion-dollar stimulus plan will help smooth the sharp edges of steep declines in global and domestic demand. China’s downturn — signs of which emerged in the third quarter — will worsen in the first half of 2009 as exports weaken.
- China has been relatively unaffected by the global crisis so far because its banks are healthy and exports are strong.
- China has the tools to keep its growth rate at a healthy level and most importantly to create the number of jobs it needs.
- Beijing has room to cut interest rates further and needs to take additional steps to stimulate growth as spending by consumers and companies weakens.
- Weaker export prospects and a sharp downturn in real estate sales have made private companies reluctant to expand and hire new workers.
