China's annual economic growth is expected to slow to 7.5 percent next year, but the country has "adequate tools" to keep the economy going at a healthy level, according to the latest World Bank quarterly report on China.
The first half of next year would be the most difficult for the Chinese economy, said Louis Kuijs, senior economist of the World Bank in China.
"Our forecast for 2009, which sees GDP growth of around 7.5 percent, has more than half of that coming from government influenced spending," he told a press conference today. The proportion of government spending-related contribution would be about 1.5 percentage points higher than in 2007, according to the report.
China has initiated a massive 4-trillion yuan economic stimulus package early this month to prevent its economy from a hard landing as the global financial turmoil and economic slowdown have seriously weakened investor confidence and reduced external demand for China's exports. Its economy slowed to 9 percent in the third quarter of this year, down from nearly 12 percent for the whole of last year.
Next year, the global import demand would substantially weaken and the world's imports growth may fall into the negative territory for the first time since 1982, said Kuijs. That would augur bad for the Chinese economy, which relies heavily on exports for its growth.
The World Bank report said China's exports will be low in 2009, even with expected continued market share gains reflecting China's strong competitiveness.
The report said the government's stimulus plan is the key to maintaining sound economic growth next year and expected the government budget for next year to increase.
"The emphasis will be on accelerating and increasing infrastructure and other investment, but of a different nature than in the wake of the Asian crisis (in 1997 and 1998), with many projects focusing on broad long term development and improving living standards," said David Dollar, World Bank country director for China.
(China Daily November 25, 2008)
