BEIJING: The World Bank Group expects China’s economic growth to ease to 7.1 percent this year, up slightly from an earlier estimate of around 7 percent made in April, the bank said in its China Economic Update released yesterday.
China’s economy may continue to decelerate to 6.9 percent by 2017, reflecting a slower but more balanced and sustainable “new normal” path for the world’s second-largest economy.
“In the short run, the slowdown in China’s economy growth means the government is making inroads with structural adjustments and policy efforts to address financial vulnerabilities,” said Karlis Smits, a senior economist at the bank.
“Over the medium term, these efforts are helping China to gradually shift its growth model from manufacturing to services, from investment to consumption, and from exports to domestic spending,” Smits said.
The government’s policies to slow rapid credit growth, contain shadow banking and limit borrowing by local governments have led to slower investment growth in real estate, the report said.
But China has also unveiled limited, targeted stimulus measures to prevent economy from slowing down too much.
China’s economic structure is slowly changing, the report said.
“On the one hand, economic activity remains constrained by overcapacity in heavy industries, decelerating export growth and regulatory tightening on non-traditional lending,” the report said. “On the other hand, growth in services is robust in advanced services such as banking and insurance.”
China’s economy grew 7 percent from a year earlier in the first quarter after growing 7.4 percent in 2014.
