By Philip Schellekens, et al., World Bank Office, Beijing
Recent Economic Developments
The Chinese economy is in the midst of a gradual slowdown. A weaker global economic environment and tighter domestic policies combined to slow GDP growth from 10.4 percent in 2010 to 9.2 percent in 2011. Slow growth in the Euro area and sluggish recovery in the [United States] limited the contribution of net exports, as exports decelerated more rapidly than imports. Tighter domestic policy conditions dampened investment – particularly in infrastructure and real estate. In contrast, consumption growth remained robust as consumer confidence was sustained and household income continued to grow rapidly.
Talks in China center on the big choices now facing the countryBEIJING, September 5, 2011 – China and the World Bank are making significant progress on a joint report on how the world's second largest economy can move to a path of sustainable growth in the face of today's challenging global economic situation, said World Bank Group President Robert B. Zoellick.
BEIJING-China's growth has moderated somewhat to a still healthy pace, with a shifting composition, according to the World Bank's latest China Quarterly Update released [Nov. 3].
BEIJING– Despite the global recession, China’s economy grew 8.7 percent in 2009, and the growth momentum continued in the first months of 2010, according to the World Bank’s latest China Quarterly Update released [Mar. 17].
The Update, a regular assessment of China’s economy, finds that massive investment-led stimulus was key in driving the economy last year. But real estate investment gained prominence more recently and household consumption growth has held up very well.
Exports declined in 2009 as a whole, even as China gained global market share. With imports strong, net external trade was a major drag on growth in 2009 and the external current account surplus declined sharply. Exports rebounded strongly through 2009, though, and exceeded pre-crisis levels in early 2010. In a heated real estate market, surging property prices triggered policy measures to expand supply and curb speculation.
“We project 9.5 percent GDP growth for this year, with a shift in the composition,” said Ardo Hansson, Lead Economist for China. “Government-led investment is bound to decelerate. But, exports are likely to continue to recover amidst a pick up in the global economy, real estate activity is likely to grow strongly this year, and consumption should remain solid.”
Inflation is on course to be significant in 2010, after being negative in 2009. But, with global price pressures likely to be subdued amidst large spare capacity internationally, China’s inflation is unlikely to reach high rates in 2010. We expect the external surplus to remain broadly unchanged this year.
Turning to policies, “the macroeconomic policy stance will have to be tighter this year than in 2009,” said Louis Kuijs, Senior Economist and main author of the Update. “Unlike in most other countries, overall output in China is close to potential. Thus, China needs a different macro stance than most other countries.”