China’s economy to grow 10.4 percent in 2006, World Bank says

15 November 2006

Beijing, China, 15 Nov – The Chinese economy is expected to grow 10.4 percent this year in 2006 and slow slightly in 2007 to growth of 9.6 percent, according to forecasts published Tuesday by the World Bank, which warned the country of the structural imbalances inherent to rapid growth.

In its report, the World Bank raised its August forecast for Chinese gross domestic (GDP) growth in 2007, which had stood at 9.3 percent, and maintained its projection for 2006.

In the medium term, the bank said, China’s priority should be to re-balance the economy with the short term aim of reducing the Chinese trade surplus, which is increasingly bigger.

The Chinese government, according to the World Bank, should focus on the services sector rather than industry, increase internal consumption, make economic development more balanced for the whole population and ensure that growth is increasingly environmentally sustainable.

“Lower levels of investment, which the authorities expect, despite being desirable for efficiency purposes, could worsen internal imbalances, if it is reached without a greater increase in demand,” The chief economist of the World Bank in China, Bert Hoffman said in a statement.

The Chinese economy posted reduced growth of 10.4 percent in the third quarter of 2006, after a leap in the second quarter to 11.3 percent.

The World Bank also said that China had good prospects for managing a smooth cooling of the economy, which is one of the government’s objectives, whilst, “domestic conditions continue to be favorable to rapid economic growth.” (macauhub)