Progress report good for China
Updated: 2013-01-16 11:52
By Zhang Yuwei in New York (China Daily)
Developing countries will see greater progress in economic recovery, led by China and Brazil, as high-income countries continue to "struggle" for four years after the global financial crisis, according to a World Bank report.
China's growth will pick up from 7.9 percent to 8.4 percent this year, said Kaushik Basu, chief economist with the bank at a press briefing in Washington on Tuesday for the release of the Global Economic Prospects report.
"China is growing at a phenomenal rate, right from 1978 or 1980, and you can't grow at 10 percent for more than a couple of decades," said Basu. "China has done it for 30 years and this has been expected in China, and it is expected by us that China will continue to grow very rapidly, but it will probably come down from these great highs."
The World Bank's prediction echoed recent comments from China experts who see the world's largest economy growing at a rate of around 8 to 8.5 percent.
Justin Yifu Lin, former World Bank chief economist and senior vice-president, predicted China would see its gross domestic product expand to 8.5 percent this year, and was likely to maintain similar growth over the next five to 10 years.
"But as a developing country and a transitional economy, China certainly faces many challenges to tap into this potential," Lin said at a recent business forum on the Chinese economy at the New York Stock Exchange.
The Chinese economy grew 7.4 percent during last year's third quarter, the seventh consecutive period of slowing pace.
The Institute of Economic Research at Renmin University in China predicted that the fourth quarter figures will likely have turned that around due to greater domestic consumption and infrastructure investment.
Wang Jianye, chief economist at the Export-Import Bank of China, who took part in the same forum, said predictions - mostly from Western media coverage - of an economic "hard landing" for China in 2012 were exaggerated.
"China's domestic market is growing rapidly, and this will remain a key driver for the country to maintain its economic growth," Wang said. "While domestic investment has and will generate economic growth in coming years, China's stable fiscal policy will also help the country's stable growth."
Among the challenges China faces, according to Lin, are income disparity and corruption, which combined could produce social tensions, and the need to exert discipline in tackling these problems.
Lin, who now teaches at Peking University, said the new Chinese leadership understands these challenges.
"China will try to do this kind of marginal reform," Lin said. "You have to be patient. It may not be as rapid as you hope. But China is very close to a well-functioning market economy."
Andrew Burns, a lead economist and manager of the global macroeconomic team in the Development Prospects Group at the World Bank, said while there will be some improvements in developing countries, they will present a "two-headed" story with "relatively weak growth".
"It has to be achieved by putting the emphasis once again on structural policies, on investing in infrastructure, investing in health and education to support that sustained growth of the supply side of their economies, in the same way that they were able to do in the early 1990s and 2000s," said Burns.
(China Daily 01/16/2013 page1)