China to achieve more than 6% growth this year, says World Bank Chief Economist
March 26, 2019 Category China News Round-up, Weekly
China’s efforts, focusing on supporting the corporate sector and consumption, will help achieve economic growth in excess of 6% this year, despite headwinds from a sluggish and uncertain external environment, Pinelopi Goldberg, Chief Economist of the World Bank, said. However, global growth is likely to slow further this year due to downside risks from sharper-than-expected decelerations in major economies and bouts of financial market stress, she said before the China Development Forum (CDF) 2019 in Beijing. This year, China has set a growth target of between 6% and 6.5%, lower than the “around 6.5%” goal in 2018, when the GDP growth came in at 6.6%. “We do not yet see a major threat to China’s goals this year,” said Goldberg.
“We agree with Premier Li Keqiang’s comments in the annual Government Work Report this year that China should at present refrain from using a deluge of stimulus policies.” Goldberg said that China’s plan to reduce CNY2 trillion of taxes and fees this year is an attempt to provide some relief to the corporate sector and support smoother economic rebalancing. “China has the fiscal space and so it is appropriate that it considers using it, with due caution, to counter global economic headwinds,” Goldberg said. Many economies also face the challenge of rising debt, warned the World Bank economist. In China, the government is taking measures to rein in credit growth and shadow banking and prevent wasteful public investments. Policies to improve the business climate have also been put in place, including the newly approved Foreign Investment Law (FIL). The moves will reduce financial risks and contribute to an improvement in corporate profitability and productivity, although some easing of macro-economic policy is still warranted, according to the World Bank economist.
“China should not lose focus in reducing financial risks, and we have confidence that it will succeed in this difficult task,” said Goldberg. In an earlier interview with China Daily, Zhu Min, former Deputy Managing Director at the International Monetary Fund (IMF), said that China’s debt level has stabilized since last year, although deleveraging is not an easy task to achieve. “Currently, we see a little bit of easing of monetary policy, but it is still in a neutral position, which fits the macro-economic situation quite well,” said Zhu. Goldberg suggested China address the critical challenges of a rapidly aging population and environmental degradation, the China Daily reports.
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