News / Asia

World Bank Raises China Growth Forecasts, Urges Rate Hikes

In this 13 Oct 2010 photo, a worker installs a new layer on an advertisement board showing skyscrapers in Beijing's Central Business District, China
In this 13 Oct 2010 photo, a worker installs a new layer on an advertisement board showing skyscrapers in Beijing's Central Business District, China
TEXT SIZE - +

The World Bank has raised its growth forecasts for the Chinese economy.  The bank warns of risks from the surging property market and bank lending.

In its quarterly update, the World Bank says the Chinese economy will grow 10 percent this year, up from an earlier forecast of 9.5 percent.  The bank says this is due to strong Chinese exports.

Chinese authorities have been trying to shift the economy's focus away from exports, and increasingly toward domestic consumption.

But Ardo Hansson, the World Bank's chief economist for China, notes that consumption has weakened this year.

"In contrast, we see the export sector, the foreign sector, contributing much more to growth this year than last year partly because the world economy is in so more better shape and because China's domestic economy is slowing a little bit," said Hansson.

Last year's strong domestic consumption was aided by government subsidies to people to buy durable goods such as refrigerators and television sets.  That was part of Beijing's $600 billion stimulus program after the global financial crisis in 2008.

Next year, the World Bank says China's economy will slow down to 8.7 percent because of the risk of slowing growth in high-income countries that buy Chinese products, and because of rising prices.  But that figure is still higher than its earlier forecast of 8.5 percent.

Hansson also warns of other potential stumbling blocks for growth.

"Domestically, we see the risks coming through the property market and some of the financial risks of the local governments and the possible spill over into the non-performing loans in the banks," he said.

Property prices in China have risen sharply in the past few years, making it difficult for many people to buy homes.  In addition, there are concerns that too many new buildings are being constructed, which could create a glut that weighs down the market.

China's banking authorities have curbed new loans after last year's record $1.4 trillion lending, of which an estimated 40 percent went to local government investment vehicles.  Inflation in China is rising, but the World Bank says it is unlikely to escalate.

But the World Bank says China needs to lift interest rates further as it faces a strong inflow of international capital, which could add to inflation. The central bank raised interest rates last month, for the first time in nearly three years.  

You May Like

Multimedia Relatives of South Korean Ferry Victims Fire at Authorities

36 people are confirmed dead, but some 270 remain trapped on board More

War Legacy Haunts Vietnam, US Relations

$84 million project aims to clean up soil contaminated by Agent Orange More

Wikipedia Proves Useful for Tracking Flu

Technique gave better results than Center for Disease Control (CDC) and Google’s Flu Trends More

This forum has been closed.
Comments
     
There are no comments in this forum. Be first and add one

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Ukraine, Russia, United in Faith, Divided in Politicsi
X
Michael Eckels
April 19, 2014
There is a strong historical religious connection between Russia and Ukraine. But what role is religion playing in the current conflict? In the run-up to Easter, Michael Eckels in Moscow reports for VOA.
Video

Video Ukraine, Russia, United in Faith, Divided in Politics

There is a strong historical religious connection between Russia and Ukraine. But what role is religion playing in the current conflict? In the run-up to Easter, Michael Eckels in Moscow reports for VOA.
Video

Video Face of American Farmer is Changing

The average American farmer is now 58 years old, and farmers 65 and older are the fastest growing segment of the population. It’s a troubling trend signaling big changes ahead for American agriculture as aging farmers retire. Reporter Mike Osborne says a new report from the U.S. Census Bureau is suggesting what some of those changes might look like... and why they might not be so troubling.
Video

Video Donetsk Governor: Ukraine Military Assault 'Delicate But Necessary'

Around a dozen state buildings in eastern Ukraine remain in the hands of pro-Russian protesters who are demanding a referendum on self-rule. The governor of the whole Donetsk region is among those forced out by the protesters. He spoke to VOA's Henry Ridgwell from his temporary new office in Donetsk city.
Video

Video Drones May Soon Send Data From High Seas

Drones are usually associated with unmanned flying vehicles, but autonomous watercraft are also becoming useful tools for jobs ranging from scientific exploration to law enforcement to searching for a missing airliner in the Indian Ocean. VOA’s George Putic reports on sea-faring drones.
Video

Video New Earth-Size Planet Found

Not too big, not too small. Not too hot, not too cold. A newly discovered planet looks just right for life as we know it, according to an international group of astronomers. VOA’s Steve Baragona has more.
Video

Video Copts in Diaspora Worry About Future in Egypt

Around 10 percent of Egypt’s population belong to the Coptic faith, making them the largest Christian minority in the Middle East. But they have become targets of violence since the revolution three years ago. With elections scheduled for May and the struggle between the Egyptian military and Islamists continuing, many Copts abroad are deeply worried about the future of their ancient church. VOA religion correspondent Jerome Socolovsky visited a Coptic church outside Washington DC.
Video

Video Critics Say Venezuelan Protests Test Limits of Military's Support

During the two months of deadly anti-government protests that have rocked the oil-rich nation of Venezuela, President Nicolas Maduro has accused the opposition of trying to initiate a coup. Though a small number of military officers have been arrested for allegedly plotting against the government, VOA’s Brian Padden reports the leadership of the armed forces continues to support the president, at least for now.
Video

Video More Millenials Unplug to Embrace Board Games

A big new trend in the U.S. toy industry has more consumers switching off their high-tech gadgets to play with classic toys, like board games. This is especially true among the so-called millenial generation - those born in the 1980's and 90's. Elizabeth Lee has more from an unusual café in Los Angeles, where the new trend is popular and business is booming.
Video

Video Google Buys Drone Company

In its latest purchase of high-tech companies, Google has acquired a manufacturer of solar-powered drones that can stay in the air almost indefinitely, relaying broadband Internet connection to remote areas. It is seen as yet another step in the U.S. based Web giant’s bid to bring Internet to the whole world. VOA’s George Putic reports.
AppleAndroid